A leading developer and provider of 2D and 3D model-based design, engineering and documentation software and services, Autodesk Inc. (ADSK) recently announced the launch of a new range of exclusive products for Apple Inc.’s (AAPL) Macintosh OS X Lion operating system.
The new products include AutoCAD 2012, AutoCAD LT and AutoCAD WS. The company is offering AutoCAD LT and AutoCAD WS through Apple’s App store. However, according to the Wall Street Journal, Autodesk will not use the store to distribute the updated full version of its flagship product, which comes at a hefty price of $3,995.
AutoCAD 2012 and AutoCAD WS will be available worldwide on August 19, 2011. On August 16, 2011 Autodesk released AutoCAD LT, which is only available in the U.S. and Canada and is priced at $899.99.
Autodesk and Apple go back a number of years. Autodesk developed its last AutoCAD version for the Mac in 1992, and discontinued support in 1994. However, Autodesk continued to develop other products for the Macintosh, including software used in the entertainment industry.
After remaining detached for nearly two decades, Autodesk re-launched a Mac version of its flagship product AutoCAD in 2010. Autodesk also launched a free mobile version of AutoCAD with limited capacity that can run on the iPad, iPhone and iPod Touch. However, the company is offering Mac versions of AutoCAD LT and AutoCAD WS for the first time.
Since then Autodesk has continued to introduce a number of products for different Apple devices. In June 2011, Autodesk launched a new version of SketchBook Pro for iPad. Earlier, Autodesk launched its TinkerBox App– a free game on the App Store for iPhone and iPod touch.
The exclusive new products will likely expand this relationship between Apple and Autodesk. AutoCAD 2012 was built specifically for OS X Lion and helps users create designs on a platform of their choice. AutoCAD LT enables users to document designs, optimize workflow and collaborate with colleagues and clients. AutoCAD WS enables users to view and collaborate on DWG files through the Mac interface.
According to the Wall Street Journal, Autodesk will split revenues with Apple, an arrangement common with iPhone and iPad apps, but unusual in the personal computer business.
We note that this mainly reflects the rapid growth of Macintosh over the last few years. Macintosh, which had lost comprehensively to the popularity of Windows in the 90’s, has witnessed a significant turnaround in recent times. In the second quarter ending June 2011, Apple sold nearly 3.95 million Mac computers, a 14% year-over-year increase, exceeding the growth rate of the overall personal computer market, according to the research firm IDC.
Apple launched the new operating system Lion on July 21, 2011. The new operating system includes more than 250 new features such as multi-touch gestures, system-wide support for full screen apps, mission control and many other features. The new operating system is expected to boost Apple’s market share going forward.
We believe that the exclusive new products offered by Autodesk will help it gain significant market share and revenue growth in the Mac segment going forward.
Recommendation
Autodesk’s large customer base provides a distinct competitive edge. We believe that Autodesk’s supremacy is driven by its innovations in 3D design technology and product portfolio. However, increasing competition from Adobe Systems Inc. (ADBE), Parametric Technology Corp. (PMTC) and Avid Technology Inc. (AVID) remains a concern over the long term.
We maintain a Neutral rating on a long-term basis (6-12 months). Currently, Autodesk has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.
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