How to take over the whole graphics industry in a year or so

A good plan, executed now, is better than a perfect plan executed next week.

--George S. Patton

Here is the kind of strategy I think a reinvigorated, aggressive, Autodesk should be unleashing on the industry. I have plotted this strategy based on what I know Autodesk can accomplish, not constrained by what Autodesk has convinced itself is ``realistic.'' My plan combines short-term, remedial steps aimed at reducing risks created by our slow progress in recent years, repositioning of existing products to better fit today's market, and development of new products to close gaps which endanger our competitive position. These recommendations are a starting point, not a complete prescription for turning Autodesk around; they are intended to highlight the extent that Autodesk truly controls its destiny and to suggest other similar moves to consolidate and expand our market position.

None of these proposals would survive scrutiny based on the first third of the criteria I call the Stainless Steel Web; implementing any of them (or indeed, doing anything at all) requires, as a prerequisite, the will to act. And that is the hardest part of the whole scenario; the rest are all things we know how to do and have done before.

Manage our products.

  If we are to redirect our products and treat the market as something we control rather than react to, we will need not only direction from senior management but close day to day line management at the product level. Our products are too important not to have a single individual who can speak for them and promote them both within the company and without.

• PM1: Appoint a strong product manager for every product. Appoint or recruit a product manager for AutoCAD, and for every other product in Autodesk's line. That person should report to the President, and will be given essentially complete discretion over the development, marketing, and sales resources for the product, constrained only by the budget allocated to that product.

• PM2: Implement product-level profit and loss accounting. Structure our internal accounting so it becomes possible to monitor the costs incurred and revenue generated by product, allowing us to track the contribution of each product to our overall goals.

• PM3: Integrate development and promotion budgeting. Undertake no new product development efforts without a comprehensive plan, adopted in advance, covering both the development phase, the marketing roll-out, and the first two years of post-launch development and marketing support. Autodesk must never again abandon a product   developed at great cost; doing so squanders the morale of developers as well as the company's cash.

  By ``product manager'' I mean an individual with line profit and loss responsibility for the product; a person delegated the authority to decide what goes in a product and what does not, when releases are to be made and what they will contain, and who bears the responsibility for achieving the schedules associated with that product. The current function called ``product management'' would remain within whatever department it best fit.

Help the dealers.

I'm concerned about the health of our dealers' businesses, and about the degree to which Autodesk relies upon them as our only channel of distribution. Still, I continue to believe that we should do everything we can to strengthen our dealer channel, and should abandon it only if its collapse imperiled Autodesk's survival. Autodesk and our dealers depend on one another, yet the nature of our businesses are very different. When our dealers are in trouble, it is incumbent upon us to look beyond the obvious in seeking ways to help them. Here are two examples of ways Autodesk could help our dealers survive.

• DE1: Provide dealer inventory on consignment. Autodesk is cash-rich; our dealers are starved for capital. Yet Autodesk requires its dealers to tie up a substantial amount of their working capital keeping copies of AutoCAD in stock. In addition, dealers must carefully estimate inventory levels to ensure they are able to deliver our products without waiting to receive new stock from Autodesk. We could drastically reduce the capital our dealers tie up in inventory by moving to a consignment stocking policy. Any dealer in good standing, not on credit hold, would be able to stock a quantity of AutoCAD equal to his average monthly sales without paying Autodesk in advance. As each copy was sold he would report its serial number to Autodesk and a Net 30 invoice would be generated for it. As long as the dealer collected from his customer before the invoice came due, he would have no capital tied up in flooring inventory of AutoCAD.

  Spare me a recitation of the ten or fifteen reasons we could never adopt such a policy. Yes, you'd have to explain it to the analysts, live with greater uncertainty, and trust the serial number tracking mechanism to prevent cheating. But isn't this how a company with $140 million in the bank should behave when its cash-poor dealers are facing extinction?

• DE2: Consider reducing the price of AutoCAD. Pressure from dealers is often cited to justify increases in the retail price of AutoCAD. But it may well be that lowering AutoCAD's price is the best way to help our dealers survive. Autodesk has, over the last several releases of AutoCAD, continued to raise the suggested retail price and has therefore increased the price dealers pay for AutoCAD since this is a constant fraction of the retail price. Evidence suggests, however, that the actual price customers pay when they buy AutoCAD from dealers has increased, if at all, much more slowly than Autodesk's posted list price. This has resulted in a squeeze, where the AutoCAD dealer makes less and less on each copy of AutoCAD he sells, while being forced to bear ever-increasing costs to maintain an inventory of the product on the shelf.

