On Fri, 16 Jul 2004 10:22:08 -0700, Brooks,Bill wrote:
> We need to gather a bunch of programmers and designers together and
> beat
> this one out... after a few brews and a couple of black eyes, we might
> actually be able to get what the industry really needs.

Bill,

I honestly think there's two distinct markets within the physical PCB
design/entry tools market:

1) Those who want basic solid schematic entry, PCB layout, basic
Autorouting, CAM tools and (possibly to a lesser extent) basic
Analog/Digital circuit level simulation. I'd call this the "shrink
wrap" market that Ivan Baggett has referenced in the past. My opinion
is that this is where the real volume sales are since almost anyone
doing even basic electronic designs needs these tools. I believe if the
price were reasonable ($995 to maybe $2495 tops) almost any manager
would put this on nearly every engineer's desktop. An alternative for
say a $495 schematic front-end only (ala Orcad SDT in their heyday)
would also be a good option and a no-brainer as a standard engineering
tool for those that needed only design entry (i.e. an engineer that
never does PCB layout).

2) Those who want an all encompassing tool, much like DXP 2004 has
grown into. All of the above plus FPGA tools, (really good) 3D modeling
tools, project management tools, etc. Pricing? I dunno, whatever the
market will bear I guess. I really feel this market is much smaller and
more specialized. These users are also going to require much more tech
support and a changing feature set as they seem to always be doing
designs with cutting edge technology, whose projects are much larger in
scope and who work in teams.

I believe that a company such as Altium could do both without forcing
their userbase into purchasing more expensive tools they really don't
need or have lots of "features" they don't want.

As an example -- Protel99SE has progressed to a state where it is quite
stable and has a few known bugs that could be easily fixed. Why not fix
them once and for all and sell this package as the lower cost "shrink
wrap" package? Offer a bug fix update to existing users for a
reasonable price (heck, I'd pay for that gladly) and offer new users a
reasonable "basic" package. You already spent the money developing the
program, why not continue to sell it relentlessly? There would also be
very little ongoing maintenance required since the feature set is
stable and all the known bugs are already stomped out. The few new bugs
that do turn up can be fixed and paid for by ongoing sales of the
mature product since there will never be anything more than occasional
bug fixes to pay for. Tech support should also be fairly inexpensive
(relatively speaking), since there's also a lot of good documentation
in existence and excellent user's groups like this one.

Now put the majority of your development group on fixing and improving
your "high end" DXP2004 product. Those are the users that want and will
gladly pay for all the high-end features. These are the people that buy
tools based on features and utility and where price is virtually
irrelevant.

Will selling a "shrink wrap" version of the software cannibalize some
of your "high end" sales? Probably. But were those customers "willing"
upgraders or did they feel the pressure of using a now orphaned product
(ala Microsoft, Autocad to name but two)? Instead you split the market
into a small (but lucrative) high end market and a much larger general
market. Now the overall market of realistic sales opportunities is much
larger.  Only a small percentage of an already niche CAD tools market
will consider buying $8-10,000/seat software regardless what it does,
especially when many of the features that drive the pricing have little
or no value to a large part of the market. On the other hand, a "shrink
wrap" package that does all the basics and sells for what a decent
Office applications suite sells for opens a huge new market. I've seen
numbers that estimate the total number of design engineers using PC
based design entry/layout tools at about 250,000 worldwide. Imagine if
you could capture a large portion of the 80,000-100,000 seats Orcad
alone had at one time? Even at $500-$2000/seat that's not an
insignificant number, especially for a product that your development
costs are already paid for! You also have the option of migrating them
to your "high end" tools in the future, should their needs change.
Having users feel forced to upgrade to something "bigger and better"
(and more expensive -- at least twice as much in this case) because you
killed off the existing tool that meets their needs today loses a lot
of the goodwill built up over the years.

I believe there's a market for the tools Altium is creating in DXP2004,
but I also believe there's a much bigger (although less sexy) market
for a more basic and cost effective toolset. Ah well, that's my take on
things FWIW. I can only base my opinion on my particular needs, those
of the dozen or so Protel users I personally know and the designs I see
every day with the clients/contract manufacturers I work with.

Matt Pobursky
Maximum Performance Systems




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