PTC Subscription: Acceptance of the New Way Customers Want to Buy Software

PTC introduces subscription licensing option to its entire portfolio.

Gavin Quinlan, PTC’s senior director of product marketing, came from the company’s reseller channel. Before working for PTC, he was head of a major PTC reseller in Europe.

He said, “Every customer I’ve ever dealt with was a 2-5 seat installation. That forms the core of our customers. Our products are not just for the large companies.”

Since subscription software allows startups and cash-dependent design shops to acquire the technology they need at a much lower upfront cost, the licensing model is generally associated with small and midsized businesses (SMBs). But in a recent survey, PTC found out that 90% of its customers want subscription -- a clue that the preference for the model may not be confined to the lower tiers ("PTC Introducing Subscription Licensing for All Software").

In early 2015, PTC began offering its Windchill PLM (product lifecycle management) products in the SaaS (software-as-a-service) model under its PLM Cloud program. ("PTC Charges into the Cloud with SaaS PLM"). At the time, Tom Shoemaker, PTC’s VP of product marketing, remarked, “In the past, we’ve been a bit skittish with our answers about our Cloud strategy,” acknowledged. “Now, we can say, yes, we’re here, we’re all in.”

In the prepared remarks for its 2015 Q1 financial results, PTC says, “[PTC Cloud] solution leverages the power of PTC Windchill, while simplifying PLM adoption with a flexible, hosted subscription offering deployable at a pace that matches the needs of SMBs.”

This year, PTC began offering its entire portfolio under the subscription model. Quinlan said, “Subscription licensing is a recognition that the way people prefer to buy software is changing. Paying for one annual price that covers the year’s software and support cost is a much more predictable way to do business.”

In the prepared remarks for its 2016 Q1 financial results, PTC says, “In Q1’16, subscription solutions bookings represented 28% of bookings … Unlike the traditional big-deal enterprise perpetual model, subscription models generally follow more of a ‘land and expand’ dynamic with more frequent, but smaller transactions.”

Subscription licensing among CAD vendors was once the exception. Today, most major CAD vendors have embraced the model. Along with PTC, Siemens PLM Software’s Solid Edge division, Autodesk, and SolidWorks now offer subscription option.

It should be noted that not all subscription design software titles are cloud-hosted or browser-based. Most mainstream CAD products currently available under subscription licensing -- including those from Autodesk, SolidWorks, Siemens PLM Software, and PTC -- require a local installation. On the other hand, many PLM titles for subscription tend to be cloud-hosted, browser-based SaaS offerings.

Quinlan revealed that PTC is also planning to unveil a new program targeting the startups around the PTC LiveWorx event. He added, “We see a lot of innovations coming out of the world of the makers, inventors, and IoT startups. We understand that, when you’re a startup, cash is king. We’d like to do everything we can to engage with those customers. We’ll provide a program that allows them to get their software initially at no cost.”

PTC recently entered a partnership with 3D printing system maker Stratasys, in a nod to the growing desire among product designers to explore additive manufacturing (AM) not as a prototyping option but a manufacturing method.

The announcement says, “The joint vision is to make additive manufacturing more accessible to designers and manufacturers and to allow them to fully realize the advantages of the technology. These advantages include geometric freedom and part functionality, economic low volume and on-demand manufacturing, the production of customized products, and more.”