  For years, many successful AutoCAD dealers have said that the bulk of their profits come primarily from sales of computers and peripherals associated with AutoCAD, not the software itself. If this is the case, a primary reason our dealers are encountering difficulties now is that the margins on their hardware sales are falling, squeezing the segment of their business which accounted for most of their earnings.

  If we were to reduce the price of AutoCAD and that resulted in increased retail volume, would that not benefit the dealers? If the majority of our dealers derive more revenue from hardware and services sold with AutoCAD than from the software, increasing the unit volume of AutoCAD would actually result in higher sales and earnings, since increased hardware sales would more than compensate for the lost revenue from a lower price for AutoCAD. There's no question that cutting the AutoCAD price would result in a short-term hit to Autodesk's sales and earnings. But what is the net present value of preserving the channel which has accounted for essentially all our domestic sales of AutoCAD since 1982?

  This is a case where the ``safe decision'' is to do nothing, but where inaction may accelerate the collapse of our dealers. There are alternatives to a simple price cut; we could create a ``2D-only AutoCAD'' and price it at, say, $1895. Or, we could introduce the 286 version of Release 11 at a lower price, for example, $2195 (this would require a modification of recommendation AC1 below--I trust you can see the obvious way to reconcile these goals).

Low cost marketing initiatives.

In the early days of Autodesk, lacking any marketing budget whatsoever, we found a way to gain influence without spending anything more then the cost of goods in our products. Sacrificing such opportunities now in a quest for illusory short term sales is folly, especially when marketing budgets continue to be tight.

• MS1: Free product for ``opinion leaders.'' A small number of individuals exert great influence in our industry. These columnists, educators, editors, consultants, and analysts form the opinions which echo throughout the market. In the early days of building the market for AutoCAD, we sought to make each and every one of these individuals familiar with AutoCAD, even if it required retaining them as consultants, flying them to Sausalito, and asking them for their view of the industry following, of course, a half-day indoctrination in our product line. But usually, a free ``evaluation'' copy of AutoCAD was all it took to get their attention.

  Now, I discover, Autodesk has become loath to provide free copies of our new products to influential people in the industry. I presume this is a misdirected attempt to boost sales instead of an urge to self-destruction, but the results are indistinguishable. When the Education department was created at Autodesk, Mike Ford gave it this charter, ``Extract as much money as you can, but never lose a sale.'' Seeking revenue in the short term ignores the multiplier effect of having a class taught using your product, having a book written about it, or having it be the object around which a curriculum is developed. These benefits follow only when those who influence opinion get an opportunity to play with a product, and they're unlikely to buy every product that comes along to see which is worth their time. Providing free products to opinion leaders is a way in which software companies can create market presence comparable to the list price of their products, while incurring a cost equal only to the raw materials.

Near-term upgrade of AutoCAD.

A $4000 list price product shouldn't look stingy. We should take whatever immediate steps are possible to make the purchaser of AutoCAD feel he is being treated as the elite customer he is; that he is dealing with a vendor who values the relationship with him.

• AC1: Universal 80x86 release. Include all operating system platform versions in the Intel architecture release. In other words, when you buy an 80x86 AutoCAD Release 11 you get 386 DOS, 286 DOS, Xenix, OS/2, and Windows executables all in the box. If any of those versions aren't available at the time we ship the product, include a coupon for ordering the others (just like the coupon Microsoft includes for no-cost ordering of 360K floppy or CD-ROM versions of their products). When you consider the costs of separate inventories, bills of materials, exchange order processing, etc., the cost of this to Autodesk may be negative.

• AC2: Eliminate AME surcharge. Include AME at the $3500 price point. We want to create a huge new market for solid modeling, and we have a unique opportunity to do so. Coming down the pike is ACIS-based AME-2, a major functionality upgrade. What better way to sell it than to get every Release 11 customer acquainted with what solid modeling can do in his application area? This also eliminates the expense of processing AME A-codes.

• AC3: Promote solid modeling. It isn't too late to beat the bass drum about what we've done for the industry by including solid modeling in AutoCAD Release 11. Even if we continue to charge extra for AME (especially, in fact), we should give it the launch it deserved when it was introduced, even though several months have passed.

• AC4: Expedite Windows AutoCAD. The existing Windows AutoCAD Product Plan Proposal should be implemented in its entirety as the highest priority project associated with AutoCAD Release 11. If diverting resources from other platforms or related projects can help ship this product sooner or make it more comprehensively integrated with Windows, divert them.

