Issue: Volume: 23 Issue: 5 (May 2000)

One CAD Vendor's Story

This is an unfounded statement. To our knowledge, Mr. Marks has never contacted the management of Cadkey Corp., a privately held firm, so he could not possibly know our fiscal fitness or operating results. Ironically, the much larger publicly held CAD companies he mentions in the same piece have suffered heavy declines in stock prices and CAD sales in the past year or two. Yet these facts were omitted or described as "slower growth."

As a private company, Cadkey (formerly Bay state Technologies) does not release financial statements to the public. However, on October 27, 1999, we did release brief financial performance data for the fiscal year ending June 30, 1999, and for the quarter ending September 30, 1999, which in part said, "Fiscal year 1999 marks the third consecutive year of increasing sales since the acquisition of the Cad key and FastSurf product lines." Through continuing revitalization of distribution channels worldwide, Cad key's international business also experienced growth in revenues for the third consecutive fiscal year.
Positioning on the basis of price alone wasn't a good idea in the long run.

Robert C. Macomber, chief financial officer for Cadkey, reports, "Cadkey plans to release an unprecedented stream of new software during the first quarter of 2000, including a Parametrics module next quarter, and another major release to follow Cadkey 99 in mid-2000. Results for the first quarter of fiscal year 2000 (the three months ending September 30, 1999) indicate that both billings and earnings recorded attractive gains as compared to the same period of last year, in part due to a near-record volume of incoming orders for the month of September '99."

We expect nothing less than unbiased reporting from Computer Graphics World.

Mark Graveline
Vice President of Sales
Cadkey Corp.
Marlborough, MA

My prediction about price points and market segmentation referred to Cad key's history before and after 1992, not just the recent years under new ownership. Cadkey is an example of a product that has struggled with price positioning during the 1992 to 1999 period. It isn't (and wasn't intended) as the industry's poster child for "struggling." Every one's struggling.

Back in 1992, the CAD industry was us ing a three-tier market model. My prediction then was that segmentation based on low, mid, and high price points (the three tiers) was flawed. The high-end guys wouldn't be able to keep prices as high (hence the mention of PTC and SDRC) and the low-price vendors would need to of fer more than a low price. (The point was probably clearer in my many-times-longer original copy, which was edited to fit.) By 1999, the high-priced offerings had to move toward the mid-range and the low-end offerings found that having a low price wasn't enough.

  1. In the late '80s, Cadkey was probably the best low-end 3D modeler for MCAD. AutoCAD was bigger but Cadkey worked better for most MCAD users. It was a proud product with the same kind of buzz that SolidWorks has today.
  2. By the time of the initial prediction in 1992, Cadkey was beginning to deal with more competition and lower prices. It responded with an aggressive attempt to gain share through lower prices.
  3. Four years after my initial prediction about pricing, the original owners sold to Baystate.
  4. Since the acquisition by Baystate, and to the credit of the private owners, Cad key is very much alive. One good move was reversing the decision to do business as Baystate, thus reinforcing the good will of the Cadkey name. Another tough but necessary move was bringing prices back from the very low end to more of a mid-range. The fact that Cad key sales have been increasing, de spite raising prices, reinforces my original point about the need for companies to go beyond price-point segmentation.
  5. Today, Cadkey's stated mission is to "remain a leading supplier." My definition of a leading supplier is to be among the top two or three vendors in market share. I'd be surprised to learn that Cadkey is now number two or three, but Cadkey is right that I can't know its exact market share (or its profitability, for that matter), since financial results aren't re vealed. The Cadkey folks probably feel, and rightly so, that they rescued the software and have done a great job resurrecting it. I'd agree with that.

My point with regard to "struggling" was that positioning on the basis of price wasn't a good idea in the long run. Cadkey (the product) proved that point twice. First, in trying and abandoning low prices. Next, in succeeding despite higher prices.

As an aside, it's not entirely clear that a mission to remain a leading supplier is specific enough for the next 10 years. Products thrive when they find a segment where they are best for some group of customers and then clearly articulate the difference.

I'm impressed that Mr. Graveline took the time to write and defend Cadkey's honor-always a good sign for a company.

Peter Marks.
Managing Director
Design Insight
Santa Cruz, CA

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