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Personal CAD : Markets at the Low End, 1988-1989

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Personal CAD : Markets at the Low End, 1988-1989 m CAD/CAM Industry Service Personal CAD: Markets at the Low End Dataquest nm acompanyof UlD The Oun&Bradsticet Corporation 1290 Ridder Park Drive San Jose, California 95131-2398 (408) 437-8000 Tfelex: 171973 Fax: (408) 437-0292 Sales/Service Offices: UNITED KINGDOM FRANCE EASTERN U.S. Dataquest UK Limited Dataquest SARL Dataquest Boston 13th Floor, Centrepoirtt Tour Gdlieni 2 1740 Massachusette Ave. 103 New Oxford Street 36, avenue GaUieni Boxborough, MA 01719 London WCIA IDD 93175 Bagnolet Cedex (617) 264-4373 England France Telex: 171973 01-379-6257 (1)48 97 31 00 Fax: (617) 263-0696 Tfelex: 266195 Telex: 233 263 Fax: 01-240-3653 Fax: (1)48 97 34 00 GERMANY JAPAN KOREA Dataquest GmbH Dataquea Japan, Ltd. Dataquest Korea Rosenkavalierplatz 17 Ikiyo Ginza Building/2nd Floor 63-1 Chungjimg-ro, 3Ka D-8000 Munich 81 7-14-16 Ginza, Chuo-ku Seodaemun-ku West Germany Tokyo 104 Japan Seoul, Korea (089)91 K) 64 (03)546-3191 (02)392-7273-5 Tfelex: 5218070 TfelKc: 32768 Telex: 27926 Fax: (089)91 21 89 Fax: (03)546-3198 Fax: (02)745-3199 The content of this report rq)resents our interpretmion and analysis of information generally avail­ able to the public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness. It does not coittain material provided to us in confidence by our clients. This information is not furnished in connection with a sale or offer to sell securities, or in connec­ tion with tlK solicitation of an offer to buy securities. This firm and its parent and/or their officers, stockholders, or members of their fenulies may, from time to time, have a long or short position in the securities mentioned and may sell or buy such securities. Printed in the United States of America. .All rights reserved. No part of this publication may be reproduced, stored in retrieval systems, or transmitted, in any form or by any means—mechanical, electronic, photocof^ing, duplicating, snicrofilming, videotape, or otherwise—without the prior written permission of the publisher. © 1988 Dataquest Incorporated Table of Contents CAD/CAM INDUSTRY SERVICE Personal CAD: Markets at the Low End TABLE OF CONTENTS* Table of Contents INDUSTRY OVERVIEW Personal CAD Industry Overview PC CAD Market in 1988 The PC CAD Platform Where Do PCs End and Workstations Begin? PC and Workstation Definitions Current Industry Trends Market Analysis CAD within the Total PC Market Software Units versus Revenue Market Leader Analysis Autodesk Compaq IBM Apple Market Outlook for the 1990s Application Forecast Regional Forecast Average Selling Prices Revenue Source Forecast Distribution Forecast The Future of Low-End CAD Operating Systems Tracking the DOS Trail: An Expanded Future The Missing Link across Operating Systems PC CAD PRODUCTS Graphics Boards Input Devices Output Devices Networking Memory and Disk Storage 'Titles in capital lettert signify tabs. CCIS Personal CAD © 1989 Dataquest Incorporated October 0005100 Table of Contents C/UD/C/^M INDUSTRY SERVICE Personal CAD: Markets at the Low End (Continued) PC CAD USERS (Survey of 1300 users of 10 different PC CAD products) Demographics Channel Price Design Environment Satisfaction The Buying Decision Buying Plans PC CAD DISTRIBUTION Distribution Market Models Turnkey GAD Market Model Mixed GAD Market Model Personal GAD Market Model Channel Dynamics Reselling Hardware The CAD Distributor GAD Software Resellers Commodity CAD Dealers YARs What Do CAD Suppliers Get from CAD Resellers? Dealer/Distributor Survey The Typical Successful CAD VAR Organizational Structure Products Offered The Value Added The Sales Process Dealer Strategies Consultative Sell Service and Support Custom Systems Advanced Systems Exclusive Products Supermarket Economics Revenue and Margin Software Operating Expenses Capital Requirements 'Titles in capital letten signify tabs. ii © 1989 Dataquest Incorporated October CCIS Personal CAD ooosioo Table of Contents C/VD/C/^M INDUSTRY SERVICE Personal CAD: Markets at the Low End (Continued) PC CAD DISTRIBUnON (Continued) Resellers' Issues How to Find, Acquire, and Keep Good Resellers Future Trends A Look to the Future FORECAST DATA BASE Forecasts MARKET SHARE DATA BASE Market Share PC CAD Distributors Directory Personal CAD Dealer Directory 'TiUes in capital letters signify tabs. CCIS Personal CAD © 1989 Dataquest Incorporated October iii 0005100 o a i Personal CAD Industry Overview THE PC CAD MARKET IN 1988 PC CAD flourished in 1988, continuing another year of record growth. Revenue rose 24 percent, which was above the industry average. (See Tables 1 through 9 at the end of this document for a complete overview of the PC CAD market from 1988 through 1993). The 1988 market leaders featured