Autodesk will detail in October an "evolution" of its business model that includes more options to rent its software, rather than buying it, CEO Carl Bass said in an earnings conference call yesterday. Bass promised an array of new rental options by the end of the year that he said will give customers more subscription options and increase the predictability of the company's revenue over time.
Bass stressed that Autodesk wasn't upending its existing model, but augmenting it. "Recall that, just 10 years ago, we added subscription maintenance to our revenue stream," he said. "That was a big change at the time, and there was no shortage of skeptics. Today, that's a billion-dollar business and represents over 40% of our revenue. Suffice it to say that transition was a huge success."
Bass said that the company has expected to make this transition for some time, but that it now believes it will happen faster than it previously expected. Within a few years' time, Bass said, it's easy to imagine "the vast majority" of Autodesk's revenue coming from subscriptions and license rentals.
Analysts on the call immediately started drawing comparisons with Adobe's move earlier this year to a subscription-only pricing model for its Creative Cloud software. Bass said that Adobe's success made Autodesk more confident about the feasibility of rental pricing, but suggested that Autodesk's move wouldn't be quite as aggressive.
"It became more clear to us that customers were willing to accept, and some even wanted, this new opportunity," Bass said. "Because we're starting in a different place than Adobe, we don't feel the need to force people, as they did, to go to these new license models and end perpetual licenses."
Bass expanded slightly on those thoughts as he answered a question about whether Autodesk was considering geographically limited tests of the new model, noting that Adobe had tested its own model in Australia. "As you can tell, [Adobe] obviously didn't gauge end-user demand as well as they would've liked to, because they had to put in a pretty radical policy change in order to drive more adoption," he said. "So I think these limited geographical tests have limited value."
Autodesk declined to expand on its plans yesterday, telling investors they'd have to wait until an event on October 2 in San Francisco to hear the details. In the call, which was keyed to Q2 earnings (revenue was down 1 percent compared to the year-ago period, or up 2 percent on a constant-currency basis), Autodesk offered guidance for Q3, ending October 31, but declined to provide any guidance for the fiscal year, citing its expectation that the new business model will have a significant impact on the company's business in the fourth quarter.