It's been a long time in the works! After endless feedback from our user base and months and months of work, Alibre is ready to announce the availability of the public beta for Alibre Design 12.0. If you haven't seen the new features, check out the 40 min. comprehensive video demo located at http://www.alibre.com/v12sneakpeek. The video goes through almost all the new functionality.

The beta is available to any Alibre customer on an active maintenance agreement and can be downloaded after signing a brief NDA.

If you are interested in participating, get started here.

We'll be publicly announcing all this outside the blog in our newsletter on Tuesday, July 14th.

The term “Creative Destruction” was coined by Joseph Schumpeter in his book "Capitalism, Socialism and Democracy" to denote a "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."

While Schumpeter was focused on innovation and its impact on mainstream companies, the current economic crisis can also be seen as a process of “Destructive Creation”, with destruction coming before creation.               

According to many economists this is not an ordinary downturn, the contraction under way reflects a fundamental restructuring of the American economy. In crucial industries — particularly manufacturing, financial services and retail — many companies are exiting whole areas of business.

Many of the businesses that are failing or being left behind are actually very good businesses that have simply been ruined by greed, poor management, and obsolete business models.

In fact, companies like AIG, Citibank, GM, Chrysler and GE, who represent some of the world’s large conglomerates, arguably existed only because a booming stock market, easy credit and financial derivatives enabled them grow to dominance. These companies may cease to exist but the need for their products and business lines do not.

The collapse of large companies or their exit from “unprofitable” lines of business can lead to a flowering of innovation and company formation as new businesses spring up to take the place of the former monoliths.

Life, death, and rebirth are the endless cycle that defines and confines our world and us. Losing your job or seeing a business fail can feel a lot like the end as you watch everything you have built, your hopes and your plans seemingly dissipate and disappear. When a company closes or shutters divisions, it is the end for that organization, and may also be for employees and business partners.

Life as we know it has changed, whether you are an engineer or a Wall Street tycoon. Anytime there is significant unexpected change, you have insecurity. When there is fear, people naturally hunker down. What is unclear is how much of the slump is cyclical and how much reflects a permanent change in business and consumer behavior.

While we may regret the passing of an Chrysler, or GM, their demise will set the stage for the beginning of a new cycle. Just like the fruit of an apple tree that rots on the ground, fertilizing the seeds contained within, starts a new cycle of life, growth, and production.

Now is the time to shed fear and embrace these troubling times as a great opportunity to put the country and ourselves back on a rational path to prosperity.

Alexander Hamilton almost single-handedly invented the American financial system by persuading the first US Congress to consolidate all state debt into  a single national debt, create a national bank, and issue currency. 

Hamilton believed that manufacturing was the key to the prosperity for the new United States and also recognized the need for a strong financial system to finance and support the expansion of production.

The recent era of financial engineering represented a repudiation of production as the basis for prosperity, substituting consumption in exchange. Hamilton is probably still turning over in his grave, but at least now there are signs of a return to his core principles.

According to an article in the New York Times titled With Finance Disgraced, Which Career Will Be King? “A new pattern of occupational choice seems to be emerging. Public service, government, the sciences and even teaching look to be winners, while fewer shiny, young minds are embarking on careers in finance and business consulting.”

University of Texas at Dallas (UTD) Enrollment – a leading indicator?
Is student enrollment in UTD’s engineering school a leading indicator of a significant shift in the value frameworks of young adults?

Recently, we had the honor of visiting with the new Dean and several faculty members at the University of Texas – Dallas (UTD) School of Engineering and Computer Science. We were very surprised to learn the Mechanical Engineering Department is their fastest growing department.

UTD’s Mechanical Engineer Department is less than one year old, but already has about 40 students. Enrollments by fall 2010 are projected to nearly quadruple the number of ME students to over 150. By the fall of 2011, enrollment is expected to quadruple again to more than 600.

We met with Dean Mark W. Spong, until recently the Director of the Center for Autonomous Engineering Systems and Robotics at Illinois University. Dean Spong told us UTD is seeing dramatically increased interest in science and engineering, especially Mechanical Engineering, Materials Science, and BioEngineering. He attributes much of this to recent economic trends and changes in the psychology of enrolling freshmen. Dean Spong mentioned three fields in which student’s perceive increased career opportunities:

These fields are fertile ground for engineering and science majors and represent global technology markets that require mechanical engineering education and skills. They are also top priorities of the Obama administration and are receiving the greatest amount of funding from the American Recovery and Reinvestment Act.

