Autodesk Strategy is No Strategy: Autodesk University 2011 - Hits and Misses, Pt 4

LAS VEGAS, NV (Autodesk University), Nov 29, 2011 -- Maybe for the millionth time Carl Bass, CEO of Autodesk, is questioned about the strategy of giving away software, or making it really cheap. The analyst who asked this question  at the media Q&A session no doubt considered such a strategy suicidal. It was much easier to understand an Autodesk that sold AutoCAD, Inventor, Revit or some other vertical product that sold for thousands of dollars and provided huge margins. But now Autodesk is as likely to brag about software that is downloaded by the millions but sells for 99 cents. Worse, the apps from Autodesk Labs  are all free. 

Carl danced around the question and did not directly answer it. The polite analyst did not press the issue. The timidity of our industry's press usually bothers me. It took me a while before I realized that in his own way, Carl actually was providing the strategy.

I remembered reading about Google, which on top of all its popular success has also achieved immense financial success as a publisher. Almost all its revenue is derived from advertising, something that did not initially occur to its founders and is missing from Google's business plan. All Google originally wanted to do was to become wildly popular, i.e. make something so good, so useful, so indispensible that people get hooked. The financial success that followed was a a happy accident.

Autodesk is a very profitable company. Last quarter it made about $550 million, almost all of it from its professional products. $70 million of it was profit. That is a lot of money to experiment with different products for consumers with the hopes that one, two or more will be a runaway hit, creating millions -- maybe billions-- of devoted fans who may do anything from pay a buck or two to upgrade to a professional product. Who knows?

No strategy appears to the Autodesk's strategy for now. Ingratiate yourself with the public, then wait for money to fall into your lap. Popularity first, profit second. Like Google. 

 

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