Dassault Systèmes S.A.

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Dassault Systèmes S.A.

9, quai Marcel Dassault
BP310
92156 Suresnes Cedex
France
(33) 1 40 99 40 99
Fax: (33) 1 42 04 45 81
Web site: http://www.dsweb.com

Public Company
Incorporated: 1981
Employees: 1,672
Sales: FFr 1.96 billion (US$ 335 million) (1997)
Stock Exchanges: Paris NASDAQ
Ticker Symbol: DASTY
SICs: 7372 Prepackaged Software; 7371 Computer Programming Services; 5045 Computers, Peripherals, and Software

Dassault Systèmes S.A. is the world’s leading developer of CAD/CAM/CAE (computer-assisted design, manufacturing, engineering) software, with a product family of more than 120 interrelated component software packages enabling the implementation of design, analysis, manufacturing, and post-production support systems tailored to clients’ specific needs. Dassault’s CATIA and CADAM software products permit engineering and product design teams, generally working across a network, to develop prototype products, as well as to provide software-based modeling, assembly, testing, analysis and other procedures using three-dimensional images, eliminating the expense of building physical models and prototypes during a product’s initial design phase. Beyond the design and engineering of a product, the company’s software enables clients to develop and implement full-scale manufacturing systems, while also providing post-production support capacity, including quality assurance and product data generation.

One of the originators of the three-dimensional CAD/CAM/ CAE market, Dassault has sold some 100,000 ‘seats,’ or licenses, of its CATIA and CADAM software products, to more than 10,000 clients worldwide. In the 1990s, the company’s software has been used to develop seven out of every ten new airplanes and four out of every ten new cars worldwide, including those from such corporations as Dassault Aviation, Boeing, Aerospatiale, BMW, Chrysler, Peugeot, Honda, Lockheed Martin, and others. CATIA has been used to design such products as Chrysler’s Voyager minivans, RAM pickups, and Viper and Neon automobiles. Aircraft designed using CATIA include the Boeing 777, the Falcon 2000 business jet, and the Rafale jet fighter plane from Dassault Aviation. In addition to the aerospace and automotive/transportation industries, Dassault’s primary markets include consumer goods, with clients such as Black & Decker, Electrolux, and Sony; plant design and shipbuilding, with clients including General Dynamics and Technip; and fabrication and assembly, with clients including ABB, Staubli, and Valmet.

Dassault’s CATIA and CADAM product family forms the core of the company’s development efforts. Users of the linked CATIA and CADAM system can achieve an end-to-end product development process from initial product specification, design and testing, through engineering analysis, to full-scale manufacturing utilizing a sole systems-wide interface, database, and programming set. Product development employs simultaneous solid-body, surface, and wireframe rendering. The use of both parametric modeling—in which the entire process responds to a series of fixed parameters—and variation modeling, which enables the ability to apply changes to individual components—for example, for customization purposes—without being required to redefine the entire parameter set, offers users sophisticated ‘next-generation’ flexibility in the design and post-design processes. The integration of CAE and CAM processes within the CAD process enable not only sophisticated stress and meshing analysis, but also the concurrent definition of the manufacturing process. The fully integrated CAD/CAM/CAE system enables manufacturers to eliminate costly physical modeling steps, improve quality control procedures, and achieve a more efficient and faster design-to-product development system. In addition, the integration of manufacturing processes in the design phase provides the ability to avoid the need to retool the production process, as the early design phase of a product can be adapted to the manufacturer’s existing machine park. Finally, CATIA and CADAM users have access to the system’s knowledge base capacity, providing access to product and specification history, as well as the integration of industry standards, regulatory requirements, and the client’s own specifications throughout the design and manufacturing process.

In addition to its CATIA-CANAM product families, Dassault also develops and distributes CATWEB Navigator, a realtime intranet and web-based browser allowing worldwide access to clients’ database and product development systems. Other products include Enovia, a computer-assisted design application supporting the emerging PDM II (product data management) and extended enterprise markets. The acquisition of Deneb adds that company’s principally Unix- and Windows NT based products to the Dassault’s traditional IBM, Hewlett Packard, and Silicon Graphics platform focus. Similarly, Solid-Works, acquired in 1997, adds that company’s set of CAD products, enabling Dassault to extend its product solutions to the Windows-based PC market. Both Deneb and Solidworks continue their independent operations. The company also operates direct subsidiaries in the United States and Japan.

