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Benign neglect: silence in the marketplace

  Not only are development resources committed to AutoCAD inappropriate to its sales, market share, and importance to the company, the visibility of the product in the marketplace, the ultimate result of Autodesk's efforts in marketing and sales, is unseemly for a product of its stature. Autodesk, once renowned for its innovations in marketing and sales, seems to have settled in recent years for a policy of ``All the same things, and less.'' Divide Autodesk's history into two parts at the halfway point: sometime in 1986. How many new initiatives in marketing and sales have been launched in the latter half?

Autodesk's penchant for abandoning products developed at great cost at the very moment of shipment has long been a source of frustration for me. AutoSketch was the first example of this sorry tradition, and even though our neglect of that product later forced us to spend millions of dollars to buy Generic Software to guard the low end of our market, that didn't keep us from launching both CA Lab and Chaos, The Software with a marketing budget of essentially zero. In fact, it was only after I offered to pay for the advertisements myself that a small sum was disgorged to advertise CA Lab in the issues of Scientific American and Discover which each devoted a page or more of editorial copy to the product.

The very existence of the Multimedia group is an admission of the neglect for Animator after its hugely successful initial launch. If Autodesk had, in 1983, treated AutoCAD the way it treated Animator and 3D Studio after their introduction, Autodesk would not exist today.

But while any number of reasons can be advanced for neglecting products which some view as distractions from the central business of the company, indulgements of certain influential people, when AutoCAD suffers the very same neglect in the marketplace, the reasons become much more inexplicable and the potential consequences more dire.

But aren't we spending lots of money on marketing? Well, I don't see the budget numbers, but I believe we are--just look at the phone list and make a body count. But the issue isn't how much you spend, it's what comes out; the equivalent in marketing of measuring development by what goes in the box. This metric reveals the extent to which Autodesk has abandoned AutoCAD, ceding by default the position its preeminence in the market merits to any competitor willing to assail it, leaving the customer perception of the product in the hands of reviewers, analysts, and the authors of books.

Is this an extreme statement? Yes, it is. But I believe it accurately reflects an extremely dangerous situation. I don't understand the logic behind spending $400,000 developing a product like Chaos, then allocating essentially zilch for marketing it after all the development cost is sunk. Such a policy makes failure of the product a self-fulfilling prophecy, or at least treats recovering the investment as a crap shoot on users spontaneously stumbling over the product. If you want to save money, don't develop the product in the first place! But don't wimp out at the instant the product has a chance to recover its costs and turn a profit.

But I digress. You probably don't care about Chaos. Let's look instead at a $20 million investment which has been abandoned in precisely the same way. I am talking about AME--our only entry in the solid modeling market, the very cutting edge of the mechanical engineering sector, which everybody says is the largest component of the CAD industry and the one at which we are most at risk.

  Twenty million dollars? Well, add up what we paid to acquire Cadetron in the first place, the money we spent subsequently bringing AutoSolid to market, the costs we incurred closing the office in Atlanta and moving development to Sausalito, the subsequent investment in AME/Eagle leading to its shipment with Release 11, and I suspect you'll come up with a figure about that size.

I can't be totally disinterested in the fate of AME since, by building the initial prototype in July of 1989, I played a rôle in the transformation of AutoSolid from a $5,000 stand-alone product targeted at mechanical designers into a $500 component of AutoCAD addressed to a much broader market. I initiated that project because I thought it was a way to rescue a project I thought was going nowhere by aligning it with the way Autodesk has always done business. Rather than addressing a small market with an expensive product (by the standards of PC software), we could bring solid modeling within the reach of anybody who could afford the price of AutoCAD. My goal at the time was to ``Within one year, sell more solid modeling systems that exist on the entire planet today.''

Well, it took longer than I expected (everything does), but the Eagle group pulled it off, delivering, the day AutoCAD Release 11 shipped, a solid modeling extension that was far more comprehensive and ambitious than anything I had contemplated as an initial adjunct to AutoCAD.

And then...? Silence.

Where was the large-scale, high-profile, roll-out of what could easily be adjudged the single most significant event in desktop design since 3D? Where were the advertisements and brochures that properly heralded it as a price/performance breakthrough comparable to the introduction of AutoCAD in 1982? Something like:

``AutoCAD's OK, but what have you done for me lately?''

How about solid modeling for $500?

For years, designers have struggled to build complex models of three dimensional objects. Repeatedly, they have begged for relief from arcane commands, obscure terminology, and facilities that seem designed more to humble the design professional than to help him. ``Why can't I have a system that works like the real world, one that lets me bore holes, mill, weld, and assemble pieces from parts with operations I can understand?''