History as a Lesson for the Future
During The Great Depression, Roosevelt put the nation back to work through the Works Process Administration and the tens of thousands of newly employed Americans that proceeded to build or rebuild countless schools, libraries, railroads, highways, and bridges including the Hoover Dam.

Science and Engineering also led the way during the space race and man’s landing on the moon. In those days, they were glamorous fields that attracted the best and brightest. The innovators of this age went on to create the technologies that define our civilization today.

Science and engineering represent the backbone of the American Dream, with the recent diversion into financial engineering clearly a “bridge to nowhere.” Engineers do interesting and important work, are well-paid and well thought of in their communities and make a difference to people and society as a whole.

That’s Why They Call it Work
During the early 70’s when I was choosing a career, money and stability were important since I already had a wife and baby. I wanted to do something that was also challenging and that would also support my family. I chose Computer Science because it was the closest thing to Robotics offered by my local community college.

I have always believed that you had to do real work, make a real contribution, in order to have a rewarding and secure career. For me real work is hard, it takes a lot of passion, commitment and perseverance, but it is worth it. Real work creates something that is real, something that is valuable and useful to others, that improves their lives by solving real problems or creating new opportunities.

In my experience, the greatest rewards are found in the work when it is done, rather than when it is being done. When you make or build something that has real value to others the rewards from seeing them use it to are much greater than money.

John Fitzgerald Kennedy

In February, another 168,000 manufacturing jobs were eliminated, bringing losses over the last year to 1.2 million. In Michigan, where the troubles of the auto industry have been particularly traumatic, the unemployment rate is at 10.6 percent, the highest of any state.

President Obama responded to the figures by declaring that “this country has never responded to a crisis by sitting on the sidelines and hoping for the best”.

Folks, we have gone awry in our haste to embrace a service economy and outsource manufacturing.

According to Doug Noland, the Portfolio Manager for Federated Prudent Bear, “the U.S. is doomed unless it rebuilds its manufacturing base. To really turn things around, we need to build an economy where we can produce things, and there is very little being done today that addresses this fundamental requirement. Unfortunately, over many years we had gotten to the point that all we were trading for imports were financial claims."

The expectation for people to be disciplined, focused and responsible has become increasingly rare in this world. We have to seriously look at fundamentally rebuilding the economy. We’ve got to use this moment to shift our mindset in a direction that breeds success.

Product Design Entrepreneurs
You have probably heard how web-based and iPhone software development companies can now be formed and launched with little or no capital investment due to the proliferation of software component technology and open source software. Many software companies are now starting without venture capital, and are financing themselves from savings or small investments from friends and family.

You may not be aware that the sames trends that are benefiting web and iPhone developers are now paying off for engineers, inventors and product innovators. They now have the ability to assemble a low-cost design platform for as little as $500 - $1000. Making it is now possible for engineers and designers to satisfy their entrepreneurial yearnings with very little out-of-pocket expense. An earlier blog post titled "Netbooks + Freemium Software = Low Cost Design Platform" explains how.

Successful Alibre Design Entrepreneurs
Alibre just finished exhibiting at the 2009 Pacific Design and Manufacturing Show. We were pleased to see that the exhibitors and attendees were upbeat in spite of the down economy. Show floor traffic was not quite as high as last year, but it was pretty good nonetheless. Rapid Prototyping vendors and service bureaus had a lot of traffic, as did the Medical Design and Manufacturing exhibit area.

We were also gratified that many Alibre customers stopped by the booth to talk to us about how they are using our product. Our customers have a lot in common with each other. Many of them are small business owners that are also the primary product innovator and designer for their company. They have literally taken their product ideas and turned them into successful companies.

Another common theme is customers that use ExpensiveCAD at work who have discovered that Alibre Design is the perfect CAD choice for their own consulting business or for creating that breakthrough product they have always dreamed of.

One Alibre customer, Jon Henderson, President of Sienco, Inc. (www.sienco.com) even brought a recently designed and manufactured medical measurement device by our booth to show us. Stephen Luse President of Ortho Kinetics, JoeCardoza President of EZ Connector Inc., and John Sylora President of Universal Multimedia Inc. all came by, as did many others. All in all, many great examples of entrepreneurial engineers living the dream of creating and manufacturing products that form the backbone of their successful businesses.

