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Commentary: Will success spoil Autodesk?

The success of the AutoCAD maker, a solid, mainstream performer, continues to challenge its prospects for faster growth in the future.

By Marc Halpern, Gartner Analyst

The success of Autodesk, a solid, mainstream performer, continues to challenge its prospects for faster growth in the future.

Autodesk has real staying power. With the software markets under stress, it stands out as a stable, dependable vendor. Even with the downward revision in projected revenue for fiscal 2002, ending Jan. 31, Autodesk will post growth of about 8 percent--from about $910 million in fiscal 2001 to about $980 million in fiscal 2002. Autodesk missed out on the Internet hype of the late 1990s and looks good by comparison now that the bubble has burst.

See news story:
Autodesk weathers downturn well
Autodesk's strength lies in its large installed base. It has more than 2 million seats for its flagship offering, AutoCAD, in production environments. Companies employ AutoCAD to handle a broad range of design and engineering data in a wide range of industries, including discrete manufacturing, architecture, engineering and construction, facilities and plant maintenance, and the process industries, where the software facilitates plant design and work flow. The revenue from this installed base for maintenance, service and support provides a rock solid foundation for Autodesk.

In addition, the company and its third-party developer network continue to roll out a broad array of complementary third-party applications that contribute to its market penetration.

Unfortunately, Autodesk's strength is also its weakness. The company has improved its offerings incrementally but has not opened new markets as it did in the 1980s. In Gartner's opinion, customers use AutoCAD because it works and because everybody else uses it--they do not use Autodesk products because the company leads the market with compelling new offerings.

Meanwhile, the rest of the marketplace for collaborative product commerce software is growing at more than 35 percent annually. For Autodesk to boost its growth rate, it would need to introduce new value that changes the complexion of the market. Yet the broad, diverse and demanding customer base--with a mammoth amount of legacy data requiring support--represents the bulk of Autodesk's revenue and attention. That situation promotes an inward focus and somewhat inhibits innovation and risk-taking.

(For a related commentary on EDS's moves in the collaborative product commerce and concurrent art-to-product environment arenas, see Gartner.com.)

Entire contents, Copyright © 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.