Since its inception, Dassault Systèmes has been partnered with IBM, which provides the company’s primary marketing, distribution, and support services through IBM’s Engineering Technology Solutions and Business Partners organizations. Apart from providing Dassault with a combined sales staff of some 1,500, the IBM partnership arrangement has also enabled Dassault to gain a broad penetration of the world’s leading industrial markets. Dassault also maintains its own sales force of approximately 200, with which it markets its products and offers support directly to a growing number of clients. Europe continues to account for the company’s primary market, with nearly 60 percent of Dassault’s installed product base, compared to 23 percent in the United States, and 14 percent in the Asian market. Industry-wide, Dassault has captured an estimated 16 percent of the total CAD/CAM/CAE market.

Dassault Systèmes has been a public company since its 1996 introduction to the Paris and NASDAQ stock exchanges. More than 60 percent of the company’s stock continues to be held by former parent Dassault Aviation, and ultimate parent Dassault Industries.

Pioneering the Third Dimension in the 1970s

Dassault Systèmes grew directly out of the aerospace industry’s search for more sophisticated drafting tools that could not only aid in streamlining the development process, but also respond to the increasing complexity of aviation design. Computer technology had already entered the manufacturing process, offering numerical-controlled tooling functions and the first CAM systems. The appearance of the microcomputer in the 1970s offered broader applications of computer technology, particularly for product design. One of the earliest efforts to replace hand-drawn drafting with computer-assisted design software was a program developed by Lockheed, called CADAM, for Computer-Augmented Drafting and Manufacturing. CADAM enabled drafters and engineers to automate much of the two-dimensional drafting process, using the computer to perform the necessary calculations. Among the first CADAM customers was Marcel Dassault, one of the pioneers of the French aviation industry, and head of Avions Marcel Dassault, the forerunner to Dassault Aviation.

Dassault purchased CADAM licenses in 1975. Yet, despite the advantages offered by CADAM and similar packages of the period, the software functioned more or less as an electronic drafting board and remained limited in its applications for the complex demands of aeronautical design. Dassault sought software that would add the third-dimension to the computer screen. Finding no such software to suit its needs, the company formed its own development team in 1977; by the end of the 1970s, Dassault’s programmers had developed the predecessor to CATIA, becoming the first to bring three-dimensional modeling to the design process. CATIA (for Computer-Aided Three Dimensional Interactive Application) represented an industry breakthrough. The addition of a third plane to the drafting process eliminated many of the errors encountered when attempting to translate a two-dimensional drawing into a physical model, offered greater interaction among drafters and engineers, while reducing—and eventually all but eliminating—the expense of building models and prototypes for each step of the product development process.

At the beginning of the 1980s, Avions Marcel Dassault decided to market CATIA to other aerospace manufacturers. In 1981, the company created Dassault Systèmes, transferring its 15-member development staff and the CATIA program to the new independent subsidiary, which could concentrate its efforts on improving the software. Instead of forming its own sales force, Dassault Systèmes reached an agreement with IBM, then at the height of its computer industry dominance, to market, distribute, and provide technical support for CATIA. The agreement called for IBM to receive some 50 percent of revenues generated by CATIA sales; in turn, the partnership brought CATIA to IBM’s worldwide customer base. Demand for CATIA was immediate, not only in France, but throughout the world. CATIA was quickly translated into English and German and then other languages. While the initial target market had been the aviation industry, the powerful new capabilities offered by CATIA were quickly adopted throughout the manufacturing world; the automobile industry became one of Dassault Systèmes most important markets. CATIA also found clients among the consumer goods and shipbuilding industries.

The initial commercial version of CATIA, presented in 1982, was offered as an add-on program to existing two-dimensional drafting programs, adding 3D design, surface modeling, and numerical-control tool programming functions. By then Dassault Systèmes was already working to incorporate drafting tools into its software, which would allow CATIA to function independently of CADAM and similar software. This next version of CATIA was readied by 1984 and launched commercially the following year. In addition to drafting functions, CATIA Version 2 also incorporated robotics functions, extending the program’s reach into the computer-aided manufacturing field, offering linked CAD and CAM functionality. These new feature additions enabled CATIA to capture the leading share of the aeronautical design market.

