Push Will Start with AutoCAD LT, Then Move Across All Products

A little more than a year after first revealing its desktop subscription plans, Autodesk says it's preparing to stop selling perpetual licenses of its software entirely. The switch won't be flipped overnight, but will be implemented a little bit at a time over the next one to two years, the company said.

The roll-out of desktop subscriptions "is going incredibly well," said Autodesk Senior Vice President of Industry Strategy and Marketing Andrew Anagnost yesterday, speaking during a presentation as part of Autodesk's Investor Day 2014. He said 35 percent of its subscription customers are completely new to Autodesk products. Still, he cited Autodesk figures showing that 2.9 million users of its products are still on perpetual licenses as the impetus for putting a firmer push behind the pay-as-you-go subscription model for software.

"The number of customers that are one to five releases back on our software stays relatively consistent year after year after year," he said. "They are real customers …. They just happen to purchase from us perpetual licenses on an infrequent basis because they can. This isn't really good for our ecosystem [because] we would like to see everybody on our most current release. We think that's good for customers."

Perpetual software licenses will be discontinued in stages over the next 12 to 24 months, according to Anagnost. "This isn't going to be an event," he said. "This is going to be a transition where we work on products and regions as we remove new perpetual licenses from the offering mix."

The guinea pig for the process will be AutoCAD LT, Anagnost said, while suggesting that other LT products (including Maya LT) may follow. He discussed some of the economics behind the decision, revealing that the "average annual value" to Autodesk of a user of one of its LT products — lower-cost, entry-level versions of its most popular tools — is $240 per year, based on their sporadic purchases of upgrades and maintenance subscriptions. By contrast, a user who has a desktop subscription to one of the LT products is worth, on average, $310 per year. "That is a 30 percent increase in value back to Autodesk, with an offering that provides access to the customer at prices they've never seen before," Anagnost said. 

To date, most subscription sales, 51 percent, have come from Autodesk's own e-store, Anagnost said, acknowledging that the company has to make subscriptions more attractive to its reseller channel. Steve Blum, Senior Vice President of Worldwide Sales and Services, said that in the company's fourth fiscal quarter, which begins in November, it will start adjusting the margins for its resellers, making sales of desktop subscriptions of the LT products as profitable as sales of perpetual licenses have been.

Wall Street seems pretty happy with the news—the company's stock traded briefly earlier today at an all-time high of $58.75.