Bloomberg News

Autodesk Boosting Software Subscriptions to Lure More Customers

September 09, 2013

Autodesk Inc. (ADSK:US), the maker of architectural and engineering software, is introducing subscriptions for its most-expensive software, seeking to attract and retain more customers.

The change, which takes effect Sept. 16, lets designers of buildings, equipment, computer games and film effects opt for periodic payments to use Autodesk’s computer-aided tools and Maya effects software for films, Andrew Anagnost, senior vice president of industry strategy, said in an interview.

The software industry is moving toward subscription payments for online and desktop software as consumers and businesses seek access to a steady stream of new features instead of being stuck with one version of a software package. For Autodesk, which is facing declining sales and profit (ADSK:US), the move to subscriptions is also a way to keep customers who are less willing to pay for big up-front licenses, Anagnost said. The new offerings are “for customers who have struggled to get access to our solutions,” he said.

Autodesk’s Product Design Suite Premium, 3-D software to test prototypes of products like factory and farm equipment, would cost $3,750 a year under the new plan, less than half the one-time price of $8,620 to permanently own the product, the company said.

Sales for San Rafael, California-based Autodesk are projected to decline 1 percent to $2.29 billion for the current fiscal year through January, increasing 4 percent in the prior period, according to data (ADSK:US) compiled by Bloomberg. Its shares (ADSK:US) have returned 10 percent the past five years, compared with a 53 percent return for the Standard & Poor’s 500 Information Technology Sector Index.

Design Disruption

“There definitely is pressure in the commercial and entertainment spaces to pay lower prices,” Anagnost said. Small companies that design games for smartphones don’t need the powerful tools used by major studios such as Activision Blizzard Inc. (ATVI:US), and home builders are using more affordable software, he said.

“Everyone’s very familiar with the fact that when platforms change, prices go down and incumbents are disrupted,” said Anagnost. “We have no intention of being disrupted.”

Autodesk will offer customers of its Design and Creation suites, 3ds Max, Maya and Maya LT software the option to rent them for monthly, quarterly or annual fees instead of purchasing them outright. It’s the latest in a series of moves by Autodesk to encourage customers to adopt regular maintenance programs, giving them the ability to upgrade to new versions over time.

Customer Shift

“Autodesk already has about 70 percent of its customers on a subscription plan, and it appears unlikely the company can force an economic change again after pushing aggressively on subscription for the last 10 years,” Walter Pritchard, an analyst at Citigroup Inc., wrote in an Aug. 23 note to clients.

Autodesk issued a forecast (ADSK:US) for fiscal third-quarter revenue on Aug. 22 that fell short of analysts’ estimates.

Shares of Autodesk rose less than 1 percent on Sept. 6 to $37.14 in New York. The shares have gained 5.1 percent this year, compared with an 11 percent return for the S&P 500 Information Technology index and an 24 percent return for Adobe Systems Inc. (ADBE:US), another maker of design software that’s moving its users to subscription pricing.

To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net


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Companies Mentioned

  • ADSK
    (Autodesk Inc)
    • $53.46 USD
    • -0.32
    • -0.6%
  • ATVI
    (Activision Blizzard Inc)
    • $23.13 USD
    • -0.03
    • -0.13%
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