The next step in CATIA’s development was the addition of computer-assisted engineering capabilities. CATIA Version 3, launched in 1988, was among the first to include CAE functions; at the same time, Dassault Systèmes introduced compatibility with IBM’s Unix-based workstations. By the end of the decade, CATIA had become the worldwide market leader among the automotive industry as well.

Expansion and Independence in the 1990s

Throughout the 1980s, CADAM, which had been purchased by IBM from Lockheed, and CATIA continued to be developed independently, while reaching a complementary customer base—including Dassault Aviation itself. In 1992, IBM agreed to transfer future development of CADAM to Dassault Systèmes, with the creation of a new independent subsidiary, Dassault Systems of America. In exchange the transfer agreement gave IBM a ten percent share of Dassault Systèmes. The first integrated version of the two industry-leading programs appeared in 1993. Now dubbed CATIA-CADAM Solutions, the system brought the various software programs developed under each product family into a single package, featuring an open architecture adaptable to each customer’s requirements. CATIA-CADAM was now capable of performing simultaneously the variety of tasks in the CAD/CAM development process, providing the design, engineering, manufacturing, and other departments of a manufacturer with access to the same data and the same user interface.

Also in 1993, the company moved to deepen its penetration into the booming Asian market, forming a wholly owned Japanese subsidiary, Dassault Systèmes Kabushiki Kaisha (Dassault Systèmes KK) and translating its software into Japanese and Korean. By year-end 1993, Dassault Systèmes’s revenues had reached FFr 914 million, for a net profit of FFr 117 million. The following year, the company’s relationship with IBM was strengthened, when IBM initiated a separate sales force, Engineering Technology Solutions, which would grow to some 800 employees, dedicated to marketing, sales, and support of the CATIA-CADAM product family.

The next version of CATIA-CADAM, introduced in 1995 and called CATIA-CADAM CAE Plant Solutions, brought enhanced engineering functionality—particularly with the incorporation of knowledge-based capacity—to the software suite. In that same year, Dassault Systèmes moved beyond its long-time IBM workstations base, offering compatibility with the Hewlett Packard 9000 Series 700 workstations. Compatibility with the fast-growing Silicon Graphics workstations market followed in 1996. By 1997, IBM’s Engineering Technology Solutions department agreed to market and support CATIA-CADAM for third-party hardware platforms. Another IBM sales department, Business Partners, had also begun to market and support the Dassault Systèmes products.

By the end of 1995, Dassault Systèmes had posted revenues of more than FFr 1.1 billion, with net earnings of FFr 221 million. The following year, the company poised to begin a new expansion, which brought it to the stock market. The company’s initial public offering (IPO), performed simultaneously on the Paris and NASDAQ stock markets, was one of the year’s successes, with the 17.5 percent of the company on offer oversubscribed by some 35 times. The IPO enabled the company to acquire, in 1997, 100 percent of SolidWorks, a California-based company specializing in Windows-based mechanical design software. The acquisition not only strengthened the company’s 2D drafting capacity, but also gave it an entry into the Windows market, which, with the rapid development in processor power for personal computers, had begun to impose itself on markets which had traditionally depended on the larger workstation environments. The acquisition raised a few eyebrows; the purchase price, through a stock swap, came to $310 million—for a company that had posted only $25 million the previous year.

The SolidWorks acquisition was joined at the end of 1997 by another acquisition, that of Deneb, which added that company’s digital manufacturing software to the Dassault Systèmes product line. Both companies continued to operate as independent subsidiaries. They also pointed the way to the next step in Dassault Systèmes quest to provide a total manufacturing system. In 1998, the company, together with IBM, announced the formation of a new Dassault Systèmes subsidiary, ENOVIA, releasing the ENOVIA PM suite of software. Designed for the PDM II, extended-enterprise market, ENOVIA enabled the access of data across the spectrum of manufacturing processes, while remaining independent of the CAD environment. While Dassault Systèmes faced increasing competition during the 1990s, particularly from Waltham, Massachusetts-based Para-metrics Corp., the company’s expansion enabled it to maintain its leadership position among the worldwide CAD/CAM/CAE market. In 1997, the company’s revenues neared FFr 2 billion, providing net earnings of more than FFr 460 million.