• AC5: Expedite Windows-32 AutoCAD. Assign resources appropriate to ensure that a 32 bit version of Windows AutoCAD will be available for delivery the day Microsoft ships the required version of Windows to customers. If more than six months can be saved and substantial performance improvements had by pursuing an interim 32 bit version (e.g., Watcom), consider it seriously.

• AC6: Include CD-ROM(s) with AutoCAD. Autodesk has everything in its possession today to include a compact disc with every copy of AutoCAD we ship. Six hundred megabytes...what could we fill it with? To start with, all the stuff on the existing drawing library disc, which needs only to be run off in sufficient quantity and included in the package. How long can that take? As soon as we can arrange it, we should make space on the CD available to all our developers to include sample applications and demos of their products. Within 45 to 60 days, we should be able to include a machine-readable version of the AutoCAD manual, hot-link indexed and connected to the HELP command in the product. If everything won't fit on one CD, then two or three. We'll have to get rid of that overpriced retrieval program on the current CD. There's no need to replace it; simply providing a High Sierra format CD and a directory map is enough to get the files off on any platform I'm aware of.

• AC7: Upgrade AutoCAD documentation. Re-design and re-print the AutoCAD Reference manual and Tutorial to equal the production values of the corresponding manuals included with Microsoft Word or Corel Draw. This is entirely a question of graphical design, use of colour highlights, etc. In the longer run, develop an ``AutoCAD Encyclopedia'' to supplement the existing reference manual, organised along the lines of the Microsoft Word or Excel reference manuals.

• AC8: Direct support line. I think it's shameful to ask $4000 for a product and then refuse to talk to any customer who calls with a problem. We should provide, at the minimum, one year of free telephone consultation. There's nothing wrong with asking who his dealer is and providing feedback to the dealer, but we should take the call and ungrudgingly provide whatever assistance we can.

• AC9: User newsletter. We should immediately start production of a quarterly AutoCAD user newsletter, to be mailed to all registered users. The content of the newsletter would primarily be meat and potatoes technical and application information about the product, questions and answers, and the like. For a prototype, look at the Cobb Group newsletters such as ``The Expert'' covering Excel. New product information, listing of interesting items available on CompuServe, and the like could serve as filler, but would not be the main purpose of the newsletter.

AutoCAD future development.

Beyond the short-term actions to upgrade the quality of AutoCAD and its perception as a premium product, we must revisit our development plans for Releases 12 and 13. Does a release defined by a shipment date rather than customer requirements, one motivated by a hope that it will create short-term demand for the product and raise its ``street price,'' keep faith with the customers who are responsible for our prosperity? How long can we get away with releases with less and less substance in each? What is an appropriate manpower commitment to development and maintenance of our principal product?

• AD1: Developer product orientation. Make the time and resources available, even if it means slipping other schedules, for every individual involved in the development of AutoCAD to become familiar, in depth, with a modern Windows or Macintosh application such as Excel, Word, or CorelDRAW! This should be viewed as an education in the standards of today's market and what users expect of products, not aimed at mastering the applications themselves.

• AD2: Evaluate development and QA staffing. Investigate the tradeoffs between manpower allocation, content of each release, and time to market, then propose staffing plans for various points on the curve. This investigation must include a review of development methodology and tools which permit more developers to work together without conflict.

• AD3: Parallel Release 13 projects. Take all of the contending plans for Release 13, set them up in parallel, and let them run for 6 to 9 months with the goal of producing, at the end of that time, a base suitable for all the requirements anticipated for AutoCAD over the next decade. These projects would, collectively, compete with the NC1 project (see below), to become the base for future development. At the end of the parallel phase, if it isn't already obvious, an in-depth review will be made to decide which alternative(s) to continue to pursue.

Own the raster market.

Multimedia's going nowhere. Why? It's too damned expensive. When you're trying to pioneer a new market, you have to recruit a small cadre of ``early adopters'' who become the fanatics who discover new applications for the product, build upon it, and generate, through their efforts, the first success stories for the product which are echoed by a well-designed promotional campaign. This is how we got AutoCAD going. If we had introduced AutoCAD at $3000, I am convinced that very few if any of the people who ended up so influential in its early growth (many of whom now work here-ask them), would have been able to afford or have been inclined to take a chance on it.

The multimedia market closely parallels the early days of AutoCAD; both were considered outside the mainstream of PC applications, both were limited at the start by crude and expensive hardware, and both lacked the collateral support resources (books, training, user groups) that allow a small initial beachhead to expand to a much larger community of users. So what do we do? Raise the price on Animator. Wizard.

