Issue: Volume: 25 Issue: 4 (April 2002)

How to Grow-Not!

It’s no secret that the mechanical CAD/CAM/CAE industry has slowed to a standstill. The latest report from Daratech shows that as a result of market saturation and price erosion of CAD/CAM/CAE software and services, this $6 billion market grew a meager 2 percent last year and may rise only 3 percent in 2002.

Get into a price war: Playing the game of "my CAD system is cheaper than yours" is a race to the bottom. Some vendors are offering 80 percent of the functionality of their software for 20 percent of the price. Others are even offering 80 percent of that 80 percent for free. But dropping prices or giving away products is no way to create a spike in demand. Vendors need to do exactly the opposite: develop products and technologies with greater functional capabilities, for which users would be willing to pay a higher price.

Merge your way to growth: Some mergers and acquisitions make sense, but history has shown that buying a company that's troubled can only lead to more trouble. When one company buys another-to gain access to a technology or installed customer base-users will reevaluate the market, because they think that what the new owner has bought, and what they have installed, is dead technology, no matter what the vendor says. As a result, more often than not, users will switch to whatever they feel is the best technology at the time. If vendors want to gain new customers and attract new business, they'll need to build better technologies, because ultimately that's what customers are going to buy.

Get back to basics: What the industry really needs to do is to get back to innovation. Vendors have lost their way over the last few years, as they've been distracted by Internet technologies, and they have lost site of the sole purpose of this industry: to deliver innovations. What's needed are para digm-shifting technologies that go beyond offering linear enhancements that merely follow the standard technology curve, as well as technologies that go beyond providing customizations based on what users say they want and need. Paradigm-shifting in novations are those that take users into a completely new realm. Examples include parametric modeling, introduced by PTC more than a decade ago, and more recently, CoBrain and TechOptimizer from Invention Machine Corp. for engineering brainstorming (see Computer Graphics World's In novation Awards, January 1999, pg 28), and IX Speed from ImpactXoft Corp. for design collaboration (see the Innovation Awards, December 2001, pg. 27).

Disregard modeling: People often say that modeling technology is a commodity, so there's no need to improve that. Well, geometry may be a commodity, but modeling certainly is not. There aren't many users who wouldn't pay a premium for technology that allows them to develop products twice as fast or use multivariable simulations to optimize a model's performance, manufacturability, and cost.

This list of recommendations is aimed at the CAD industry, but most of it could be addressed to anyone in the graphics industry. It's time for vendors to follow the advice they preach to their customers: Deliver innovations that break the mold. Being overly conservative and trying merely to save your way to success is a tried-and-true formula for failure.