HSMWorks acquired by Autodesk
On October 1, 2012, Autodesk Inc. announced that it had acquired “certain assets of HSMWorks ApS”. For those of you who might not know, HSMWorks is a company based in Denmark that develops a CAM product that runs inside SolidWorks. What is Aps you might wonder as I did. Wikipedia describes this as an abbreviation for “Anpartsselskab”, which means limited liability company in Danish. But there are more important questions that need to be answered.
First question that comes to my mind is why in the world are the HSMWorks founders selling out? The conventional wisdom seems to be that the founders of HSMWorks are cashing out after Autodesk came in with an offer they could not refuse. But I would beg to differ on this opinion. CAM industry insiders will remember the HSMWorks a year ago in SolidWorks world 2011, made a big splash and offered a free 2-1/2 axis program. They gave away a whopping 1/3 of their entire portfolio. And HSMWorks ain’t Autodesk. It is a small company trying to keep the lights on. A year later they sell out. Connect the dots and I am almost certain that this was a fire sale. In my opinion, HSMWorks initiated this acquisition conversation because they were in financial trouble or the founders were just tired of not gaining any traction in the marketplace. I cannot but compare this with what happened with Alibre Inc. just two years ago. After announcing a $99 price for their Alibre Design product in 2010, they ended up selling out to 3D Systems in 2011. The parallels here are way too many to not draw the same conclusions.
Now why is Autodesk buying a company that makes a fully integrated plug-in for a competitor’s product? My thoughts on this are as follows:
- Both Dassault Systems and Siemens have enterprise level product offerings as well as a mid-range product offerings in the MCAD space. In the case of Dassault Systems, it is Catia & SolidWorks while in the case of Siemens it is the NX & SolidEdge. Both of these companies also have full blown PLM offerings as well. Autodesk recently announced a PLM product after arguing for a long time that PLM was not necessary for their customers. Now with the acquisition of a CAM company, they are trying to walk up the value chain and be considered as one of the big boys.
- Autodesk has $2.5 billion in the bank. With so much money not earning much in terms of interest the executives at Autodesk must be itching to pull the trigger on “strategic acquisitions”. Corporate speak for “let us throw some darts on the wall and see what sticks.” Watch for more such acquisitions in the near future. Whether these acquisitions make sense or not might not be the right question to ask.
Now here is my take on the winners and losers in this event.
HSMWorks: Winners. The founders who were written checks by Autodesk and the employees who were absorbed into Autodesk are for sure the biggest winners here. They now have a company with very deep pockets who can bankroll their development.
Autodesk: Only time will tell. History has proven repeatedly that a large company taking over a small company and screwing the integration up is quite common place. Case in point: Autodesk buying a CAM company called MES in the 1980s for their CAM technology and ending up doing nothing noteworthy with the CAM technology. But in the grand scheme of things, even if they fail it might just not matter since they have such deep pockets.
Autodesk CAM Partner Program: Loser. Autodesk tried for many years to create a partner program like the one SolidWorks has created but failed miserably. They have made a decision that owning CAM technology is strategically important – more important than maintaining a stance of neutrality that is absolutely necessary when trying to build a partner program. I would not want to be on the product program team at Autodesk right now.
Autodesk CAM Partners: Losers. Having spent resources building a product for Inventor they now have an in-house product to compete with. They can’t be happy about this situation.
SolidWorks: A little poke in the eye but they have 6 other Gold partner CAM products they probably don’t care much.
HSMWorks Customers: Losers. After investing time and money in a product that is critical to their business they find out that the product is most probably a dead product. The SolidWorks product will atrophy slowly but it is dead as a door knob. Sorry folks. They just have to start looking for alternative products. Maybe not an immediate priority but they eventually have to do it. Don’t believe me? Talk to SolidWorks and Rhino customers who were using the T-Splines plug-ins. Similar story and you can see how that ended up.
HSMWorks Resellers: The biggest losers. My heart goes out to these folks. Some of them probably built their business around the HSM product and now their contracts would have been terminated. The bigger ones with multiple products in their portfolio will suck it up and move on. The smaller guys will be scrambling to look for alternative products to sell or even alternative businesses to start. Not a pretty picture whichever way you look at it.