``Because that would take solid modeling!'' was the answer. ``That's a sophisticated technology, suitable only for high-end mechanical engineers, far too costly for your needs and requiring much more computer than you could ever afford.''

Until today. With the shipment of AutoCAD Release 11, Autodesk announces the Advanced Solid Modeling Extension, which delivers true, thoroughly professional solid modeling as an integral component of AutoCAD. And, in keeping with Autodesk's commitment to its customers, it runs on the same affordable machines that run AutoCAD, costs less than $500, and, through open architecture, encourages users to build application systems upon it.

CAD before AutoCAD was an elite club, foreclosed to the vast majority of designers who couldn't afford expensive mainframe computers. Just like solid modeling before today. With AutoCAD Release 11 and ASME, we're putting an end to that, forever. Welcome to the golden age of engineering.

This was how we announced AME in the Release 11 press release of October 18th, 1990.

AutoCAD Release 11 supports the optional Advanced Modeling Extension (AME) which gives designers and engineers powerful constructive solid geometry capabilities that are completely integrated within AutoCAD. With AME, designers can create complex, three-dimensional models by constructing them from simple 3-D shapes.

If this were any more low key, it would be apologetic.

The following sentence closed the paragraph on AME that appeared on the second page of the Autodesk Designer, a flyer mailed to Autodesk dealers, dated October 15th, 1990. AME appeared next to last in the list of Release 11 benefits, right before ``Personalisation.''

AME's price, US$495, is unprecedented for solid modeling software, and is sure to introduce the benefits of solid modeling to a wider customer base, especially in the mechanical engineering market.

Well, gosh, I couldn't have put it better myself, but the very tone of this sentence, examined closer in the context of the rest of Autodesk's promotional material, speaks volumes about the assumptions that underlie Autodesk's do-nothing posture toward its products. Indulge me for a moment while I stick this sentence with a pin and pick it apart under the magnifier. ``AME's sure to introduce the benefits of solid modeling to a wider customer base....'' Precisely how? What is the chain of cause and effect? How does the price act to introduce the benefits. The price, in other words the mere event of Autodesk's making the product available, is seen as an actor in the market, empowered somehow to set in motion the events Autodesk wishes to transpire.

This isn't putting the cart before the horse; it's expecting the cart to go with no horse at all. A low marginal price creates the conditions under which Autodesk possesses an opportunity to transform solid modeling from a highly specialised niche market into another widely-used application like AutoCAD and perhaps, by doing so, to break down the barrier that has kept most designers from truly entering the world of three-dimensional modeling, creating, in time, a market for additional design tools as large or larger than the current AutoCAD drafting market. All the work that went into AME from the inception of The Engineer Works at Cadetron in Atlanta through the breaking of the champagne bottle on the UPS truck the day Release 11 left Sausalito created only the potential for success, conditions that were necessary but not sufficient.

For all the wonderful things to happen which so many people worked to bring about, a few more links in the chain of causality need attending to. Users must learn of the existence of the product. Its benefits must be explained to them. They must understand both what it can do and its limitations. And they need the opportunity to evaluate it for themselves.

These are all the things we had to do between 1983 and 1985 to convert the potential of AutoCAD, the computer program, into the success of AutoCAD, the new world standard for CAD. Having achieved success once does not grant us a license to succeed with additional products, whether related to AutoCAD or not, without doing all the same things we did to bring AutoCAD before its potential customers.

Yet today, Autodesk attends fewer trade shows, garners less press, communicates less frequently and in fewer ways with its user community. What other software company comparable to Autodesk has no user newsletter? What other software company refuses to provide technical support to users in need?

There is a dangerous myth that because we have a reseller channel, we needn't do the things other companies must to create demand for our products. What nonsense. Pushing products into a distribution channel is like pushing on a rope. Distribution is an asset only if the product is pulled out the other end; if customers are brought to the reseller seeking the products for sale there. The responsibility for creating that demand rests primarily with the manufacturer; after all, it is he who keeps the majority of the money from the sale. Manufacturers who neglect this simple, eternal truth of retailing may, in the short term, post better profits but before long will suffer, along with their resellers, the symptoms of declining sales, falling earnings, and eroding market share.

How often do you see an advertisement from Autodesk in the publications you read? Compared to 1984 and 1985, how frequently do you see articles in the press about the myriad applications of Autodesk's products? Compare the visibility of AutoCAD, for example, to that of a typical Microsoft product such as Word or Excel. Immediately somebody shouts, ``But those are mass-market products, not highly specialised products like AutoCAD. Besides, they're addressing a much more lucrative market.'' Well, let's see. Microsoft's sales are about five times ours. Of that, about half is application software, so all the Microsoft applications, including Word, Excel, PowerPoint, Project, and Works, add up to about 2.5 times our sales. If you assume Word and Excel account for the lion's share of this revenue, that means the sales of these products are roughly comparable to Autodesk's revenue from sales of AutoCAD. So in fact the larger volume of these products is just about balanced by their lower retail price, yielding the same revenue. Word and Excel ads are everywhere. Where are the AutoCAD ads?

