ZWCAD Software Kicks Off Price War with Autodesk

China's largest CAD (computer-aided design) software builder ZWCAD Software Co., Ltd. (ZWSOFT) announced a 50% markdown for affiliated products yesterday.

ZWSOFT Executive Deputy General Manager Liu Yufeng discloses that his company will kick off a promotion in the domestic market from November 4, during which the selling price of its CAD software will be reduced for half to CNY 2,698. Besides, preferential activities will be carried out to veteran users.

Just 20 days earlier, Autodesk (Nasdaq: ADSK), a world leader in 2D and 3D design software, announced in China an 80% price-cutting of its CAD products, which was sold at CNY 6,000 apiece, almost the same as ZWSOFT's price before the markdown.

ZWSOFT's promotion will last till February 3, 2010, after which its marketing strategy will be decided according to the steps taken by Autodesk. If the archrival chooses to continue the price war, the Chinese party will follow. Insiders believe that the fight between Autodesk and ZWSOFT is helpful to the adjustment of CAD industrial price.

Autodesk's price-cutting aims to push out ZWSOFT and snatch market share from its Chinese peers, pointed out Liu Yufeng.

Actually, Autodesk has been leading China's CAD field with a 50% market share. In recent years, CAXA Technology Co., Ltd. and ZWSOFT geared up in the domestic market through the promotion of multifunctional and low-price products. From 2007 to 2009, ZWSOFT's number of newly authorized uses has caught up with that of Autodesk.

Besides, homegrown CAD software companies formed a CAD software alliance under the leadership of ZWSOFT, enabling partners to develop applications freely on the latter's platforms, which received warm welcome from customers and imposed great pressure on Autodesk.

Insiders deem that unsatisfying performance is another reason for Autodesk's markdown. In the first fiscal quarter, the software giant lost USD 32.1 million. Its operating revenues reached USD 425.8 million, lower than USD 598.8 million a year ago. Its sales value even dived 42% in the emerging market. At the end of 2008, Autodesk announced a decision to change the president of its Greater China region.

By far, no other CAD software builders have announced to join the price war. However, insiders point out that the severe competition between two industrial leaders will eventually affect the whole market.

Liu Yufeng says that price-cutting is effective to the sales boost of CAD products, whose profits will then surge accordingly, although they need large inputs in terms of R&D.

(USD 1 = CNY 6.83)

Source: www.163.com (November 06, 2009)

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