well-known brand names: Apple, Autodesk, and Compaq. By the end of the year, Compaq had unseated IBM for the number one market position in two important categories: • Total CAD/CAM/CAE revenue on the PC platform • Number of seats shipped in the entire CAD/CAM/CAE market In software, Autodesk's number one market position appears untouchable for the foreseeable future, /^mong the second tier companies, PC products from large tradi­ tional CAD companies grew faster than those from the small unknown vendors. Few companies entered the PC CAD market in 1988. The revenue of PC CAD vendors of all sizes generally grew or held steady in 1988. Our PC CAD data represent revenue from a very large sample: 175 vendors and their subsidiaries, some of which are miniscule. While the CAD industry as a whole experi­ enced mind-numbing consolidation, the small PC CAD software vendors generally neither left the market nor were acquired in 1988, with the notable exception of Autodesk's purchase of Generic Software. Typically, vendors were busy either developing products for the Macintosh, or wringing higher performance from existing software. The scrappy, upstart nature of the PC CAD market has not vanished, but cost-conscious innovation has shifted from improving application software to wresting better CAD performance from hardware and system software. The PC CAD Platform The Intel 80386 processor deserves significant credit for PC CAD growth in 1988, because its power was Just what existing CAD software needed. More than any other PC-based application, existing CAD software provided the showcase for 80386 per­ formance. Buyers saw existing PC software change from being a "make-do" product on the 286 CPU to being an "almost-workstation" product on a 386-based system. By midyear, it was clear that CAD is a key driver of the high-end PC market, and vendors of PC CAD system components began cooperating to produce more powerful systems. During 1988, relationships strengthened among CAD software suppliers, computer manufacturers (especially Compaq), graphics hardware suppliers, and operating system suppliers. PC hardware manufacturers focused on CAD as a key driver of their high-end products and worked steadily to drive up product performance. Thus, the CAD software supplier is no longer working alone to deliver the highest performance on a PC system. CCIS Personal CAD © 1989 Dataquest Incorporated June i 0004116 Personal CAD Industry Overview Vendors supplying any component of a high-end PC CAD system typically tweak their products toward boosting CAD software performance. Where Do PCs End and Workstations Begin? PC and technical workstation vendors achieved significant overlap in 1988, with PC hardware vendors relentlessly driving up performance and options while technical workstation vendors pushed their products toward the commodity arena by lowering prices and adding DOS compatibility. For several years, Dataquest had been predicting the merger of the PC and low-end technical workstation CAD markets, and 1988 was the year it became measurable. PC and Workstation Definitions Personal Computer This is a single-user computer that is distinguished from a technical workstation by its features- and by the user's potential range of expansion on the platform. Features found in technical workstations (such as a virtual operating system, networking, high- performance graphics, and multiuser/multitasking capability) are optional, rather than integrated by the manufacturer. Many users reach a migration path ceiling at the high end of the PC product line, both in computer performance and sophistication of available application software (for example, a Mac II or Compaq 386 user is operating at the platform ceiling; the next move upward is to the technical workstation platform). Technical Workstation This is a single-user computer that is distinguished from a personal computer by its features and by the user's potential range of expansion on the platform. Its features include a virtual, multitasking operating system (UNIX, VMS, or DOMAIN). The com­ puter is designed by a manufacturer to run high-performance graphic applications in a multiuser/multitasking environment. Many users reach a migration path limit at the low end of the workstation product line (for example, the Sun 386i user is operating at the platform floor; the next move downward is to the personal computer platform). Although Dataquest's glossary definition clearly distinguishes between the two platforms (see Figure 1), computer manufacturers are working overtime to claim every feature possible, and distinctions blur a little more each week. As a result, we expect long-term distinctions between the two platforms to eventually become more a function of intended use than of performance. "PC" will continue to describe a product bought
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