Examining the Autodesk-Bentley Agreement (Viewpoint Column)31 Jul, 2008
What's behind this gesture toward DWG-DGN interoperability -- and is it the right thing to do?
Editor's Note: Because Autodesk is currently engaged in litigation with ODA, the company declined to verify or comment on the content of this column. Statements about the transactions between Autodesk, Bentley, and ODA are based on the author's recollection.
Generating some surprise and raised eyebrows, Autodesk and Bentley Systems in early July announced an agreement to cooperate. The companies reported that they will exchange software libraries for accessing DWG and DGN format files as written by their respective applications and will support reciprocal use of one another's application programming interfaces (APIs).
The reaction to the announcement by analysts, press, and even users was quick. Most of the commentary I've seen has been well-considered and thoughtful (see for example, Cadalyst Executive Editor Kenneth Wong's analysis, "Bentley and Autodesk Join Hands to Bridge DGN and DWG," www.cadalyst.com/0708autodesk-bentley). What I hope to add to the mix is a bit of background and perspective.
A Little ODA History
In late 2002 when I was president of the OpenDWG Alliance (ODA, now Open Design Alliance, www.opendesign.com), I made trips to the headquarters of Bentley and Autodesk.
I traveled to Bentley to meet with the company's top management, including CEO Greg Bentley and CTO Keith Bentley, to discuss the OpenDGN project. The clear message was that Bentley wanted to find a way to open its DGN V8 file format in a way that benefited its users — but without archrival Autodesk being able to unfairly take advantage of the situation.
Bentley decided to take two important steps: The first was to publish an OpenDGN file specification, making it available to its developer partners and customers who were members of the Bentley SELECT subscription program. The second was to provide documentation and technical support to the OpenDWG Alliance, from which ODA could create a set of independent software libraries to read and write DGN V8 format files. This second step involved a lot of careful contract negotiation.
Bentley had no problem with Autodesk using the OpenDGN libraries to be developed by ODA — so long as Autodesk was willing to join ODA, which would require Autodesk to provide ODA with information about its DWG implementation. Actually, Bentley would have been happy for this to happen — although no one thought it was likely, except possibly me.
I traveled to Autodesk headquarters to meet with Carl Bass, now CEO but COO at the time, and John Sanders, then vice-president of platform technology — the two executives designated by then-CEO Carol Bartz to deal with the OpenDWG Alliance. My first priority was to find out if the rumors were true about AutoCAD 2004 (due to ship in several months). I'd heard that Autodesk employees in Europe were saying that this next version of AutoCAD was going to create real trouble for ODA, because the DWG files it created were encrypted. The Autodesk executives assured me that this wasn't the case. I also wanted to discuss DGN. I told Bass and Sanders that we were developing DGN libraries and that the only way they could use them would be to join ODA. They told me, "No, thanks"; they just weren't all that interested in DGN.
That lack of interest apparently changed. In 2004, I found out that Autodesk had reportedly acquired ODA's DGN libraries (called DGNdirect) through an unauthorized transaction with an ODA member. I spent a good deal of time talking with lawyers and trying to determine how to avoid having the situation become a bunch of lawsuits. Ultimately, the acceptable options were to sue Autodesk for copyright infringement or to wait until the contract under which the company reportedly had acquired the libraries simply lapsed. The ODA board of directors showed little support for getting into a million-dollar legal fight with Autodesk, so I opted to avoid that approach. It took until May 2006 for Autodesk to finally stop shipping software based on DGNdirect. Needless to say, Bentley was livid about the situation.
One of the side effects of losing access to DGNdirect was that Autodesk needed to have a replacement. So, the company began developing DGN libraries of its own. Ultimately, these libraries didn't prove to be all that good.
Conversations with Carl Bass
When I was dealing with Autodesk's use of DGNdirect, I had several phone conversations with Bass. We didn't talk about DGNdirect — that was delegated to someone else — but rather about how ODA and Autodesk could work together. I challenged Autodesk to take a red pen to our membership agreements and suggest revisions to make them more palatable. Bass challenged me to find a way to restructure ODA to create a level playing field where, for example, all members would contribute the information they had on all file formats. Neither of us was particularly successful. Autodesk never suggested any membership agreement changes. I was never able to persuade the ODA board to act on Bass' suggestion.
What did come out of our conversations, though, was that Bass was willing to make agreements wherein Autodesk would exchange file read/write libraries and interoperability information on a reciprocal basis with competitors.
Quite a bit has changed over time, with respect to DWG and DGN. In late 2006, after new management took over ODA, Autodesk sued and got a court order to remove TrustedDWG from the ODA DWG files. In my view, this makes it impossible for ODA libraries to create DWG files that are 100% compatible with AutoCAD.
About the same time, DGNdirect development under way by ODA was stalled. The product languished for a year until ODA introduced a new version, based on DWGdirect code.
Why Do the Deal?
Truth is, I don't know what motives underlie Autodesk's and Bentley's agreement. I do know, however, that both companies have tremendous power in the AEC software market. And they're both aggressive.
Although it's possible that Bentley's experience with ODA pushed it to make this deal with Autodesk, it's just as likely that some of its big customers laid it on the line — Bentley tends toward large customers — and Bentley forged the agreement to respond to those demands.
As for Autodesk, the reason could have been the company's inability to create an adequate DGN library, a desire to marginalize ODA, or simply Bass' predisposition to make such deals.
Separate from any of these factors, both companies recognize that DWG and DGN are not the simple formats they used to be. They're exceedingly complex, and the ODA libraries for either are likely to be behind the curve at any point in time. The most up-to-date software libraries are going to be those created by Autodesk and Bentley.
Beyond DWG and DGN, the agreement to support reciprocal use of one another's API just makes good sense. Bentley has acquired a bunch of interesting software companies over time, many that produce third-party applications that run on top of Autodesk software. Autodesk has Revit and would certainly like to tap into Bentley's customer base.
Who Wins and Who Loses?
I've heard some folks say they think Autodesk comes out on top of Bentley in this deal. I doubt it. My take is that both Autodesk and Bentley will gain far more from not having the other messing with them behind the scenes than they'll potentially lose in customer migration.
Major joint customers of Autodesk and Bentley win, in the near term, with this deal. However, the resulting benefits could become less obvious if this agreement causes Autodesk or Bentley to pull back its efforts to support open standards.
One could reasonably argue that this arrangement could harm competing companies of Autodesk and Bentley in the AEC software market. Given the combined Autodesk–Bentley share of that market and the dearth of adequate substitutes for the technologies involved, this deal could end up on the radar screen of the Federal Trade Commission (FTC) and the European Commission (see U.S. Department of Justice and FTC Antitrust Guidelines for the Licensing of Intellectual Property, www.usdoj.gov/atr/public/guidelines/0558.htm.).
Is It the Right Thing to Do?
In their joint press release, Autodesk and Bentley quote a National Institute of Standards and Technology (NIST) study that found $16 billion per year in losses in the AEC market due to interoperability problems. The reference is rather ironic, given that the two companies' past actions have likely contributed greatly to that number.
If the companies' only goal is to reduce the direct interoperability costs of their internecine feud, then I'd say, yes, this arrangement is the right thing to do.
If, however, their goal is to actually "advance AEC software interoperability," as their joint press release states, then this arrangement misses the mark. At least, that's what I'd guess a few hundred of their competitors might say.