Dassault Systèmes soon to turn to B-to-C
I had recently posted a few excerpts of an interview, given at a venture capital event in Paris, of Bernard Charlès, the CEO of Dassault Systèmes. This time this post is about Dassault Systèmes, a world leader in product life cycle management (PLM) solutions aimed soon to turn to B-to-C 3D environments.
An public company listed (Euronext), Dassault Systèmes is a spin off of jet manufacturer Dassault Aviation – born after a bunch of people decided to market outside the company the CAO software they had devised for internal purpose. 60% of Dassault Systèmes is owned by a number of historical, managerial & institutional investors. Thanks to its locked capital structure, Dassault Systèmes engineers don’t get disturbed by M&A rumors such as Business Objects software guys, which helps the management (Charles Edelstenne, a chartered accountant and significant shareholder, as a President & Bernard Charlès as an executive director) execute their very conservative and yet aggressive acquisition strategy (DS is hot on acquiring strategic targets; e.g. SolidWorks in 1997, MatrixOne in 2006, etc.).
DS competitors include AutoDesk, PTC, SofTech, EDS-PLM Solutions, MSC Software, Aras Corp, Arena Solutions, Agile Software Corporation & Unigraphics on a fast, 2-digit growing but yet cyclical market. Indeed, in case of an economic downturn, R&D budgets are likely to be cut first (which I think is dumb, but what can I do about it?). And since PLM is aimed at R&D departments…
Dassault Systèmes is truly international software company: 60% of its revenues are generated in Asia & the Americas. Unlike a majority of software publishers who prefer to keep product development centralized at corporate headquarters (such as Microsoft does), Dassault Systèmes has R&D centers spread all over the world (France, USA, India, Israel, etc.) – which I think is good in the business of technology: it fosters competition, diversity, creativity & innovation.
Dassault Systèmes has one of the best software development teams worldwide: their people are highly knowledgeable in a number of areas such as C++ programming, 3-D modeling & mathematics, industrialization processes, & mechanical engineering. Oddly enough, and although Dassault Systèmes isn’t famous for paying software developers so well (compensated by a highly technical culture within the company & a number of perks such as preferred shares, no work on week ends, etc.), staff turnover is extremely low. Headhunters spend a lot of time trying to recruit these high flyers for their software clients, but it’s no piece of cake: Dassault Systèmes’ technology is cutting-edge in the industry. DS engineers know too well about their technological competitive advantage and are, as far as I know, usually proud of their company.
DS’s product portfolio include 5 brands: CATIA, DELMIA, SIMULIA, SolidWorks & ENOVIA. Each one of these address specific market segments & functional needs. See for yourself: product engineering for CATIA, life cycle management & product data for ENOVIA, manufacturing process simulation for DELMIA, physical phenomena simulation for SIMULIA, etc.. In total, DS’s 5 brands have been packaged into 400 different products!
Dassault Systèmes’ 90,000 clients include Boeing, Embraer, Airbus Industries, Toyota, Smoby, Essilor, Nordica, and, this is pretty new, a number of pharmaceutical companies. One of Dassault Systèmes’ major upcoming challenge, considering the sector diversity of its clients, will be to integrate its clients’ know-how into DS products.
When it comes to distribution & integration, DS rests on a vast ecosystem of local VAD and global partners. The most noticeable of these partners being IBM: Dassault Systèmes & IBM Software Group have been working together for more than 25 years. The latter is responsible for marketing & deploying the solution to Fortune 500 corporate accounts – which enables DS to focus on its core business: crème-de-la-crème product development.
A few figures now: DS is to generate US$ 1.5 bn of revenues this year, representing a US$ 6.5bn market cap. Its business model is one of the most profitable in the entire software industry, with gross margins reaching 48%. DS employs 7000 people, amongst which 3000 are R&D engineers (1,700 of them are located just outside Paris, in Suresnes).
Let’s add to it some corporate bullshit: DS’s vision is that “3D opens the door to the world we imagine“, and its mission is to “enable people to create innovative products & experience the whole life cycle to build a better environment for the future“.
Last but not least, Dassault Systèmes has always led market trends: I take the company’s ability to drive strategic shifts successfully very seriously. Check this out: in the 1970s, DS was in 2D CAD; it turned to 3D CAD in 1985. It turned to process modeling in 1995, and packaged the whole thing into PLM solutions in early 2000. Now the company’s been focusing on integrating more client knowledge into its products. Its roadmap include turning to realistic simulation and 3D collaborative tools at the 2010 horizon.
Dassault Systèmes has always operated in the B-to-B market, leaving a share of the pie to its value-added resellers. At Capital IT in Paris recently, CEO Bernard Charlès announced Dassault Systèmes was to turn in the short term to the consumer market. In Bernard Charlès own words, DS is to come out very soon not with a Second Life-like, but with a “First Life”. The underlying rationale of this strategy being to provide a tri-dimensional environment to everyone. Turning to B-to-C is so exciting! Considering the tradition of the company to deliver top quality products, I hardly see any market adoption risk.
Needless to say, I purchased 50 Dassault Systèmes shares @ a EUR 40.55 price each, after running the company numbers thoroughly. I’m confident on the company’s long term potential, and I’m holding the stock until it reaches EUR 65 – which according to my financial forecast & crash test should occur within a 24 months time line.
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An interesting article about a very amazing company.
A few words for the blogger : I don’t know anyone who shows his passion for IT in a better way than yours.
Go on like this, ‘mec’ !
I got the message Jeremy. Things are very clear now. I am going to purchase 30 shares right now!
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