Carol Bartz may be one of the most underrated executives in the technology world. The chairwoman, CEO, and president of Autodesk (ADSK) has successfully run the stalwart supplier of PC design tools since 1992 but still lacks the name recognition of, say, Oracle's (ORCL) Larry Ellison or eBay's (EBAY) Meg Whitman. Bartz may soon find herself better known, however. Over the last few years, she has transformed a seemingly stodgy company into a veritable growth machine.
Last year, after sales grew 30% and profits nearly doubled, to $220 million, Autodesk's stock tripled to $38, (though it has since cooled off to around $30). This year, analysts expect Autodesk's sales to grow 13%, with profits jumping 29%. Not too shabby for a company that not too long ago looked liked it had its best years behind it. In fact, with more companies designing products on a global basis, Autodesk is sitting in one of the software market's few sweet spots. BusinessWeek Computer Editor Spencer E. Ante recently spoke with Bartz about Autodesk's success. Here are edited excerpts from their conversation:
Q: Why has the company been so successful lately?
A: We serve this wonderful market that makes all the things for the world. I always say, "If God didn't make it, my customers did." Also, our customers need better solutions so they can get better products to market faster. Nothing gets engineered and manufactured in the same place anymore.
Q: Do you expect the success to continue?
A: I do. We're just at the beginning of this new concept. This is not a flash-in-the-pan situation. This is about the ways goods get made over the next decade. The whole global manufacturing and construction system has to be reworked. You don't change manufacturing process in a year or two. And we are right in the middle of it.
Q: Autodesk grew 30% last year. Most software companies are struggling to grow 10%. What's going on?
A: We're seeing a lot of growth in emerging countries. Our software has always been there. Now we're getting a bit of money for it. As these companies get connected to the global information cycle, we benefit from that. If you can get a more complete design up front, the chances of increasing [the customer's] manufacturing yield goes up. That's a huge driver of growth.
Q: Sales from new software licenses, as opposed to upgrades, grew 46% last year. Where are the new customers coming from?
A: We're kind of the "it" company in this space now. We went through a lot of work in the '90s. We maybe overshot the need or skill of users. It was simply too complex. Our idea is to democratize this software for all size companies so they can get productive. It's a combo of price point and functionality.
Q: Your subscription program is really catching on with customers. Are you surprised?
A: We're one of the last software companies to do this. We really thought it was necessary to do this four years ago in the U.S. Three years ago we rolled it out in Europe and two years ago in Asia. It's a stable revenue stream to our investors. I like it because we can pay more attention to selling new seats.
Q: You just launched a bunch of new products. Will they help the company?
A: We launch our line every year in Q1. This year's suite of 15 products has better authoring, creation, 3-D tools, and collaboration. As one example, in the Inventor product, we have a vault that enables you to check in and check out drawings. In beta program, 95% of people said they wanted it. We've never had that high a percentage. You feel good with 70%-80%. We were doing flips.
Q: Some of your customers said they really like the 3-D tools. What percent of your customers are using 3-D, and what do you expect that will grow to?
A: Right now, around 15% of customers use 3-D. This will be a wonderful engine for us for quite a while. One of the growth engines is this move to 3-D. We've been selling 3-D in the manufacturing space for five years. And we just started in infrastructure. We're at the beginning of a great run.