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Monday, February 28, 2011

Excuse me, is this seat taken?

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Over the last several months, we have been asked by several players in the PLM economy about “seat counts” for various PLM solutions. This information is generally not published and is almost always confusing. The definition of a “seat” has as many variations as the ones creating the estimate or asking the question.

So, just what is a seat? Airplane seat (many of us in the PLM economy see too many of those, don’t we?), car seat (my time with those is up, at least for while), and I hope to see the two seats on the right in my down time. And, I also do not mean a SEAT.

Almost all of the solution providers in the PLM space apportion at least some of their portfolio by the seat. Over the last couple years, PTC has changed the way they report their numbers, and in their prepared remarks they provide great detail on seats of their products. Some solution suppliers occasionally talk about average seat price (ASP). For example, Dassault Systèmes reports on seats and average seat price in their earnings calls, but for SolidWorks only. Siemens PLM Software claims “6.7 million licensed seats” in their press release boilerplate but don’t specify what kind of seats. Some PLM solution providers have recently changed from “named seats” from “concurrent seats,” another compound use of the core term “seat.” Some offer “concurrent” add-ons to named “seats.” And still others claim to never offer “enterprise seats.” Most of the solution suppliers I spoke to would LOVE to have a consistent answer, but agreeing on a consistent definition seems to be a problem. So why can’t we have that good, consistent definition of a “seat” or a “license”?

As I said above, defining a seat is in the eye of the beholder OR the one asking the question. If I am in marketing, a seat count is the maximum it could be in the wildest estimation to improve the perception of size: demo seats, free seats, academic seats, seats where dust comes out of the keyboard when people try to log on, just about anything. (It is sort of how they count attendance at the University of Michigan football games – anyone inside the fence is “at” that game, which includes vendors, the bands, referees, the whole shooting match.) While these types of figures are good for press release taglines and Websites, they are not often instructive to others who want such data to make decisions. That is not to say large numbers don’t affect decisions. It is a measure of solution provider longevity and a proxy for provider size. However, in our work with industrial clients, they often want measures of “seats” in their geography, country, industry, or some other slice they feel is relevant to their decision process.

Others in the PLM economy have another definition in mind: for which seats are end users actively paying maintenance? This is where solution providers make a large percentage of their revenues, and there are many other parties interested in just how that maintenance revenue gets made over time, like the financial community. For example, Jay Vleeschhouwer has been making such estimates for some time to the benefit of the financial community and other interested parties. (Thanks Jay.)

In recent conversations with PLM solution suppliers as part of the data gathering for our 2010 Market Analysis Report (MAR), I have asked most respondents about this topic. One said the purest definition would be commercial “seats” on maintenance. Commercial does not include academic seats, and no demos, trials, or others (like seats provided to partners). A commercial seat is defined as a seat of software under maintenance that is being used to develop products by industrial companies This commercial definition gets to “gainful” use in the PLM economy – one for which the holder most likely paid a license fee and continues to pay for maintenance (to get access to bug fixes, updates and other covered forms of support). Yes, academic use is important, but more as “seed corn” for the next generation of designers and engineers. The “on maintenance” part would even include open source players such as Aras who have no license fees.

If you are interested in selling hardware, you might need an entirely different answer. I recently spoke to a hardware solution provider selling devices for use with active 3D CAD seats. For them, the right measure is really on the number of “boxes” of a relatively recent vintage being used for CAD or analysis purposes that can make effective use of their offering. Commercial or academic might be irrelevant here, as long as the users have the need and cash to buy that device.

How would YOU like to see the “seat” defined? If you have such a number, how would it benefit your role in the PLM economy? Inquiring minds would like to know. Follow Stan on Twitter @smprezbo.

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Stan Przybylinski

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