We received an unsolicited email from a customer today and he gave us permission to publish it. The identity of the SolidWorks VAR was removed.

From: Ralph Hilton
Date: March 11, 2009 2:16:12 PM MDT
To: XXXXX XXXXX
Subject: Re: SolidWorks 2009

Dear XXXXX,

After receiving a quote on your overpriced software last spring, I purchased Alibre for about $1,400.00 (includes maintenance and a load of plugins).

I have about 2,500 hours experience on SolidWorks and I've got to tell you, I much prefer Alibre (about 600 hrs experience).

It is much easier to use, and I have been very pleased at the 3D models and drawings I have been able to generate!  The Bill of Materials generator is MUCH better and manually flexible.

ALGOR FEA, which is included in the above price is very powerful and runs as good if not better than COSMOS Express.

The built in help system is much better written and actually helps a user like myself.

Their phone support (rarely needed) has been immediately available and accurate.

I'm so happy that you have some real competition, if only more people knew about Alibre, I think you guys would be in a run for your lives.

Have a great day.

Regards,

Ralph Hilton PSE
Hilton Engineering Inc.

> On Mar 11, 2009, at 11:32 AM, XXXXX XXXXX wrote:

> Good morning Ralph,

> This is XXXXXX from XXXXXXX, your local vendor for
> SolidWorks. 

> Because companies are looking to be aggressive right now,
> XXXXXX and SolidWorks are offering some monumental savings
> and great financing promotions on new software. This makes
> right now an excellent time to look at SolidWorks, add
> additional seats, or just get more information.

> If there is anything I can help you with please let me know.

> Best regards,
> XXXXX XXXXX | XXXXXXXX

A secular change in attitude is sweeping the country, replacing conspicuous consumption with conspicuous frugality. From big business to mom and pop, it's smart and trendy now to save money, ask for discounts, and shop for bargains. As the stock market sinks and unemployment rises, today's status symbol is the hot deal.

It seems like only yesterday that conversations in the office and the mall centered on new houses, new cars, private schools, and planned summer vacations. Now folks openly admit stock market losses while proudly boasting of self-reliant lifestyles and making do with less.

The thrifty mood of the country, prompted by a deepening recession, is helping Alibre take advantage of our penny-pinching ways. We were frugal before it was cool, and now we can see a growing appreciation for our approach among customers.

During the boom years, Alibre was sort of like the Rodney Dangerfield of 3D CAD, we couldn’t get any respect. Companies would learn about Alibre, check out our product, learn that we could do the job and then buy SolidWorks or Inventor anyway. When asked why they would say “my boss doesn’t understand how Alibre can be so inexpensive” or that they “wanted to make the popular choice to use what others were using” or that “cost was not a factor.”

During the last few months the conversations have changed, now we are much more likely to hear, “we were looking at Solidworks, but there is no way we will spend that kind of money.” This is especially true of companies that need to buy multiple design seats. With our recent 2 for 1 seat sale, companies could by 5 seats of Alibre Design for ~$3,000 including maintenance, whereas 5 seats of Solidworks with maintenance would have cost $30,000.

And with recent addition of Alibre Translate, companies can be successful with their older CAD files and take advantage of Alibre’s Professional, Affordable 3D CAD.

A factor of 10 in a down economy is pretty compelling.

Ralph Grabowski, Editor of the upFront eZine and the WorldCAD blog, picked up on “The Future of 3D CAD Software Pricing” blog from last month in his article titled “Can Low-Cost CAD Benefit from These Spartan Times?” He also linked to an interesting article in the New York Times titled “ $200 Laptops Break a Business Model.” Then the Wall St. Journal quickly followed with an article called “The Economics of Giving it Away.”

While Ralph and I often don’t see eye-to-eye, I do appreciate his entrepreneurial spirit, and willingness to raise topics that are uncomfortable for the ExpensiveCAD vendors. Unlike most major US publications, you don’t find much “Separation of Church and State” between the editorial and the advertising departments at CAD publications, so it is rare to find a journalist like Ralph in the CAD business.

Reading these articles got me thinking about the concept of a next generation, but “low cost”, CAD platform. The history of the CAD software business, even more so than other software businesses is closely linked to specific computing platforms. Think CATIA / Mainframes, ComputerVision / Minicomputers, Pro/E / Unix Workstation, SolidWorks / Windows PC. The mainstream CAD product of a technology generation is the product best suited for the computing paradigm of that generation.

