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Autodesk's "final days."

As founding president (and later chairman) of Autodesk, John Walker regularly circulated lengthy "information letters" to employees and shareholders, explaining the company's inner workings (Soft*letter, 6/15/89). Walker dropped out of active management at Autodesk in 1988; since then, he's spent most of his time working on product development. But several months ago Walker distributed a new letter that--like Microsoft chairman Bill Gates' recent "nightmare scenario" memo--warned that his company could be facing its "final days." Autodesk, says Walker, "seems to have become stuck in the past, mired in bureaucracy, paralyzed by unwarranted caution, and to have lost the edge of rapid and responsive product development and aggressive marketing and promotion." Autodesk has always been one of the industry's more eccentric companies--a $200 million, bootstrapped venture built on selling high-priced CAD software to engineers, architects, and other design professionals. But much of what Walker says about Autodesk's "final days" also applies to other companies that aren't growing old as gracefully as they should. Some excerpts: On modern product design: The most fundamental characteristic of modern software is that it is extensive. The actual executable program, what most folks in software development consider to be 'the product,' is a fairly small component of the total software delivered to the customer. Most of the size of modern products comes from what Autodesk dismisses as 'support files' and devotes relatively little effort to: fonts, sample documents, help files, on-line tutorials, on-line documentation, clip art, menus, macros, templates, and so on. But as seen by the user, these components are just as much of the product as the executable program. This kind of massive support around the core of an application is becoming a prerequisite for software products, especially those in large, maturing markets." On protecting the dealer channel: "AutoCAD is the last major software product to retain dealer sales as its only channel of distribution ... I think the shrinking margin between the price at which Autodesk sells AutoCAD to its dealers and the price dealers are able to obtain for it from customers (the so-called 'street price') reflects the perception on the part of AutoCAD buyers that many dealers are doing little more than passing the product through their hands, and thus deserve only a small markup. In such a situation, trying to raise the average retail price by limiting distribution and pursuing 'gray marketeers' is like trying to stop the tide with a teaspoon and a sponge; it's setting yourself against the judgment of the market, and it never works, at least not for very long." On keeping a low profile: "Today, Autodesk attends fewer trade shows, garners less press, communicates less frequently and in fewer ways with its user community... I believe Autodesk is increasingly slipping from sight, except within the existing community that uses its products. To build markets you have to go out, make some mistakes, find what works, then build upon it. And that costs money. once you realize 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." On corporate paralysis: "When timidity and unrestrained risk-aversion gain the upper hand, the kind of imaginative and bold initiatives that companies must make in order to sustain their rapid growth are forced to run a gauntlet of analysis and criticism that no suggestion, no venture not already proven successful, has a chance of surviving... In such an environment, an unambiguous statement of direction, strong and effective leadership, and continued follow-through by senior management is essential if the company is to progress. Otherwise, the parochial concerns of individual departments will block any and all changes to the way they've become accustomed to doing their work." On finding great new products: "A literal search for 'The Next AutoCAD' always ends up with dorky stuff like overpriced high-end project management software. what a concept: jumping into the very top end of a market where the entry level is dominated by Microsoft Project, then slugging it out with a company five times our size, selling a product at more than twice the price, through a distribution channel a fraction as large ... When we find The Next AutoCADI it will look just like the last AutoCAD did in 1982--a non-obvious product in a market waiting to be created, with a large body of potential users who haven't ever really thought about how useful such a product might be." John Walker, "Information Letter 14"11 4/1/91.
COPYRIGHT 1991 Soft-letter
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Date:Aug 25, 1991
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