This is an interesting move by Dassault Systemes.
ABAQUS is the major player in the field of advanced engineering analysis (non-linear analysis). Just last week we published a review of the company in CADCAMNet “ABAQUS on a Roll” [http://go.cadwire.net/?8125,3,1]
The CAE market is the fastest growing segment of the sub-markets within the PLM world. According to the Cyon Research Stock index, that segment has had a compound annual growth rate in its market capitalization of 37% over the past 4+ years. (Details on this and other sectors will be forthcoming in CADCAMNet and EAReport over the next few weeks [http://www.cadcamnet.com] )
Dassault Systemes has been pushing realistic simulation as the final destination of the journey from 2D CAD (see page 5 of the PDF at [http://www.3ds.com/fileadmin/newsevents/finance/05Q1_pres_analysts.zip] )
Up until now, Dassault Systemes had not fleshed out the product map to make that final step to realistic simulation. While the company did (and does) have good relationships with most of the players in the CAE space (many of whom have standardized on the CAA architecture as a development platform), Dassault Systemes did not have a complete story of its own. This acquisition changes that. And then some.
We view this acquisition as Dassault Systemes putting its money where its mouth is.
Dassault is spending two-thirds of its cash on hand to make this acquisition. That is a huge bet on their part. Our opinion is that it will pay off.
The acquisition does raise some interesting questions:
• ABAQUS sales were quoted at $100M. Assuming that’s the correct figure, the sales price of $413M, at over four times annual revenue, is a huge multiplier for an all cash transaction. Is it justified?
• Dassault Systemes has made it clear that the engineering analysis/scientific simulation business will be rolled into a new line of business similar to the DELMIA model. The unfortunate name for this new line of business and its infrastructure is SIMULIA. More than 90% of ABAQUS’ sales are through its direct sales force. Where does this leave IBM?
• Dassault Systemes has been investing time and money in its relationship with MSC.Software. Part of ABAQUS’ growth has been at the expense of MSC.Software. What does the acquisition mean for MSC?
• Dassault Systemes software is sold on a per-seat license. ABAQUS is sold on a per-processor license. What will the ABAQUS business model be under Dassault Systemes and how will that change the revenue and penetration picture?
• The combined Dassault Systemes/ABAQUS will have annual CAE revenue on the order of $140M (not counting about $20-30M/year of CAE revenue coming in from SolidWorks’ Cosmos) This will put it a step below MSC and about on par with UGS and ANSYS. How will this change the landscape and will this trigger other consolidation within the sector?
I’ll be taking a closer look at these questions in an article in Friday’s CADCAMNet. [http://go.cadwire.net/?8169,3,1]