Historically, it has always been a struggle to get enough performance in a computing platform. In most generations the platforms have been underpowered, resulting in limitation in features and capacity of the design applications.  Recently, mainstream computing platforms have caught up with and are now surpassing the performance needs of even high-end 3D CAD design.

Now, we have entered the realm of Netbooks and Freemium software that together define an emerging technology platform that is characterized by affordability, accessibility, and ease of use. As David Title says in “$200 Laptops Break a Business Model”, “We’ve reached one of those moments in tech history when there are low-priced and free alternatives that are both user-friendly and reliable enough to make the switch. Then there’s the extra bonus of saving some cash.”

Most current Netbooks are still a bit underpowered for 3D CAD, but are probably sufficient for 2D. Ralph Grabowski has been running AutoCAD 2D on his Netbook and describes his experience here. Netbook performance is advancing rapidly, but a $500 laptop is probably a better choice for 3D CAD today. Alibre has been purchasing $500 laptops for all of our employees, except for the software developers, who are still using desktops. However, we are only spending about $500 for each of those and we get faster processors, larger hard drives, and better graphics instead of paying a portability premium.

Low Cost Design Platform Components
It is actually quite surprising how much choice you have in low cost design platform components. Here is a brief summary by major component area:

Bottom Line
I am not really trying to get you to run Alibre Design or other 3D CAD programs on a Netbook, although it is possible to do so. Most people that buy a Netbook, will do so because of their extreme portability combined with their very low cost. They are hard to beat for Internet browsing and watching downloaded videos on the road.

However, the Netbook phenomenon does illustrate how far we have come in affordable personal computing. You can rest assured that it won’t be long, perhaps another year or so, before you really can run high-end 3D CAD on a Netbook. Even then, most 3D designers will choose a large screen laptop or desktop with a flat screen monitor for the larger visual modeling and viewing area.

The point is that technology prices for CAD hardware and software continue to decline, except in the land of ExpensiveCAD where the CEO’s continue to brag of every increasing Average Selling Prices. Improving price performance means that 3D CAD platforms are more affordable, leading to increased utilization of 3D CAD by a broader set of more innovative companies and individuals. And that is a good thing.

Many people are wondering how the global recession will impact CAD software companies.  After all manufacturing is one of the hardest hit segments, and manufacturing companies are the largest consumers of high-end CAD software.

So far the news is not good. PTC just announced that they would miss earnings estimates and CEO C. Richard Harrison said, “The global economic situation has impacted our financial results.” He also said the shortfall was due to reduced license sales in all major geographies.

Autodesk and Dassault Systemes, also both missed expectations in their most recent quarters. At that time, Autodesk said they had seen a “sharp downturn, a dramatic fall off in demand in all geographies” and Dassault reported “a fairly large sequential drop in SolidWorks units” and a 2% decline in revenue.

In addition, S&P Equity Research said it expects demand for new CAD licenses to worsen in the next several quarters on lower worldwide manufacturing activity.

What Happens Now?
We are in for a rough time in 2009, even if only the moderate-case predictions come true. Worst-case, poor conditions could continue through 2010 or later.

The large CAD software companies have been primary beneficiaries of the boom cycle during the last 15 years. During the early stages of the recession, through mid 2008, they continued to benefit due to a rapidly declining US dollar.

Now the stage is set for a significant reversal of fortune. Dassault Systems, Autodesk, and PTC all have huge infrastructures that require high-priced, high margin revenue to afford. They are geographically dispersed, with sales, marketing, and development offices spread around the world. Most of them have expensive direct sales forces and broadly deployed sales partners. This whole edifice is going to be under enormous pressure.

You can be certain that cost cutting is already underway with marketing, advertising, trade shows, and contract positions the first casualties. Further consolidation seems inevitable, likely starting with layoff announcements of 10-20% in the next month or two. This will be followed by less publicly acknowledged reductions in office space and facilities. More worrisome is the potential for a second or third round of cutbacks if the worst-case economic scenarios develop.

Most of the employees of these companies have never known anything but boom times and are totally unprepared to undergo the dramatic cost reductions and downsizing that will occur.  Company culture, a fragile thing, will suffer.

3D CAD Software Pricing History

We wrote about the Evolution of 3D CAD previously. In light of the growing impact of the recession on manufacturing companies and their suppliers, lets take another look at where we have been.

