IBM, Prime reveal CAD plans

Electronic News, March 9, 1992 by Peter Dunn

CAMBRIDGE, Mass. -- IBM and Computervision, two of the leading mechanical CAD suppliers, will both be making significant strategic changes over the next year or so, as IBM adapts to its recent sale of software lines and Computervision prepares to leave the Prime Computer fold.

In presentations at last week's CAD/CAM/CAE conference sponsored by market researcher Daratech Inc., executives from IBM and Dassault shed some light on their plans for the Cadam and Catia product lines. Last year, the two firms struck a deal in which the French company received Cadam's mainframe and workstation software, with IBM taking a minority stake in Dassault and retaining PC-based lines (EN, No. 25, 1991).

At the time, observers suspected Dassault would not invest a great deal of energy in the Cadam line, but company president Francis Bernard sought to refute that suggestion. "People who are using Cadam and are pleased with it should continue to be Cadam users," he said. "They will get more than what they got in the past, and they will get it faster. We will protect their investment."

Mr. Bernard showed a roadmap of convergence between Catia, a high-end 3-D package, and Cadam. Improved coupling between the two is the first order of business, followed by a "highly interoperable environment" with a common data manager. Finally, there will be an "upward compatible next-generation product family."

Robert Williams, vice president for worldwide development in IBM's Industrial Sector division, said a bridge would be ready in the next year. Citing the common origins of Cadam and Catia, MR. Williams said "The bridge will be superior to any you've ever seen." A unified new product will take three years or more to reach market, he added.

Meanwhile, IBM will continue to build its low-end PC-based offerings. "Our mission is to become the leading supplier of value-driven products for IBM," said Mr. Williams. "We have follow-on technology under development that will combine IBM CAD and Micro CAD," two of the desktop lines retained by IBM. He declined to elaborate or give a time frame for the combination.

Dssault's Mr. Bernard noted that ports of Catia or Cadam to non-IBM platforms are not expected any time soon. "It's not a priority for us," he explained. "Our customers say IBM is OK, and we prefer to use our money and human resources on development of the products. Fortunately, we're partners with the number one hardware vendor."

The next year or so will also hold important developments for Computervision, which went through a tumultuous period in the late 1980s. A hostile takeover by Prime Computer was followed by a lengthy struggle when Prime itself became a takeover target, and finally was purchased and taken private by a New York investment firm, J.H. Whitney & Co. For several years, CV executives have said that Whitney plans to spin out Computervision in an effort to pay off debt and obtain a profit from the acquisition.

Following a presentation by Prime president and chief executive Jack Shields, Daratech president Charles Foundyller asked about Computervision's financial stability. "There's a unacceptable debt load, but good operating performance," said Mr. Foundyller. "Is there a plan to convert that debt to equity?"

"I can't comment on any initial public offerings, except to say it is an option, along with a private placement," replied Mr. Shields. "It will probably happen within 15 months."

Mr. Foundyller went on to say that reports indicate that Prime's noteholders are "clearly ready to accept paper" for their debts, and added that Daratech has revised downward its revenue estimates for CV. The firm no estimates that CV had a 5 percent decline in revenues last year and will be flat in the current year; Mr. Foundyller asked about the effect on CV's bottom line.

"You're in the range we estimate," replied Mr. Shields. "Our strategy is to displace hardware revenue with software -- our hardware gross margin is 20 or 25 percent while our software revenue is very rich, in the mid to high 80s. Overall, our revenue is flat, but if we can replace hardware, we will have a very successful, very profitable company. We would like to get to an 80-20 ratio."