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Autodesk May Be Next to Offer Rental Model

But CEO Says It Will Not End Perpetual Licenses for Software

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.

16 Comments

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  • BOB

    How can this person “judge Adobes success” when they haven’t even completed a single year cycle?? Who is paying this person?

    • Anonymous

      “Cloud” 100% subscription model is new however Adobe has actually had subscription options available for at least over 2 years now they just were not the only option and not as promoted and still managed to generate as much if not more revenue than direct sales(you get volume from people that would not have purchased it normally due to the high initial stake) so it’s a fairly good judge.

      Plus keep in mind Autodesk all ready has experience with this business model with it’s current contract options which are yearly maitnenance subscriptions that include the software and updates/support it’s just a matter of breaking that up into a monthly system

    • Sam Smithton

      I used to pirate Adobe software rather than paying almost $3k upfront for the production suite.
      After Adobe announced a subscription model that was affordable ($50/month) I became a paying customer.
      The idea was to turn pirates into paying customers and it has worked for them, hence the aforementioned “Adobe’s success.”

      • Dave Williams

        Isn’t that wonderful! These aholes who pirated Adobe software while the rest of us were PAYING get the fruits of OUR labors. WE paid thousands of dollars over the years while ingrates like this guy didn’t know how to save their money and be a legitimate user. Unbelievable!

  • Ralph

    Obviously, he is gauging Adobe’s confidence in it’s new model. For my purposes, I avoid software updates as much as possible because every update simply is not worth the price. subscription/rental improves the value over time for me because I can dedicate the freed-up cashflow to other heavy needs, like buying a 4K camera, while adding 3D through a subscription. Cool.

  • Mike

    I won’t give my business to any company who offers a subscription service for tools. I don’t rent software. Most customers don’t want that. Just because you are keeping the perpetual license for the time being doesn’t mean they won’t change their mind in the future. Autodesk – you lost my business on principle alone.

    • Anonymous

      This is a bad state of mind to have. I shudder to think what kind of decisions you make elsewhere based on such stupid bullshit.

      • Mike

        You must be talking about the CEO of Autodesk then I agree. I never pay subscription fees for my tools which makes me very happy. Based on the customer backlash from Adobe customers, this isn’t the brightest of ideas Autodesk.

    • Lance Stern

      I think it would be a terribly bad idea if they had gone all-subscription based, then maybe you could say you’ll have nothing to do with them.
      But for small businesses and mid-size businesses alike, subscription and rental models are a natural and more affordable fit, it provides a steady and predictable revenue stream for autodesk, and for those who want a license to own the software you can do that.
      I think they are implementing a very forward-looking strategy with this decision. You might want to just keep your license and give it a chance.

  • chiron

    Its only a matter of time before renting turns into paying for time used. Want to use the software? Great, Pay for every minute of use. When not running the software you are not charged. All software will eventually head to this model. It provides the most revenue.

    • Mike

      Not at all – customers have final say. Vote with your $. My $ won’t be going to Autodesk and Adobe.

  • tommy

    They need to make it more like c4d where you buy basic version then you can add on all the extras like particles,fur, rigging etc..

  • Anonymous

    If you rent the software, but then a few months later stop renting… you won’t have any software to open up your scenes (source files)… then what?

    • Bob Loblaw

      Keep renting the software if you want to use it…

      We rent cars, houses, etc. Otherwise we have to come up with a lot of money up front to purchase these items outright. Which is why the rental option exists in the first place.

      If you are mad at the companies decision to go with this model, vote with your $ and move on to another product.

      • Anonymous

        You don’t understand. It’s a legal issue Bob. It’s called maintaining ownership of your Copyrights and Intellectual Property. It’s like renting art supplies from an art store. The moment you can’t pay to rent the art tools is the moment they collect the tools “including your painting” and lock them up in a vault. If you want to access, view, or continue working on your painting you have to keep giving Adobe money until you die. Not all all the same thing as renting a car, because the car is disposable; my original creative and intellectual property is not.

  • Bob Loblaw

    I am excited that Autodesk is finally going to release a rental option. As an independent animator/producer it’s difficult shelling out thousands of dollars upfront for a single piece of software.

    As Mike said below, vote with your $. My vote is absolutely for this model. If you do not like such a business model, simply move on and purchase a different product.