You've probably read about Autodesk's latest acquisition, but is the taking of, long-time competitor, Softimage into the fold with other former foes a move that artists and CG companies should welcome, or fear?
In the backdrop of pretty serious global economic issues, we have to look at Autodesk itself and judge what it can offer the smaller firms it is buying. For that we probably need to go back to the start...
An unusual tale
Autodesk is an unexpected tale in the software world. Founded in 1982, it is now in its 26th year and shows no sign of slowing in growth. Indeed for many, this upstart-turned-behemoth no threatens to create an all-encompassing monopoly over the CG world.
But let's step back for a moment and think about what they have achieved. 26 years of operation and business growth is a remarkable testament to the company. The 26 years alone sets them as the second oldest software company on the market - and when you're standing behind Microsoft on the podium, you can't be doing too much wrong.
Yet they haven't just survived, which is a remarkable feat in itself, they have thrived. In the fiscal year ending January 2008, the 7,300 staff employed attracted sales totalling $2,171.9M. That's a lot of dough, and it's not dough that Autodesk are sticking away for a rainy day. This ancient leviathan of the software market is going places fast. Last year's income growth sat at 23%, most software companies break open the champagne when they hit 10%. Again, that is a remarkable return for a mature company to deliver. So what's going on? Where's this growth coming from and where's the money going?
The turning point
Those of you who were in the industry around the turn of the millennium will probably remember the time when Autodesk was a parochial and almost provincial in its outlook. A steady company developing its product range iteration by iteration. Then, something triggered a realisation within the firm of this not being right. As the long time CEO, Carol Bartz, described:
‘We went through a lot of work in the '90s. We maybe overshot the need or skill of users. It was simply too complex. Our idea is to democratize this software for all size companies so they can get productive. It's a combo of price point and functionality.'
In 2004, for example, software licences grew 46% in a year. In the same year company growth sat at 30%, profits doubled, stock price tripled.
They had regenerated Autodesk into a fearsome income machine, with a ravenous appetite.
The hunger
So the corporate machine was up and running. The first major acquisition that really underlined their intent was the purchasing of Discreet Logic, which they merged with Kinetix and their software program named 3d Studio Max, but that was just the start, here's a list of the major acquisitions since then (apologies if I've missed some, there were a lot!):
- 1999 - Discreet Logic Inc
- 1999 - VISION* Solutions - $26m
- 2001 - Gentry Systems
- 2001 - Buzzsaw - $15m
- 2002 - Revit Technology Corporation - $133 million cash
- 2002 - CAiCE Software Corporation - $10 million cash
- 2003 - truEInnovations, Inc., and Linius Technologies, Inc
- 2004 - certain assets of MechSoft, Inc
- 2004 - Unreal Pictures
- 2004 - AVEVA forms a technical alliance with Autodesk
- 2004 - Cross-licensing pact with Microsoft
- 2005 - COMPASS systems GmbH, 13 million Euros
- 2005 - Colorfront Ltd. for $15 million
- 2005 - c-plan AG for $18 million
- 2005 - Solid Dynamics
- 2005 - Alias Inc for $182 million in cash
- 2007 -Skymatter Inc, Mudbox developer
- 2007 - Opticore AB
- 2007 - PlassoTech
- 2007 - Robobat
- 2008 - Moldflow Corporation
- 2008 - Kynogon SA
- 2008 - REALVIZ SA
- 2008 - Square One Research
- 2008 - Avid's Softimage
That's a serious aggressive purchasing strategy!
This clever waterfall of acquisitions has both diversified the company's market as well as strengthening its core. That $2bn in revenue they get every isn't the same as the revenues Google get, where a Google killer could arrive in a year. That $2bn is coming from a rock-solid, worldwide market spanning almost the entire 3D industry. Freelancers to production houses to Hollywood FX companies depend on their product and have built themselves around them. Autodesk have made themselves into a rock, that is going to take some shifting.
Turbulent times
So as we head into what's likely to be a massively damaging global recession, is this rock going to offer an unrivalled stability for us as consumers or is it going to leave other companies easy prey to allow Autodesk to become a dangerous monopoly?
It's becoming ever-more evident that the effects of the credit crunch are rippling towards the CG industry. It will hit, there's no doubt about that. So when it does, we're going to need to brace ourselves for the storm, because it's going to be a rough one. The effect for Autodesk may result in an acceleration of their product merging - certainly they are now paying for the development of several products doing moreorless the same thing (eg. 3d Studio Max, Maya, Softimage) and there is going to have to be pressure on them to expediate the joining of these products to release the cost savings of such a move. Whether this is a good or bad thing really depends on your personal views, however certainly the merging of other, albeit smaller toolsets has been appreciated on the whole by users. Many of us will forget that there was a time that Character Studio, Pro Booleans, AEC sets etc were separate products from separate companies - now they are closely integrated.
Friend or Foe?
So that brings us back to the initial question. Autodesk's latest purchase of Softimage has raised this question again to the forefront. Is Softimage on the way up...or down? If you look at the figures $35 million is a ludicrously cheap deal - one that underlines the issues in Avid's business. You may recall, this is the same software Avid paid $285 million to take Softimage from Microsoft back in 1998. Today Avid are a struggling company, losing money and fast. Even including this sale, their net loss for the quarter was around $66.4 million.
So perhaps Softimage users should be grateful to Autodesk for ensuring they still have a company supporting their software, at least in the medium term...
In the long run, we will have a more homogenised toolset as artists. One suite of software that'll be the industry standard, no worries about whether you should learn Maya or Max or Softimage at university. Simpler integration between products. Greater R&D investment power.
But then there will be less competition and companies don't naturally drive investment into new features and tools, it's competition that pushes them. If you look at other technological monopolies that have been established, you'll note a similar ‘slowing' of pace in their development once they establish dominance of the market and this is only ever sparked by ambitious new starts. The OpenOffices snapping customers from the Microsoft Offices. The Firefoxes stealing Internet Explorers. The Googles offering new Windows for customers.
Autodesk is now the Microsoft of the CG world. And I don't mind. Every industry needs a towering colossus to stablise the market. To be the benchmark to the smaller, more agile competition snapping around its heels. Like any company, as it becomes too dominant, it'll slow and allow space for new starts to emerge and threaten. It'll shake off the dust and rumble to life again, snapping up the Mudboxes to take on the ZBrushes.
So while there is that nagging doubt, the majority of us will go back to our PCs, not Macs. Load Vista/XP, not OSX or Linux. And be presented by an Autodesk logo.
For me personally, the biggest doubt is what this move will mean to the price point of the whole range of Max, Maya & Softimage - less product competition will almost inevitably mean less price competition. And that could make an already expensive set of brushes, even more so...
The final question I guess is, who's next...?
