There have been several changes in the CAD (computer-aided design)/PLM (product-life-cycle management) market in the last year, with UGS being purchased by Siemens (SI) for $3.5 Billion, and with Dassault (OTCPK:DASTY) reducing its dependence on IBM (NYSE:IBM) Global Services. Both moves are surprising, since I don’t at all, see any synergy between Siemens and UGS, and the IBM-Dassault partnership was a fabulous one, so the reasons for it to be severed (reduced in importance) appear perplexing at best.
I have nothing against Europeans, but both the German logic and the French logic seem suspect, while the American Private Equity firms’ logic of wanting to sell UGS to someone, anyone, makes perfect sense. After all, they bought it for a lot of money, and needed to turn it over and take their profits!
What this tells me, is that the future of the giants of CAD and PLM - Dassault and UGS - are equally suspect. And, it also suggests, we take a good solid look at Autodesk (NASDAQ:ADSK), which has been having a superb run, having managed effectively its CEO transition from Carol Bartz to Carl Bass.
In general, the mid-market of CAD/PLM has been growing rapidly, and much of the high-end capabilities, earlier not available in the lower end systems like AutoCAd / Inventor or Solidworks, are becoming increasingly commoditized. The premium that the high-end players charged for their products (CATIA from Dassault, ProEngineer from Parametric Technology, UGS), will soon start to make less and less sense, and this sort of confusion will make it a great opportunity for the Autodesk sales force and VARs to wedge their way into important accounts.
Meanwhile, Parametric Technology (PMTC) has engineered a solid and surprising turnaround, and looks suddenly stronger than ever.