Introduction

Analysts agree that the leaders in Product Lifecycle Management (PLM) are the leading high end mechanical CAD vendors (Dassault Systemes, UGS and PTC), the leading ERP vendor (SAP), and two independent dedicated vendors (MatrixOne and Agile). There is no EDA vendor among the major players. Nor is Autodesk a player. The most recent event of significance in the PLM arena was the March 2nd announcement of merger agreement by which Dassault would acquire MatrixOne for approximately $408 million. For its most recent fiscal year ended July 2, 2005, MatrixOne reported total revenues of $124.1 million. Cash and cash equivalents totaled $98.6 million at December 31, 2005. Bernard Charlès, Dassault Systèmes' President and Chief Executive Officer, commented, "The acquisition of MatrixOne will extend our reach, enabling us to bring the value of PLM to a significantly expanded audience across a broader range of industries. The combination will enable a new level of collaboration and will leverage the best-in-class technologies, products and skills of both companies." The acquisition was completed on May 11, 2006. The all cash purchase price was $410 million in the aggregate, before reflecting cash balances and estimated tax benefits.

Analyst firm Daratech estimates PLM revenue in 2005 at $10.4 billion (13% over 2004) and projects revenue in 2006 to be $11.95 billion. For 2006 they estimate end user sales related to Dassault to be around $2.8 billion, related to UGS at around $2.4 billion and related to PTC at $1.15 billion. Research firm CIMdata reports that the overall PLM grew 8.7% to reach $18.1 billion in 2005 and will continue climbing for the next five years to reach $26.3 billion by 2010 for a 7.7% CAGR. The large difference between the estimates is due to inclusion versus exclusion of segments like EDA.

PLM can be divided into two major segments. The first is authoring tools and related services. This segment includes CAD/CAM/CAE (Computer Aided Design, Computer Aided Engineering and Computer Aided Manufacturing) tools. These tools create and modify data. The second segments deals with Product Data Management (PDM), communication, collaboration and visualization. These tools manage the storage (vaulting and archiving) and the distribution and sharing of data. This segment can be referred to as collaborative Product Data management (cPDm).

It is difficult to get a handle on cPDm revenue and make comparisons between the vendors because the biggest vendors generate most of their revenue from other segments and do not necessarily breakout detailed cPDm figures. Further, the vendors have different business models with third parties accounting for varying share of product and service revenue. For example IBM is the prime service provider (estimated revenue $300 million) for Dassault's ENOVIA product line as well as the marketing and sales arm for this product line.

CIMdata reports that the cPDm portion of the PLM market exceeded previous forecasts for growth and reached $6.1 billion in 2005, representing an increase of approximately 14.7% over 2004. They expect the cPDm segment to continue its strong growth to $6.8 billion in 2006 and reach $11.6 billion by 2010 for a CAGR of 13.9%. CIMdata estimates that the combination of IBM and Dassault resulted in about $600 million in end user spend on cPDm, UGS in around $500 million, SAP in ~$480 million and PTC in ~$250 million and MatrixOne and Agile in under $200 million.

The following sections give an overview of the major players in the cPDm arena.

SAP is the world's largest business software company and the third-largest independent software supplier overall. For 2005 SAP had total revenue of €8.5 billion, software license revenue of €2.78 billion, and net income of €1 billion. SAP reports 33,200 customers, and 88,700 Installations. SAP has been the unquestioned ERP leader for years. In terms of software revenue SAP is now number 1 in SCM, CRM, and PLM.

SAP has been very successful in leveraging its huge ERP customer installed base to branch out into CRM, SCM, SRM and most recently PLM markets. SAP Introduced SAP PLM in February 2000 built upon existing PDM and Project Management modules. SAP divides its mySAP PLM offerings into the following categories:


While the first two categories form the core of most PDM product suites, the last four are unusual. The company claims 3,600 businesses are using mySAP PLM.

The table below shows the reported financial performance of SAP and its PLM segment.


mySAP PLM accounts for 12% of SAP software revenue, about a third that of the CRM and SCM sectors and a seventh of ERP sector.

SAP reports software license revenue on a product segment basis. Software maintenance revenue is only reported on an aggregate basis across all product lines. The latter has been slightly greater than software license revenue on an annual basis. For 2005 Maintenance revenue was 37% of total revenue versus 33% for software. Using this ratio total PLM revenue (software license + maintenance) would be about twice PLM software revenue or $400 million for 2005.

PTC

PTC was founded as Parametric Technology in 1985. PTC revolutionized the CAD industry by providing inexpensive, interactive variational solid modeling on early computer workstations in its Pro/E product line. Based on a two year lead in technology and extremely aggressive sales tactics, PTC "zoomed" over some 13 years to nearly a $1 billion in annual revenue.

Despite this success, PTC management concluded by the late 90's that CAD was no longer a high growth industry. PTC turned to product data management where it saw great potential for professional services revenues. In June of 1998 PTC introduced a product suite using acquired systems from Windchill Technology. In its subsequent quarterly earnings releases and conference calls PTC began reporting the figures and touting the successes of Windchill even when Windchill accounted for less than 10% of total PTC revenue.

In 2000 PTC formed two major business units: "Windchill Solutions" and "MCAD Solutions", to be better able to focus on the Windchill side. PTC's Windchill revenue did in fact increase dramatically from $13 million in 1998 to $214 million in 2001. Unfortunately for PTC, MCAD revenue decreased by an even greater amount. By diverting resources from the MCAD side, PTC arguably lost MCAD technical advantage, customer loyalty and market share. For several years PTC revenues have slid in both sides of the business. PTC rebounded somewhat on the CAD side with their introduction of Wildfire.



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-- Jack Horgan, EDACafe.com Contributing Editor.