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CAD Giants Make it Big in 2005, Part 1
15 Feb, 2006 By: Sara FerrisUGS brings in $1.15 billion in its first full year of independence
CAD heavyweights UGS and Dassault Systèmes recently released year-end earnings reports, and both recorded double-digit growth. In this edition, we'll look at the details of the UGS report, released February 12. We'll look at Dassault in an upcoming edition.
For 2005, its first full year as an independent company, UGS earned US$1.15 billion, an 18% increase over the previous year. Revenue from software, which includes license and maintenance, grew by 21%, and revenue attributed to cPDM (collaborative product development management) increased by 58% including acquisitions (37% excluding them). UGS' big buy in 2005 was Tecnomatix Technologies, a developer of digital manufacturing software. That added US$68.4 million in overall revenue; $52.2 million of that came from software. Growth in the fourth quarter was concentrated in Asia and the Americas.
Big Wins
UGS reported landing 22 enterprise contracts (those valued at more than $1 million) in the fourth quarter of 2005. Nissan will use UGS NX and Teamcenter cPDM to build its next generation of vehicles. It had been using a mix of I-DEAS and CATIA. Unilever selected NX to handle packaging design for its home and personal care products.
Lockheed Martin Aeronautics will deploy UGS Teamcenter 2005 to manage product data for its entire F-35 Joint Strike Fighter program. The software will handle collaboration among three primary partners and more than 5,000 suppliers. UGS says Teamcenter will reduce cycle times by 35% for product design and 67% for manufacturing. The Joint Strike Fighter program is also on the list of Dassault's big wins for CATIA V5.
UGS cited successes among midsized businesses, as well, which it is targeting with its Velocity Series of products. "Reaction to Velocity has been very, very strong," said UGS president and CEO Tony Affuso. UGS has added 20 new resellers in targeted areas for this market and seeks to have 100 on board by the end of 2006. Australian defense contractor Smart Engineering and Logistics Solutions adopted the Velocity portfolio, and Mubea, a spring manufacturer, ordered more than 100 seats of Teamcenter Express.
Down the Road
Affuso sees future growth coming in the area of services. Though UGS has touted wins in nontraditional markets such as consumer goods and pharmaceuticals, Affuso says the company's traditional markets—automotive, aerospace, high-tech and machinery—will continue to account for most sales. He sees CAD software growth coming in two areas—suppliers picking up the high-end NX product, and increased Solid Edge sales through the Velocity program.
Affuso also expects the PLM landscape to be interesting this year in light of IBM's recent partnership with PTC. "IBM has left Dassault," he noted. "We've always considered IBM to be Dassault's strongest asset."
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