Next software for the masses? How about three-dimensional design
Here is one safe prediction you can make about technology: It will eventually be democratized.
Computers were once tools used by almost exclusively by PhDs. Videocassette recorders were developed initially for television broadcasters. Cellphones? GPS? The Internet? Photo-editing software? Developed first for professionals and academics - and used today by just about everybody.
Unfortunately, one of the region's biggest software companies, Needham's Parametric Technology Corp., has spent much of its history betting against democratization. PTC's flagship product is a sophisticated - and expensive - software package for engineers and product designers whose work involves the creation of three-dimensional objects.
Earlier this month, the Financial Times reported that PTC had hired Goldman Sachs to explore selling the 23-year-old company, seeking a price of more than $2 billion. The company isn't commenting, but some see the potential sale as the end of the road for a company that helped develop the market for what is called MCAD, or mechanical computer-aided design software.
"They have no future," said Mike Payne, an engineer and executive who was PTC's third employee.
Since leaving PTC more than a decade ago, Payne has focused on starting companies that have sought to democratize MCAD software, making it less complicated and less expensive.
"If you want a lot of people to use a product, you can't price it at $5,000 or $10,000, and you have to make it easy to learn and use," Payne said.
Pro/Engineer, PTC's main product, costs $5,000 to $25,000 per user; in the most recent quarter, the company added 4,400 new users of its product.
Contrast that with Google, which offers a product, SketchUp, that allows anyone - from architects to videogame developers to students - to create three-dimensional models of anything they can imagine.
The price? It's free. (Google does sell a professional edition for $495.)
In PTC's defense, executives there say they've constantly upgraded their product. The latest version of Pro/Engineer, released in January, helps electrical and mechanical engineers work together better, and has features to "lock up" product data when it is shared with outside business partners. A new product coming out later this year, Windchill Product Point, will help employees across a company collaborate better on product design. Revenues could surpass $1 billion this year, up from $941 million in 2007. As recently as 2003, the company was losing about $100 million a year. While the situation is far from a flame-out, a sale would be an admission that they haven't been able to diversify enough to endure as a stand-alone company.
Much of PTC's strategy, said John McEleney, former chief executive of SolidWorks in Concord, has consisted of "trying to sell more stuff to their existing customers" rather than developing new products.
SolidWorks Corp. emerged in the 1990s as one of PTC's primary competitors; it offered cheaper design software that ran well on PCs, rather than requiring a high-powered workstation.
These days, McEleney said, SolidWorks' software and software sold by Autodesk Inc., a California company, account for "the lion's share of new users of 3-D solid-modeling software. That has absolutely eroded PTC's core business."
More than a decade ago, SolidWorks was acquired by the French company Dassault Systemes SA for $310 million.
Interestingly, when I called schools like MIT, Worcester Polytechnic Institute, and Wentworth Institute of Technology, I found that most undergrads there are learning mechanical engineering by using SolidWorks' software - not PTC's.
PTC chief executive C. Richard Harrison came up through the company's sales ranks. One former PTC executive with whom I spoke (who asked for anonymity because he still has some ties to the company) said Harrison had built "one of the most feared and hated sales forces" in the industry, known for high-pressure tactics.
Payne, who was vice president of development at PTC when he left the company, said, "Sales guys have a one-quarter focus. There's no vision. They just want to know, 'how much money will your idea bring me this quarter?' "
Payne's current company, Concord-based SpaceClaim Corp., raised $13.5 million in venture capital last year; its board includes the former chief executive of PTC, Steve Walske. The company's products are in the $1,000 to $2,000 range, Payne said.
If PTC is indeed sold, its acquirer could be a larger, more diversified software company like Oracle Corp. or SAP AG, said McEleney. A private equity firm might be interested, given the company's consistent cash flow numbers.
McEleney is a big believer in democratization; under his leadership, SolidWorks tried to introduce 3-D software that children could use to create and animate. Cosmic Blobs sold for less than $50.
McEleney said it sold "more than 10,000 copies," but it didn't turn into a big hit and has since been pulled from the market. He calls Google's SketchUp "very cool technology," even though he believes that it wouldn't be very useful to the professionals who rely on SolidWorks or Pro/Engineer.
Though McEleney acknowledges that consumers' use of 3-D modeling software hasn't taken off as quickly as some have expected, suddenly many video gamers are creating customized 3-D characters, and there's even talk of designing customized products on the Web and having them manufactured on-demand - a radically simplified version of what can be done with pricey MCAD software.
But ask PTC about the idea that someday all of us will be working with 3-D design software the way we use Web browsers or Microsoft Excel today, and they don't quite buy it.
"We're focused on the needs of professionals," said Brian Shepherd, a divisional vice president of product management. Lower-end 3-D design software "hasn't seemed like a financially attractive market to us."
Can you hear someone getting out the chisel and preparing to write that on a piece of stone?
Scott Kirsner can be reached at kirsner@pobox.com. 