Our penultimate article in this extensive Interview Series gets to some of the more fascinating questions both VectorWorks and ArchiCAD users have been wondering about ever since Nemetschek AG acquired Graphisoft last year. Why did they purchase ArchiCAD? How will the German AEC software giant utilize not just two but three competing BIM applications? Will these apps eventually merge? How does the group focus and what are some of the ways the group as a whole can leverage combined assets? In this article we delve into these questions.

This article also mentions that the Nemetschek Group -- taken together -- is one of the largest organizations with massive collective expertise in Macintosh software development. Where will this expertise be taken next within the arsenal of tools and technologies at the Nemetschek Group's disposal? Read on.

The Nemetschek Group and the Graphisoft Acquisition

AFR: I want to switch gears and talk about Graphisoft directly. In 2007 Nemetschek AG acquire Hungarian-based Graphisoft, makers of ArchiCAD. Why? 

(SF): When they bought Graphisoft, it was a financial holding company. It was to enrich the company's positions, and they wanted Graphisoft for their financial results. They [Graphisoft] occupied a key place in the global competitive landscape, and now that is a part of the Nemetschek Group rather than a part of another competitor.

That's it?

(SF): Those are the major reasons. The press was very unhappy with that because they are used to more of a centrally managed company like Autodesk. Their thinking goes..."well I bought this so something will have to be replaced."

But it doesn't really go down quite that way. Even in this case we can see how that doesn't work in the situation of Revit and Autodesk. They purchased Revit, but they can't get rid of the use of AutoCAD and AutoCAD Architecture.

With the Nemetschek Group we are running a very different approach.

You guys don't think the Autodesk way...

(SF): Nemetschek would like to see us not competing so directly. When I talk about horizontal integration, that is an example of us moving in a different direction -- that over time will cement our position as the designer's choice and differentiate us from the competition.

Even though we talk to the same customers we come in with different approaches.

We are talking about approaches to practice and how, say, a competitor like Autodesk approaches the market. What I hear you saying is that different firms need different tools because of their unique approaches.

(SF): That is right. There are different packages for different customer approaches. To think that every architect in any given market uses the same product with the same approach -- that is a mistake.

How exactly then will the Nemetschek Group impress upon both of your companies not to compete directly but have different paths? Will one company focus on vertical integration while the other focuses on horizontal integration, as you defined earlier?

(SF): To be honest, they are still trying to work that out. For the past few years there has been no central strategic management, so we have competed with everyone in the group. In Germany we sell with Maxon's C4D (Cinema 4D); in the U.S. we have a much stronger presence with our own RenderWorks.

That is how the holding company works. We have a fairly independent operation here in the office in Columbia.

Some assume the Nemetschek Group will direct Graphisoft to focus on the bigger firms, but clearly VectorWorks Architect already has global market share among bigger firms outside the U.S.

(SF): With Graphisoft, I don't think that is smart. I don't think you can segment the customer that easily. You can't say “everyone with 50 or less architects use this product, and everyone with more than 50 architects, you use this product.” Segmentation doesn't work that way.

When you look at ArchiCAD, when we go out to a customer, and they say that having very good construction cost estimation integrated into the product is important to them, well, we can't provide that and that is something that ArchiCAD does very well. But it doesn't have anything to do with the size of the firm or whether or not they are a pure architecture firm or an AE firm. That is something the group is figuring out: how to make this friendly competition idea work.

So if you go into a firm to talk to them, and you find they are working with ArchiCAD, do you say “that is fine,” politely excuse yourself and move on to the next potential new customer?

(SF): No. I think we compete. We assess if they are happy. Ultimately we are doing our best if we match up products with real customer needs. To make a happy ArchiCAD customer unhappy -- that is not doing anyone any good.

On the other hand, if we walk in to a firm and they say all they really seem to be doing is 2D drafting because they can’t figure out how to use it for BIM, then they are using the wrong product. Then we should talk to them.

Getting back to the global importance of the Nemetschek Group. Where is the group’s strengths?

(SF): As I said, Nemetschek is quite big, but the name is not well recognized and we want to improve on that--in the U.S. in particular. We have global product lines with high market share and unique technology in products from Maxon and Graphisoft, for example. On the Macintosh side, the Nemetschek Group is the undisputed leader in global and U.S. market share. We have approximately 90% of the Mac market, which is a market that has great growth prospects and continues to grow.

The press always cites Microsoft as being the second biggest developer of Mac products outside Apple itself, but that is just a seat and revenue picture. In terms of actual discreet products, both Adobe and the Nemetschek Group produce more major Mac products than Microsoft, which really just makes one major product, Mac Office.

(SF): The group has phenomenal Macintosh expertise. When you add in Cinema 4D (C4D), we are a major Macintosh software company. We have some of the best Mac graphics software expertise in the world. I think we need to leverage this story in the market. I think the Nemetschek Group needs to pull this together. How can we bring in other products? The group has a lot of really excellent European tools products. We are looking at how we can extend the Nemetschek range of products.

I go to SIGGRAPH and I always visit the MAXON folks there. I don't think the Nemetschek brand name ever comes up in the booth, in the marketing. I think the Nemetschek brand name doesn't get fairly associated with the products behind it.

(SF): That is an example of the thing we need to work on as a group. Obviously customers narrow down the list of who they will consider based on what their friend is using. That friend may not have done any good technology research at all. It is a momentum sale. The U.S. market is very susceptible to that right now.

But at least with the devices, machines, and solutions things are changing a bit now. Look at Apple, for example.

(SF): It is great to see people for the first time saying, "before I go and buy the windows machine, I keep hearing all this buzz about Apple, let me take a look at Macintosh”. If you get them to do that, it is amazing how many will buy it.

The effect of word of mouth and buzz is tremendous.

(SF): I think people didn't buy the Mac because they never looked at it. They heard about it, but they are a simple user so they are not going to break any trend -- which is funny because they are exactly the people who should be using a Mac.

It is interesting how many people you hear that are unhappy using AutoCAD. “Well what have you looked at beside that?” we ask? “Ah nothing," they reply. That is a shame. Maybe by raising our brand profile we can do what is happening successfully with Apple.

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