``You can't sell a product like AutoCAD the way you sell a spreadsheet. It's a different market, and it has to be addressed in a different way.'' This claim might be credible if, years ago, people hadn't insisted you couldn't sell spreadsheets the way Microsoft sells spreadsheets. Remember when spreadsheets were vertical market tools for financial analysts in the Fortune 500? It was only after the products were mass marketed, widely available, and affordable that the market for spreadsheets exploded, including today scientists, engineers, high school students, and diet book authors. It was this same kind of expansion of the market for CAD, set into motion by Autodesk's early and highly successful though meagerly-funded communication efforts, that redefined CAD as something suitable for ``anybody who draws.''

``But advertising is expensive! There are more cost effective ways to getting the job done.'' Surely. And advertising and other paid promotion should be but components of a balanced program including trade shows, co-promotions, dealer incentives, and all the myriad ways market-savvy companies stimulate demand. If Autodesk were achieving high visibility in these other ways, one might conclude that advertising was unnecessary. But we aren't. In fact, I believe Autodesk is increasingly slipping from sight, except within the existing community that uses its products. Talking to them is important, but it won't expand the market; we're preaching to the choir. To build markets you have to go out, make some mistakes, find what works, then build upon it. And that costs money. Once you realise that the revenue from a major Microsoft application is comparable to the sales of AutoCAD, the invisibility of AutoCAD is even more inexplicable since Microsoft's margins are the same as Autodesk's. Microsoft isn't doing all that aggressive marketing by spending more on a percentage basis. They're either doing less of the things that don't get them in front of the customers, or they're getting more for their money.

Advertising is, of course, the last resort of the communicator. Autodesk was able to promote AutoCAD in the early days with very little direct advertising by gaining editorial coverage in a wide variety of publications. A five or six page story about a user's success with AutoCAD delivers many times the impact of an advertisement at a fraction of the cost. These days, however, AutoCAD applications have become far more common and more imagination is needed to get the attention of the press. Imagination is something that's never been in short supply around Autodesk, yet we seem to consistently squander the visibility it gains us through lack of follow-through. One of the reasons I started the cyberspace project was to create a high-profile, exciting technology project to make the company stand out in the industry. Well, at least that part worked! Within a year, Autodesk was mentioned in the technology focus column and later on the front page of the Wall Street Journal, in the New York Times, and in many other extremely hard-to-crack publications in which paid advertising is forbiddingly expensive. And did we effectively communicate to any of these writers, given the entré created by the cyberspace project, the Autodesk story, of how this project indicated our ongoing commitment to lead the three dimensional design market from the cutting edge? Well, no we didn't. That story, and with it the equivalent of several million dollars of paid publicity simply slipped through our hands. Or consider the month when Scientific American ran a screen shot from one of our products on the table of contents page and devoted two pages to one of our new products. Did we use that opportunity, in the same publication where Autodesk ran its first ambitious four-colour advertisement, to showcase the company and its mainstream products? No, we were identified by the columnist as a ``California computer games company.'' This would never have happened in 1984.

Foregone opportunities don't show up on the profit and loss statement, at least not right away, nor are they ever itemised and charged back to internal departments. But each one is the equivalent of burning current dollars and bypassing future opportunities.

If AutoCAD's invisibility is not in keeping with its importance, then the consistent lack of support for new products makes their failure inevitable. We spend large sums developing a product, ship it, ignore it, and it fails. After a while, nobody's interested in promoting new products because ``they all fail.'' And eventually, so does the company. Ignore the subtler points of strategy and look only at the numbers. Autodesk is committed to increasing its sales and earnings at a rapid pace for the foreseeable future. The price/earnings premium on our stock reflects an assumption we will succeed in this. Since AutoCAD already commands a large share of the current CAD market, we cannot achieve this growth by taking business away from competitors. Consequently, the growth objectives can be met only by broadening the market for AutoCAD, thereby increasing its sales, or by launching new products which, in time, will contribute revenue and earnings comparable to AutoCAD. But if we don't promote AutoCAD, how is its market to grow? And if we push each successive new product off the loading dock, keening our ears for the thud that indicates ``another Autodesk new product flop,'' how are these products to help us? The absence of effective promotion of either AutoCAD or our new products precludes success through either path.

``Sure, we'd like to do all those things, if only we could afford them, but the money just isn't there in the budget to do the kind of advertising, promotion, and public relations you're suggesting.''

Out of two hundred million dollars a year?

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Editor: John Walker