PlanetPTC Shanghai 2010 – Press Conference

After lunch there was a press conference where the media, which was predominantly Chinese, posed questions to a panel of eleven PTC executives.

Penny Zhou of PTC PR did an excellent job of interpreter. Here are some of  the questions and answers:

(Q) Can you give us details on the performance of PTC, its revenue for FY 2010 and talk about your plans for China?

(A) We grew 8% in FY 2010. We are happy that we were able to bounce back. License growth tends to be a leading indicator of how a company is growing. In 2010 we had 39% license growth. Out of that enterprise software growth was 71%. 2011 will be our largest  product launch year. We have Windchill 10 coming out as well as Creo 1.0 and 2.0. In China PTC grew 25%. When most of the world was seeing a recession our business here still grew. We had a significant MCAD expansion opportunity in China.

(Q) In the downturn a number of companies reduced their R&D investment, but you increased, Why? How many patents does PTC have in PLM? Windchill growth rate is fast, but CAD is steady. Will Creo speed up the CAD growth rate?

(A) In 2009 we increased investment in R&D. We did the same in 2010. We have been increasing R&D investment by about 6% every year. This was important because we had to develop the products that we will be releasing in 2011. We felt that we had a competitive advantage in the marketplace and we that we had to continue to invest in spite of the slowdown. We don’t report the total number if patents at PTC. However, I can tell you that we have 7 patents pending for Creo. Windchill has been growing at almost 20% every year. CAD growth, not just at PTC, has been relative flat. We do expect that Creo will recharge the growth rate of CAD for PTC. One reason is that the locking of customers to their legacy data will now be reduced. It will be easier for customers to use design data from other CAD systems inside Creo.

(Q) Can PTC provide the same level of service to SME’s as it does to Enterprise customers?

(A) Today we work with several partners that we train to offer services to different sections of industry. We hope to add more of them and help them offer more services as demanded by our customers. In order to improve the efficiency and lowering cost we have several e-learning solutions for SME’s. We have also created a global team that manages these partners.

(Q) Does PTC have any plans regarding cloud computing?

(A) We view cloud computing as a delivery mechanism and we will take advantage of it when it solves some real problems. An example is Windchill and it does make use of the cloud today.

(Q) What is PTC’s growth strategy in China with regard to direct and channel sales?

(A) We are growing in both direct and channel sales. Five years ago growth in direct sales was in the single digits. Today it is approaching 20%. The fast rate of growth in China is a challenge and our problem is coverage and finding the right partners to get us the reach.

(Q) Can you elaborate on the Arbortext growth situation?

(A) We don’t report our Arbortext numbers individually. But it exceeds the overall growth rate. We are going to release four new products in the Arbortext family and we believe that will increase the growth rate even more. Also in China our Arbortext business is growing faster than the rest of the world. FAW, SAIC, Comac, ZTE are some of our largest Arbortext customers.

(Q) Pro/E has such a long history and you launched Creo. What’s the background and your strategy?

(A) The MCAD market is a mature market that still has some fundamental issues that need to be resolved. That’s what drove us to develop the Creo strategy. The expectation is that the Creo strategy, its delivery and impact will recharge our MCAD business. Feedback from customers for several months has been very positive.

(Q) Chinese customers have specific requirements in terms of services. Does PTC intend to start a service center in China?

(A) Yes. In fact we have started an on site and off site service department in our Shanghai office. We will be starting another in Xi’an. We promote the concept of using our solutions out of the box. But when required we make it easy for our customers to customize them based on their specific requirements. We actively collect and utilize feedback from our Chinese customers and help drive the decisions for our product roadmaps. We now actually have a significant R&D team working in our Shanghai office with local support working with them directly.

(Q) How is the world wide revenue in maintenance and does China have any differentiators?

(A) We find that revenue in maintenance is similar to other emerging markets. Most of the expenditure of our customers in these regions is focused on increasing the number of licenses to support more workforce. And since most of them are long term users they usually find ways to support themselves. PTC has the most comprehensive support system in the industry. We have 400 ISO certified support engineers. Due to increased pressures to go to market faster companies are now seeing the value in using the support services that we offer.  We are seeing a change in China. We had 20% renewal growth in China and 50% renewal the year before that.

(Q) What is the definition and role of the Chief Customer Officer?

(A) [Mark Hodges] I have been asked to be the customer’s advocate to PTC. That means I bring the customers voice to the most senior part of our organization and we use that feedback to make informed decisions about our products and services for the future. In China and Taiwan I regularly meet our most important customers to understand their needs and requirements.

(Q) What are PTC’s plans for SaaS?

(A) Windchill is fundamentally a cloud based solution. Windchill was cloud much before there was a cloud fad. So today Windchill is available as a cloud based solution with the help of some partners. Whether that evolves into a public cloud based solution really depends on our customers.