Article by Kenneth Wong, published March 2013, in Desktop Engineering.
Novedge and the Changing Face of Design Software Consumers
Perhaps it’s no coincidence that Novedge was founded on April Fools’ Day, 2003. The company’s cofounders, Franco Folini and Cristiano Sacchi, believed what many once thought was a joke — selling professional 3D design software the way Amazon.com sells books and CDs.
“To launch a new enterprise, you need to be a bit of a fool, so April Fool’s Day seemed appropriate,” noted Cristiano.
When Novedge opened its doors a decade ago, value-added resellers (VARs) were the be-all and end-all of how design software packages were bought and sold. VARs developed relationships with local businesses, convinced potential buyers of the need for 3D, assisted with installations, and provided tech support as needed. The conventional wisdom was that VARs were essential for design software commerce. Not too many vendors were convinced professional 3D software buyers would browse available titles online, read user reviews, and then click the “buy” button, like they would with CDs and DVDs.
But a decade after its launch, Novedge is a thriving online business. The company’s catalog is “rapidly approaching 10,000 titles,” according to Cristiano. It’s a far cry from the early days, when Cristiano and Franco’s overtures to software vendors frequently went unanswered. It took them four months to recruit 10 vendors. What began as a two-person business has now grown to employ roughly a dozen sales and support staff, working out of San Francisco’s start-up hub south of Market Street.
A New Kind of Buyer
“At the beginning, we decided to sell only through our website, and we chose our products based on that commitment,” said Franco. “As we expanded and added more complex products, we started to develop a hybrid system: now we still sell online, but we also have a team of dedicated professionals ready to answer questions and to support our customers by phone or email.”
But Franco and Cristiano noticed that many customers who make purchases online seldom contact them for tech support or troubleshooting. It’s a clue to the emergence of a new type of consumer of design software. Franco said, “[We are] more than surprised; we feel validated in our initial vision. Ten years ago, we recognized that our customers would be tech-savvy, confident, able to install new software on their own, and therefore would need minimal, if any, tech support.”
The VAR distribution model is deeply rooted in enterprise sales, characterized by repeated visits to client sites, multi-seat sales, long-term maintenance contracts, and customized implementations. This model doesn’t serve small firms and individuals well who want to purchase 1-5 licenses, with no complex IT setup or consulting needs. Because of lower profit margins, larger VARs don’t feel motivated to aggressively pursue such customers. This may be the underserved group Novedge has managed to tap into.
Franco said, “We also wanted to grow as a business by helping all professionals and designers succeed, from the individual freelancers to the big companies.”
One of Novedge’s appeals is speedy fulfillment. The company delivers its software orders quite often overnight or in 48 hours, bypassing the week-long or month-long wait typical in enterprise sales. “Selling online, efficiency is the difference between life and death,” said Franco. “We knew from the start that it was necessary for us to develop technologies and processes to fulfill the high expectations of our customers.”
Who’s On Board; Who’s Not; Who’s On the Fence
SolidWorks, the company behind one of the widely used 3D CAD titles in mechanical design, offers a student edition of its software through Novedge. “This is an individual, watermarked version of the previous year’s software,” explained Kristen Wilson, SolidWorks senior PR manager. The same student version of SolidWorks is also distributed through online student bookstores and supported through the SolidWorks Student Forum.
The company continues to rely on traditional VARs to sell and service the professional crowd, and to sell education licenses, intended for academic institutions. “The SolidWorks VARs continue to be an integral part of SolidWorks advocacy in education,” Wilson said.
By contrast, Autodesk uses Novedge to sell many of its professional titles, including Autodesk Inventor, AutoCAD, 3ds Max, and Maya. The company also distributes the same titles through its VAR network.
Novedge’s current catalog lists surface design programs (Rhino), product data management programs (Oracle), collaboration tools (Vuuch), rendering programs (Luxology, Bunkspeed SHOT, Luxion KeyShot), calculation software (PTC Mathcad), and others. Some popular CAD titles, such as Solid Edge, NX, and PTC Creo, are not in the catalog. Also missing are the more sophisticated simulation software brands such as ANSYS, MSC Software, and SIMULIA.
Mobile Apps and Cloud Changing the Game
IMSI/Design, makers of TurboCAD and DoubleCAD XT, is among those who use Novedge as one of the means to market and distribute its titles.
Bob Mayer, COO of IMSI/Design, noted, “VARs are still a valuable component of selling CAD/CAM/BIM/PLM products to professionals. We believe there will be a newfound role for VARs as more and more mobile apps are developed for customers in the AEC (architecture/construction/design) and Mechanical Design fields, priced commensurate with desktop apps. Developers (like ourselves) will need to develop gateways or other means of incorporating VARs into the selling process.”
IMSI/Design has invested heavily in developing robust professional-class mobile apps, selling directly through iTunes for as little as $0 (TurboViewer, TurboSite Reader), as much as $499.99 (TurboSite). It’s difficult to predict or foresee how VARs will participate in the app-centric future, in transactions facilitated by the iTunes and Android marketplaces.
The emerging trend of delivering software through the cloud (SaaS) also challenges the role of traditional VARs. Franco said, “All the trends point towards a future with easier-to-use and install software, less demand for tech support, and availability in the cloud. We are looking forward to playing a primary role as these changes come about.” Cristiano said, “We will play an even more important role as most of the software moves to the cloud.”
