3D software giant Autodesk suddenly announced layoffs for approximately 10% of their staff. Does this imply there’s troubles ahead for 3D printing?
Autodesk is one of the largest suppliers of 3D software used by those driving 3D printers, has developed standards for 3D printing and even has a fund for 3D-based startup companies, so you’d suspect there may be a correlation. But what exactly did they say they were doing? Here’s their opening statement from the February 3rd announcement:
Autodesk, Inc. today announced a restructuring plan that will accelerate the move to the cloud and its transition to a subscription-based business model. Through the restructuring, Autodesk seeks to reduce expenses, streamline the organization, and reallocate resources to align more closely with the company’s needs going forward.
This may make sense; as several major software companies have discovered, it is far more economical (and profitable) to provide their software via subscription rather than by direct software sales. Adobe, Microsoft and others have gone down this journey, and it seems that it will become the norm for the future. And the release of some 925 people will save a very substantial amount of cash flow.
Why do this? There are many reasons, not the least of which is that it requires far less effort to maintain a cloud-based service than individual software installations. One very important aspect is that all deployments are suddenly at the same version level, making product support vastly simpler. Customers pay more frequently, and are automatically renewed, making the sales process also much easier for Autodesk.
The company’s initial experiment with cloud-based products must have been a big success, as it now seems they are tipping the entire company in that direction. Expect to see no more standalone software from Autodesk at some point in the future.
But could there be other reasons for this? They did say “Autodesk seeks to reduce expenses”, suggesting that there isn’t sufficient income to make their profit. In fact, that’s the case. In their most recent quarterly statement, the company reported a loss, although some of that is due to the development cost of shifting to cloud services. Their stock price dropped in January as a result.
Autodesk also faces considerable challenges from leaner competitors that have recently launched as well. Onshape is an example of a pure cloud-based service that could take customers away. While Autodesk is a lot bigger than Onshape and operates in many other niches, the same pattern could occur in those areas, too.
As a result, Autodesk is apparently heading directly into cloud services to stay, and they believe it will remain a profitable business for them.
The general downturn in 3D printing business that has occurred over the past year may also have something to do with their actions. While the consumer rush to 3D printing has stalled due to usage complexity, that was not a prime source of revenue for Autodesk. Instead, their main revenue is obtained from corporate clients purchasing large suites of software. But a slowdown in the economy does affect that area too, just not as severely as the consumer segment has been affected.
Will 3D printing be affected? We don’t believe these actions will significantly affect the welfare of the 3D printing industry. Software is still available from Autodesk and increasingly others, too. Autodesk is apparently still proceeding with their efforts to standardize 3D printing protocols and their 3D business fund appears unaffected.
On the other hand, if their shift to cloud services does not restore profitability, then other things could happen.