Summary
PTC is attempting to grow in part by acquiring small software companies. PTC's has not gotten as much value as it might have from past acquisitions. There is no reason to believe the Relex Software acquisition will be handled better.
Analysis
PTC’s track record of acquiring companies has been mixed. Over the years, PTC has acquired rising stars such as Rasna (maker of the Mechanica analysis software) and more recently MathCAD and Arbortext. PTC executives were initially enthusiastic about these companies, but within a few years their ardor cooled. PTC integrated these companies into its Pro/Engineer and Windchill sales, marketing, and development organizations. PTC’s sales force is focused on companies that buy Pro/Engineer. Consequently, it lacks the sales contacts to call on companies that aren’t in the discrete manufacturing sector. Such companies include industries such as airlines, pharmaceuticals, utilities, and chemical processing. Moreover, by concentrating on accounts that might buy Pro/Engineer and Windchill, PTC misses opportunities to sell niche software to manufacturers who are committed to the likes of CATIA or Siemens NX. The bottom line is that PTC hasn't gotten the value it might have from its software acquisitions.
Representatives of Relex said their acquisitions would be different. They believe that PTC will run Relex as an independent subsidiary called Insight with its own sales force that’s free to call on firms that aren’t potential Pro/Engineer and Windchill buyers.
But in response to questioning at a June 9, 2009 press conference, Jim Heppelmann said the independence of these subsidiaries would be short term. He envisions a suite of applications “flying in tight formation” rather than selling open applications to competitors or to firms in industries that PTC has historically not served.
The tight formation vision is unfortunate, because it will prevent many companies that might potentially take advantage of the Insight products from learning about them. The tight formation also flies in the face of current software-industry trends. Software buyers of the future want open systems that communicate with all other systems. The idea of picking a single source will seem silly to managers growing up in the post-Google era.
