MCAD Still Converging in the Middle14 Nov, 2007 By: Jeffrey Rowe
As the separation diminishes between high-end and mid-range software, the customer gets more functionality for less money.
MCAD Tech News readers constantly ask me about my perceptions of MCAD industry trends. One of the most common questions is whether there is still a distinction between so-called mid-range and high-end MCAD packages. That always has been a loaded question, and it still elicits some pretty strong responses from both vendors and users. No one can argue, however, that the gap between the two is closing. In many global markets and vertical industries, the mid-range products are dominating the high-end ones that historically ruled. The reasons for the shift are simple -- increased functionality, lower cost of initial and sustained ownership, shallower learning curve, and better levels of interoperability (far from perfect, but better).
I recently read the synopsis of a study by 01consulting about the MCAD market in Europe. It reported results for countries and industries under two categories: high-end and mid-range. And, although it reported specifically on the European market, I think a lot of parallels can be drawn for the North American market.
Although the synopsis was quite short, it spoke loud and clear on the current state of the MCAD market and the perpetual battle between the mid-range and high-end products. The report shows that the top four European mid-range vendors are Autodesk (Inventor), SolidWorks, PTC (Pro/ENGINEER), and UGS (Solid Edge). That’s not too surprising, and is roughly what you’d also expect to see on this side of the Atlantic.
For the purposes of this study, the market consisted of three segments: high-end, low-end, and mid-range. The mid-range segment, which has clearly overrun the value of the high-end segment, is growing at more than 20% annually, leaving behind the high-end segment with an annual decrease of 5%. According to the study, the mid-range segment now holds more total market share (52%) than the high-end and low-end combined (48%).
As I have for the past few years, I contend that less and less separates the mid-range and high-end on several levels, although there are still some significant differences. However, an increasing number of users are able to accomplish all design tasks using a mid-range application. The mid-range has continued to put tremendous pressure on the high-end for the minds and budgets of potential customers, and it will increasingly exert this pressure and move into industries where it has had little presence historically -- especially automotive. (More about the mid-range push into automotive a little later).
Successful Third-Party Relationships
Although many MCAD products introduced in the past 10-12 years have influenced the shift toward the mid-range, factors such as cost and ease of use were largely responsible for their success. The vendors that enjoyed the highest levels of success were the ones with third-party relationships for adding specialized functionality to the core applications. Partners are a critical factor in how and why the mid-range evolved so quickly because this approach let the mid-range CAD vendors focus on what they do best -- their core functionality. This is still predominantly how many mid-range product vendors operate. Some partners remain independent, while others are acquired over time and their solutions integrated into the core product, largely based on customer demand or to stay one step ahead of the competition.
Cost and capabilities have always been the factors that distinguish the mid-range and the high-end. Unless users had really advanced surfacing requirements (such as those found in automotive and aerospace), most could design using the mid-range applications, especially if the CAD solution could be supplemented with third-party products for specialized requirements. Granted, you’re not going to completely style and design a car body with a mid-range product, but you could certainly design many of the components found beneath the exterior sheet metal, such as engine mounts or door lock mechanisms.
Mid-Range MCAD in Automotive Industry
A real opportunity for the mid-range products is the increasingly cost-conscious automotive design arena. As an example, Cerberus Capital Management recently acquired Chrysler, making the company the only privately owned automaker in North America. It’s well known that Chrysler is one of Dassault Systemes' best customers, holding endless seats of CATIA and other Dassault applications. Chrysler’s new owners will surely look at the cost of initially buying and maintaining the CATIA licenses and the other expenses associated with it, such as training. When the bean counters add up the total cost of ownership, they will either have a serious talk with Dassault about making the cost more reasonable or search for alternatives. SolidWorks, of course, comes to mind because it has the advantage of also being a Dassault program.
On the other hand, Dassault recently launched a “CATIA for Automotive Suppliers” initiative that aims to ensure the automotive industry that it is still the best option for those specialized needs. Again, this might be true for many cases, but certainly not for all. I admit that my view is probably too simplistic, but the fact remains that you don’t necessarily need CATIA to design a gas cap.
Of course, some vendors sell both a mid-range and high-end product. For example, Dassault has CATIA and SolidWorks, and Siemens PLM software (formerly UGS) has NX and Solid Edge. I’m sure that competitive sales situations where products from the same company are at odds with each other will continue and even escalate over time. Customers will ultimately determine the best software based on their needs, and (much to the chagrin of the vendors) the choice won’t always be the high-end product.
As MCAD software continues to evolve, the distinction between traditional high-end solutions from the mid-range will continue to diminish. In the end, it will be the customer who wins as the impetus behind the market continues to move to the middle.