Evan on Engineering Software

Randall Newton reports that Nemetschek is acquiring Graphisoft.

Now that's an interesting combination.  But the first thing that occured to me as I read Randall's analysis was "I wonder where they're going with this?"

I suppose the reason I asked myself this question had to do with knowing a few of the personalities involved.

Dominic Gallello, Graphisoft's CEO, has been in the CAD industry for a good long time.  He served in senior executive roles at Intergraph, Autodesk, and Macromedia before moving his family to Hungary to head-up Graphisoft.  Vic Leventhal, a member of Graphisoft's board, once ran one of the largest Autodesk resellers, but made his name as COO of SolidWorks, where he built the most highly regarded CAD reseller channel in the industry.

When Dominic and Vic are involved, I tend to pay attention.  These are smart businessmen.

If you take a look at Graphisoft's most recent financials, they look strong.  The company is experiencing revenue growth on the order of 25%, and its overall results for the first 9 months of 2006 are the strongest for Graphisoft in many years. 

So, Graphisoft is not a company that's looking to be rescued.  My sense is that, rather, it is a company that sees a future competing with behemoths such as Autodesk and Bentley, and recognizes that it can do this better as a part of a larger organization than it can alone.

One of the things that probably attracted Nemetschek's interest is Graphisoft's Virtual Construction line.   This product line has the benefit of being in an area where neither Autodesk nor Bentley has dominance.  And, given the money lost when a construction project goes sour, it's likely that this line will find some very interested customers.  Though I'd guess that, post acquisition, the Allplan and ArchiCAD product lines will remain distinct, yet I'd be very surprised if Allplan weren't connected up with Virtual Construction as quickly as possible.  It seems like a big opportunity, and the timing is right.