1970 – CATIA / Mainframe - $1,000,000
1980 – ComputerVision / Minicomputer - $100,000
1985 – Pro/Engineer / Workstation - $20,000
1995 – SolidWorks / PC - $5,000

Every decade for the last 50 years, there has been a significant shift in the CAD software market that was driven by rapid improvements in computing price performance. Interestingly, the price of CAD software also very closely matched the cost of the hardware it ran on. It is hard to believe that companies paid over a million dollars a seat for CAD software in the 70’s.

Now it is 2009 and the economy is facing the deepest recession since the Great Depression. Today you can buy a high-end CAD computer for $1000 and yet we are still stuck paying $5,000 a seat for SolidWorks, Inventor, and Pro/E.  The average selling prices of these products continue to increase with SolidWorks worldwide average selling prices approaching $7,000. To add insult to injury AutoDesk recently increased the price of AutoCAD LT, their low-end 2D software, again and it now costs more than $1,000.

Breaking Free
The CAD software industry is stuck in a pricing and business model that no longer makes sense, especially considering the slowing economy and the dire need for companies to reduce costs and conserve cash.  The natural inclination for all businesses is to seek improved profit margins, but rather than using process and technology innovations, the CAD software companies want to increase prices.

In order to justify these higher prices, the CAD companies add complex new features and extensions that overburden the product, cluttering the user interface and making them harder to learn.

Large CAD software companies also seek to maintain their dominant positions by locking customers in, making it difficult or impossible for them to switch to a competitive product. One of the ways that they do this is through proprietary file formats. In addition, they also use long-term software subscriptions and maintenance contracts, so that customers cannot easily reduce usage even in a downturn.

However, there is also a long-term trend away from large-scale vertically integrated manufacturers, and the recession will only cause this to accelerate, resulting in the proliferation of consultants, independent design companies and small manufacturing job shops. As this occurs, the founders and employees of these new companies will look for lower cost CAD software that can get the job done without the added expense of unnecessary bells and whistles.

With many manufacturing companies cutting work schedules and staff in response to the recession, the design engineers affected will turn to other lower cost 3D design products like Alibre Design for moonlighting and entrepreneurial efforts. After all it is not likely that a designer facing cuts in personal income can afford to spend $5,000 for SolidWorks, Pro/E, or Inventor for his or her own use.

Best-Cost CAD
In the current economy, customers are becoming much more price and value sensitive. Only Alibre is positioned to take advantage of this with average selling prices of $1,000 a seat for our design software.

Our strategy is to give customers more value for the money, and to do so by making a product with high-end features available at a lower cost. We call this strategy the “Best-cost” strategy because it combines a strategic emphasis on creating the “Best” product with a strategic emphasis on providing it at the lowest possible “Cost”.

We believe the key to success is to closely match our competitors on key product attributes while also beating them on price. Consequently, we have developed the organizational skills to both increase product features and manage costs down.

Alibre’s approach is to strive relentlessly to become a lower and lower cost provider of a better and better product, with the intent of becoming both the CAD software industry’s lowest cost producer and, simultaneously, the CAD software industry’s overall best product.

The Easiest CAD Company to do Business With
In addition, we are dedicated to being the easiest CAD software company to do business with. This starts with making our software fast and lightweight, yet very easy and simple to use.

Alibre also believes in making our products and company easy to access. Many customers find us through the Internet, via a search engine, or by word-of-mouth. And unlike our competitors our prospects can quickly find, download, install, and learn our products quickly and easily. The products include built-in help systems and extensive tutorials.

Finally to make the products easy to buy, we offer telephone and online sales, interest free monthly payment plans, and a 30-day money back guarantee. Customers also receive telephone and online support along with both video and instructor lead online training.

Alibre’s Outlook
All companies are impacted by the recession and Alibre feels it as well. However, we are already a very lean and cost efficient company with a finely honed low-cost business model.

We rely on the Internet for marketing, sales and product distribution. We have over 150 Value Added Resellers worldwide, but do not have any infrastructure or employee investment outside of the United States. All of our employees are located at our headquarters in Texas.

The only physical products we manufacture are DVD’s and manuals for customers who are willing to pay extra for hardcopy and offline backups.

Arguably we are positioned to benefit, or at least suffer less, than our large CAD competitors.

Is it possible that the overpriced status quo in the CAD software business is an artifact of the economic boom of the last 15 years, and that the $1,000 price point is the next mainstream? Alibre thinks so, now all we need is for engineers and designers to put us to the test.