Page 2 in this report.

In this commentary the argument that Apple should buy the Nemetschek Group of Germany assumes a premise -- which I hope is wrong -- that the German software giant isn't quite large enough to compete directly against a looming Autodesk in the global AEC smarket. In fact, the company seems to literally avoid a direct challenge with Autodesk.

In this interview with Sean Flaherty he remarks that the Nemetschek Group is "running a very different approach"...and isn't concerned with competing directly. And it was also reported to me recently from a well-known and highly regarded AEC industry writer that the Nemetschek Group backed out of an invited moderated "BIM shoot-out" between ArchiCAD and Autodesk's Revit. I have not yet corroberated this very recent claim however but it might be indicative of the Nemetschek Group's market positioning relative to Autodesk.

Apple and Scale

There may be European reasons that explain this more intrepid approach to global competition but the reality is that Autodesk is an aggressive competitor in the global CAD and AEC markets without an aggressive equal. Apple is an aggressive and surefooted competitor in design markets and fundamentally there may be three main reasons for Apple buying the Nemetschek Group.

Reason 1: Mac Tools Are Now Consolidated

While some may bemoan this statement, the reality is that the vast majority of Macintosh CAD market share is now owned by a single entity: the Nemetschek Group and its subsidiaries, with the two main rivals, ArchiCAD and VectorWorks, now in the same hands. A Jon Peddie research report earlier this year makes this also clear noting that the Macintosh CAD market exceeded $122 million (USD) in 2007, and is growing.

It is worth noting that the Apple subsidiary FileMaker Inc., reportedly topped annual revenues of $100 million (USD) back in 2000, though Apple has refrained from discussing FileMaker's performance in recent years. I only point this out to setup a parallel. Clearly FileMaker Pro is a mission critical application for the Mac maker, as it dominates the corporate and academic workgroup database market, as well as serves critical roles in nearly all of the small business segments where the Macintosh is seen as strong (architecture, law and medicine being chief among them).

Rumors have flown for years that Apple wants to sell FileMaker Inc. off, but I'm not sure I believe it. FileMaker on the Mac is too important to Apple's customers and that is why FileMaker is still under Apple's control.

In the same sense many of the CAD and 3D technologies in the hands of the Nemetschek Group are also critical to many of Apple's customers. With the main Mac CAD/BIM tools now consolidated under one group it means Apple can take control of these applications and assure their future success and hence preserve its current Mac customers.

Reason 2: Apple Might

The Nemetschek Group is filled with innovative software companies, like MAXON, Graphisoft and Nemetschek North America, all makers of key, award-winning, global software offerings. The group in general posted excellent growth-oriented results in 2007. Regardless, despite revenues exceeding 146 million euros, the US-based Autodesk just keeps getting bigger.

Yet, an ongoing BIM study by Architosh clearly suggest that there is strong interest in Apple being a more active player in the global AEC market, especially on the architecture side. An Apple acquisition of the Nemetschek Group would instantly resonate with a large segment of the AEC market which have found -- in recent years -- a new appreciation for Apple's technical prowess, vis-a-vis the iPod and the new iPhone.

With $19 billion in the bank Apple can not only afford such an acquisition, it could also afford a multi-year effort to go after the global AEC CAD market, estimated to reach as high as $4 billion (USD) by 2012.

Apple's might includes more than its money. It has made consistently smart technological decisions with its operating systems and developer tools. And it has recently acquired the unique and powerful assets of PA Semi. Moreover, its proposal for OpenCL and the use of parallel computation using graphics processors could portend great things for such programs as engineering, visualization and CAD/BIM.

The bottom line is that Apple could do much with a war chest such as that owned by the Nemetschek Group. It already contains what are arguably some of the best apps in the industry.

Reason 3: Autodesk Could Buy It

Perhaps the best reason of all is that Autodesk may eventually buy the Nemetschek Group. If you think this won't happen maybe you will change your mind after it buys Bentley in 2009. Bentley's civil and plant products and its new innovative GenerativeComponents (GC) software in particular make great additions to Autodesk's growing line-up of market-leading tools. At least that is what I would be thinking if I was CEO of Autodesk.

Their new strategic interoperability alliance happens to also take dead aim at the Nemetschek Group's efforts to foster a common open file format in IFC. And furthermore, this new alliance may also hurt Adobe's PDF in the engineering and CAD markets through a common support of Autodesk's Windows-centric DWF file format.

Even if Autodesk never buys the Nemetschek Group-- which is likely remote -- it may definitely continue to buy other innovative companies. And many of them will be Mac developers; they will leverage every dollar out of them (including those dollars from the Mac) while planning deliberately to not aid Apple's growth in any one dimension unless it particularly suits their own profitability.

Acting this way isn't evil of Autodesk, it is just plain smart business, and the company should be commended for many of its recent strategic moves. But make no bones about it, Autodesk is an Apple rival and often their success comes at a loss for Mac users.

Closing Comments

The reality is both Apple and Autodesk are both saying to the world that they are the proven tool makers for those that create, those that envision a better world, those that are artists, designers, architects, visionaries -- you name it. They are both competing for the same customers on many many fronts, it's just that Apple doesn't see it that way.

Yet Apple's results speak for themselves. And the counter-argument to this commentary's thesis is that they only need to continue to build great machines, built on a great OS X platform, and provide a great developer environment...and the rest will take care of itself. Indeed, Autodesk might one day being saying, "let us in, we want to develop for you, not compete with you." --- ANTHONY FRAUSTO-ROBLEDO, Editor-in-Chief

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