Product Lifecycle Management (PLM)

Event Report: 2006 PTC/User Conference, Pt. 1

7 Jun, 2006

Acquisitions are key to PTC's billion-dollar strategy.

The PTC/User Conference drew nearly 2,000 attendees to Dallas this week for tips, training and talks from key PTC customers. The conference and concurrent media/analyst event gave PTC a stage to show off its its latest acquisitions and map out future plans for its product lines. Today we'll look at the company's financial outlook and overall strategy for growth. Next week we'll review what's planned for future releases of Pro/ENGINEER and highlight some intriguing customer stories.

PTC is on track to bring in $810-$820 million in revenue for 2006, with operating profit of around $120 million. CEO Dick Harrison remains confident that PTC will hit its goal of $1 billion in revenue by 2008. The company will do this by:

  • driving organic growth by improving product quality.
  • making high-quality acquisitions.
  • selectively targeting new markets.
  • driving small- and midsized market success.
  • delivering high-value services.
Another priority is making it easier for customers to do business with PTC through such initiatives as paperwork reduction, maintenance quote simplification and a simplified license agreement.

President and CEO Richard Harrison told attendees that there will probably be a few more acquisitions in the hopper (PTC has around $200 million in its coffers for such purposes). Such acquisitions are the means by which PTC will gain access to new markets.

Harrison mentioned life sciences, government and retail and apparel as areas where PTC has a growing presence, in large part thanks to recent acquisitions.

As we noted earlier in Cadalyst, Arbortext is a dynamic publishing tool that finds use in a broad range of markets. PTC certainly plans to target manufacturers, who spend an estimated 1-2% of revenue on technical publications and translations, but also plans to pursue opportunities in life sciences and government as well. Arbortext is also used in publishing, financial services, software and other markets that PTC continues to study. PTC gained a presence in the retail and apparel market with FlexPLM, a Windchill-based tool developed by Aptavis (acquired by PTC in June 2005).

A problem in expanding one's footprint is identifying and meeting the particular needs of the new target markets. In retail, for example, the pace and volume of new product introductions is accelerated-fast fashion. PTC customer Nike develops an average of 50 new products every working day (if that's hard to believe, consider that it sells 27 different kinds of golf balls). Other priorities include managing line plans, reducing rework and collaborating with far-flung suppliers and customers. Life sciences companies must follow complex regulatory guidelines for documenting their product development process.

To help with this challenge, PTC has formed boards of customer advisors to help it negotiate some of the new markets in which it now finds itself. It may also target additional

PTC also plans to strengthen its offerings for its traditional market strongholds: electronics, industrial machinery, medical devices, automotive (drive train) and aerospace (missiles). Its acquisition of OHIO Design Automation will bear fruit in improved tools for electro-mechanical product development and electronic design verification. The company is also working on MPMLink, a manufacturing process automation tool that will integrate with Windchill. It's based on technology acquired from Polyplan. As noted earlier, next week in part 2 we'll look more closely at what PTC plans for its CAD and PLM offerings.