Industrial IOT company PTC announced on Wednesday, Oct. 23, that it will be acquiring computer-aided design (CAD) software Onshape for $470 million. This acquisition is the biggest in PTC’s history.
Onshape will now operate as a PTC business unit, with current management reporting directly to PTC CEO Jim Heppelmann.
The company expects the deal to close in Nov. 2019, pending regulatory approval.
PTC’s aggressive move toward SaaS
Onshape delivers its product over the internet via a software as a service (SaaS) model, making it accessible to any subscribed user with an internet connection.
Onshape was founded in 2015 as the first native 3D CAD solution developed for the cloud under a SaaS model. Since then, Onshape has amassed over 5,000 customers and is currently a Leader in G2's Product and Machine Design category.
PTC sees this purchase as a huge step toward its goal of establishing a subscription-based revenue model at the company.
PTC commissioned a market study from McKinsey that projected the SaaS-based CAD market would grow more than 35% year over year and represent nearly 20% of the total CAD market in five years. For PTC, this move seems like the logical step to adopting a strategy that will undoubtedly dominate the market in years to come.
Cloud-based CAD is heading in the right direction
Aside from being a SaaS product, Onshape has also made its mark in the CAD industry by being the first company to introduce a CAD software that lives exclusively in the cloud. While other vendors such as Autodesk have introduced hybrid cloud-based/on-premises CAD solutions, Onshape is the only software to live exclusively in the cloud.
It’s because of this that PTC believes it is acquiring a product that beats out its competitors. In an interview regarding the acquisition of onshape by PTC, Onshape founder John Hirschtick shared:
“They say that the cloud future is SaaS, it's just that they don't back it up with the goods yet. We align completely on the idea that you have to have a pure cloud, pure SaaS platform and offering. Autodesk today offers a partial solution, mixing installed software with cloud, partial cloud services, and so forth. You know those strategies are not things that we believe are the way to deliver the value we seek to deliver to customers and so we think we have a big advantage there.”
It's true that adoption of cloud-based CAD has been slow over the years; users cite subscription fees, the need for internet access, lack of storage, and network security as concerns. On the other hand, G2 believes that PTC is on to something and the tide is set to shift as major vendors in the CAD industry begin to pour more resources into improving their cloud-based CAD solutions. These new cloud CAD solutions will improve collaboration and communication for designers.