HZS What is the future direction of the mechanical area in your company. There are many competitors like Ideas, Catia, Solid Edge, and Bentley. They focus on one area, high end - mid range - and low end. What area is Autodesk focusing on and what are your strategies to achieve your goals?

Autodesk Autodesk is focusing on the mid range modeling market. We think the very very high end where Catia is, designs airplanes and automobiles and this is not interesting to us because it requires very complex software and the seat volumes are not so big.

The big middle part of the market, that is everything from what we call 1st & 2nd tier suppliers to the automotive industry, to mold makers to jig makers and manufacturing, is a huge market. This is the biggest part of the market and what Autodesk is interested in for Mechanical Desktop. Autodesk has a priority to be able to handle very large assemblies, we have a priority to get better geometric coverage. Obviously, with the next release of ACIS we will get better performance, better shelling. With the current release of Mechanical Desktop we now have feature re-order and better user interface to the system. We believe that making mechanical 3D parametric design much easier to use is very important. We also believe that the complexity of choices on how you can do commands, in other word how you can get your 3d work done, has been way too complicated and we believe that there should be an easier way to guide the designer through the process of making a 3D model. So this is another emphasis we have for future releases. Of course, we believe that there is an important need to have 2D & 3D very close because 2D is very necessary for manufacturing, so we will always focus on bi-directional between 2D & 3D.

HZS Do you have a specific schedule for this bi-directional?

Autodesk We are bi-directional now. I am saying that in the future it has to continue to be very strong.

HZS Who do you see as your competition in this having middle range customers? For example: SolidWorks, SOLID EDGE, Computervision Designer, and others.

Autodesk We do not see CV. We do not see SOLID EDGE. We see SolidWorks in some instances, but we benchmark very well against them and have won a lot of accounts against them. We actually win good business against Pro/E. Pro/E, I think is in the high end of the middle market. They are not in the high end market. So, they are a strong competitor for us in this area.

HZS When you look at the Japanese, European, and American market, are there any distinctive characteristics in terms of the mechanical market or its business?

Autodesk The Japanese mechanical market is about the same size as all of Europe. It is a very strong market in Japan. Each of the areas have combination of automotive and the rest of manufacturing. Japan does not tend to have aircraft and that is something we see in the U.S. market and of course in the European market. Japan does a very good job with its automation, therefore the available market potential is very good in Japan.

HZS In terms of achievement or business performance of Mechanical Desktop do you see differences between those 3 markets?

Autodesk The U.S. is strongest, Europe is 2nd and Japan is third.

HZS Do you see any reason for this?

Autodesk Japan market is slower. I believe that our partners in U.S. and Europe, including our MAI partners, were more aggressive, faster and we believe there is equal opportunity in Japan. Japan is a huge market. like I said. I think we can get help for Autodesk Japan from our virtual corporation.

HZS What do you mean by aggressive partners? What kind of abilities or capabilities do we have to show to become your aggressive partner?

Autodesk Well, SELL!!! I believe the other geographies started focusing sooner. They started getting reference accounts, where accounts started with 5 or 10 desktops and now have 100. The customers got to try earlier and faster and now its buying many seats and I think that is just starting in Japan. You have expertise in CAD, so having engineers and sales people making sale calls together is good. I like your 2 to 1, engineer/salesperson. In mechanical it is bench marking, high selling, seeding the account and then you get many units.

HZS We are using the ACIS kernel, each of PARASOLIDS and ACIS is peculiar. We live in Japan the information we receive on ACIS maybe limited. I would like to know how you feel about the situation of ACIS and it kernel.

Autodesk We feel very good about ACIS, Spatial. They work closely with us, we actually have engineers in Colorado working with them. We know what is in revisions 4.0 and 5.0, and we think they are doing a very good job. Spatial has done a good job in the last year fixing their performance, fixing their bugs, adding good features and so we think that they have a great future. You mentioned Parasolids, Parasolids has problems also.