Exclusive: Autodesk Explains How Phasing Out Perpetual Licenses Will Help You

During Autodesk's Investor Day 2014 last week (Oct 1st), Andrew Anagnost, Senior VP of Industry Strategy & Marketing, announced to investors that the company is planning on phasing out the sale of new perpetual licenses over the next 12-24 months. Making the transition through an aggressive expansion of the desktop subscription-only service the company already has. Anagnost's presentation to investors discussed the rapid growth of desktop subscriptions over the past year, which was helping build interest in the move. Unlike perpetual licenses, desktop subscribers have pay-as-you-go access to the software. Anagnost also pointed to the growth in the number of Cloud service subscribers the company was seeing. Approximately a third of these subscribers were completely new customers to Autodesk, and that part of the plan for increasing the value of the desktop subscription model was to add to them more features like Cloud services. To this end, Anagnost announced the company's was also planning to include a Cloud service with every new subscription. According to Anagnost, another big reason Autodesk was planning to move exclusively to a pay-as-you-go service was because of the large number of perpetual license holders it maintains. These are customers who buy a perpetual license, but then use it for years without upgrading. "These are all non-subscribers who purchase perpetual licenses on an infrequent basis," stated Anagnost. He went on to explain that, year after year, the company consistently sees 2.9 million customers who are "one to five releases back" on Autodesk's current versions. For the company, this group represents a "huge opportunity," he stated. It was also suggested that such a large group of license holders were a problem for Autodesk's culture. Anagnost explained that he believed having such a large group of customers so out of line with current versions was not good for the company's "ecosystem" or for the customers themselves. "We would like to see everybody on the current release," he stated.

Autodesk Interview

We reached out to Autodesk rep, Noah Cole, for a comment on why keeping all Autodesk customers up-to-date was so important to the company.
"We have thousands of other companies who are developing on top of our products....when you have a lot of people using significantly older versions of the software, it becomes really difficult for those companies to support so many different versions. So, if you've got someone running a version of AutoCAD that's ten years old, let's say, and someone else that running a version that's one year old, those are dramatically different products. So, it's really difficult for that ISV or for our development partner to support both of those customers at once."
Cole went on to state that the impact of software version lag also extended to Autodesk's own internal development efforts. "Having everyone current on the same version will enable Autodesk to much more rapidly develop and innovate our software." Some are concerned about how the new subscription model would affect studios who must go off line or be locked down for extended periods during production. Cole explained that Autodesk's experience working with larger studios to customize products will serve as a similar precedent for going forward with these types of situations.
"That may mean putting features in the software to make it work offline. We are working to ensure that, as we roll this functionality out and as we move away from the perpetual license, it's not going to prevent customers from accessing their software either because they're working within a closed environment or working in a place without internet access."
One concern with Autodesk's plans for integrating its Cloud services into each customer account is the issue of customer privacy and intellectual property. Cole informed us that the proposed desktop subscription model wouldn't require studios or individuals to store assets or sensitive date within their cloud services:
"We see a ton of value in the cloud in terms of the kind of collaboration it enables. As you may know we acquired ShotGun earlier this year, and their platform is cloud enabled. But we also know that every organization and individual is in a different place as far as their comfort level with the cloud. So, we want to offer the most cutting edge and best advantages of moving to the cloud for those who are ready. But for those who aren't ready to start storing their data in the cloud or start using the cloud for rendering, we want to give them options to do that locally. We are really sensitive to that and hear that from our customers."
The move to an exclusive subscription model for Autodesk would bring them in line with other software companies like Adobe who have also adopted such models for similar reasons. The benefits are to lower start up costs for beginners and to make high end, professional software available to a much larger group of customers. Autodesk is betting on any revenue it looses up front will be offset with an increase in subscribers overall. You can listen to Anagnost's entire presentation at Autodesk's webcast. You can also look over all of Autodesk's current subscription models.