• RM1: Re-price Animator at $149.95, add graphics modes, target paint programs. If we want to own this market, and I cannot conceive of any reason we wouldn't want to, here's how to go about it. First, we have to reprice and reposition Animator. It's a spiffy animation program, but it also happens to be the best paint program available for the PC as well. Its only limitation is that the only graphics mode it supports is 320x200 VGA/MCGA mode. What I'd do is remove that restriction, and support all the 16 colour modes and SVGA 256 colour modes for single-image painting only (the easiest way to accomplish this is to license and use MetaWINDOW, as we used for Chaos). Then, we re-price the product at $149.95 and re-launch it, aiming it directly at Z-Soft's various Paintbrush products and Colorix VGA Paint. ``For the price of a paintbrush, we give you the whole movie studio....'' That kind of thing. The re-launch and post-launch support will be expensive. Spend the money. Otherwise kill the product and cut your losses.

• RM2: Re-price high-res animator at $275. As the reborn Animator takes off, we roll out the high-resolution animator, code named PJ, at $275. Call it ``Animator Professional'' and harp on the way it effectively uses 386 mode and VCR control, etc. Continue to target paint programs as well as animation, and show how POCO and user-defined inks make this the first open-architecture paint program.

• RM3: Move animator, PJ to Windows. As quickly as possible, we should make both the original Animator and PJ work under Windows. In the case of PJ we may have to wait for the 32 bit mode Windows, but in neither case should we wait any longer than necessary.

• RM4: Re-price 3D Studio at $499.95. Don't touch the product. Just move the price down to where the early adopters can afford it, including all those people who'll buy it on impulse and find out only later that this is the product they've waited for all their life. Don't discount the impact of ``corporate early adopters''--at $500, lots of companies will buy one and have somebody evaluate it. At thousands of dollars, it's a major purchase decision. Doubt me? Try ordering a $3000 software package to ``look it over'' around here. After repricing, re-launch much more broadly. Offer demo tapes at cost through 800 number. Maybe try a little cheap-o TV. Move the product to Windows as soon as technically feasible.

• RM5: Launch an image-processing product. Acquire, license, or develop a product that embodies the image processing functions not provided by PJ. (Quite possibly, these facilities could be integrated into PJ or made some kind of add-on to it.) This would complete Autodesk's product line in the raster graphics industry. The product should be targeted at a $499.95 price point, and could use comprehensive manipulation of scanned images as a means of establishing its initial customer base.

New CAD system.

In parallel with the work underway on AutoCAD, we should immediately begin a project to produce its successor; a thoroughly modern product that does everything AutoCAD does and provides a reasonable level of compatibility, but which is freed from the truly stupid baggage of the past. This project would target its initial product release for Windows, with subsequent platform versions thereafter based on market demand. This development project would be staffed comparable to the AutoCAD project and assigned similar priority.

• NC1: Develop AutoCAD successor. Immediately begin development of the next-generation CAD system--the replacement for AutoCAD. The outline, specifications, scope, pricing, and timetable for such a project are given in the ``Nightmare Scenario'' on page . The project would be chartered to take as much or as little code from existing Autodesk products as its developers wished, and to use whatever development environment and methodology they believed best suited to the task.

  The initial release of this product would require a 386 or better and the 32 bit version of Windows. Other platforms would follow. The product would be able to read and write AutoCAD .DWG and .DXF files, but would not be required to maintain absolute compatibility in other aspects. For example, the command line could be entirely absent, menus might be totally different, and AutoLisp may not be provided. This would differentiate the product from AutoCAD, so when it was introduced at a lower price with broad distribution it would not be perceived, at first, as a replacement for AutoCAD. The product would, however, serve as the base upon which such a replacement would be assembled in the future.

  All existing Autodesk resellers would be authorised to sell the new product at the date of its introduction and would be encouraged to sell it to prospects they are currently losing due to AutoCAD's price. The product would also be placed into general distribution, using the channels which already carry Generic CADD, plus others we may develop in the meanwhile. If the fear generated by the existence of this product (which will be done by somebody in the next 48 months anyway, I am sure) cannot be overcome, I suggest it may be easier to take if the product is named ``Generic CADD 7.0.''

• NC2: Continue product line integration. Building on the initial release of the successor system, which will already integrate illustration, 2D and 3D wireframe, surfaces, and solid modeling in a modern application framework (providing multiple document architecture, clipboard, a full function macro recorder and editor, background generation, and inter-application hot links just as Excel 3.0 does), continue to roll in other components of the product line as pluggable pieces. Two or three releases down the road, it should be possible to paint, do image processing, create animations, and perhaps build worlds for cyberspace or spatial models for Xanadu all from the user interface (and, just as important, application linkages) of the product.