Andy Shaughnessy chats with Lawrence Romine about Altium’s new subscription model for their Altium 365 platform. They discuss what this means for existing and future Altium customers, and some of the drivers leading to this development, including evolving use patterns among customers during the pandemic.
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Andy Shaughnessy: I’m here today with Lawrence Romine of Altium, director of everything.
Lawrence Romine: No, I’m vice president of marketing at Altium, but I think director of everything is probably more accurate, Andy.
Shaughnessy: You all had some pretty big news recently. You announced a comprehensive, new subscription plan for your software tools. Why don’t you just tell us about it?
Romine: Sure. It’s interesting, Andy, we’ve used the term “subscription” for many years now. It goes back about to the 2010 timeframe when we launched our online community of AltiumLive—not the event, but AltiumLive, the online community. And that was associated, at the time, with pure maintenance, if you will, classic maintenance. Everybody knows the term “maintenance” in software, and so we pivoted to the word subscription then; overwhelmingly that’s what people call it, and Altium users are very familiar with the term subscription. But primarily, the value they saw in it and the reason people renewed each year was really for what’s classically been considered maintenance—software updates, basically.
Now with the introduction of Altium 365, we needed to repackage what we call the subscription, and that’s what we’ve done. So, subscription now has three pillars to it, if you will. There are three components to it. First and foremost are software updates, so that’s one component of it. The second component is your Altium 365 services packaging—the capabilities that you get by virtue of subscribing to a particular level. The third component is your technical support level and the priority level you’ve subscribed to.
Shaughnessy: How would you break this down? What levels are best for which customers?
Romine: That’s an interesting question, Andy. Today there are two levels available: standard and pro. They tell me there’s another one slated to be released, but I’m hesitant to say the name because you know how Altium works, Andy. You’ve been around us long enough to know that whatever I say today will change by the time we hang up the call. That’s the signature of our success, quite frankly. So, I won’t give you names about what it’ll be called, but there are two with additional levels above what we’re looking at, and there’s one free level that we’re looking at, as well.
For now, it’s just the standard and pro levels. We do classic marketing research; in other words, “This is the ideal customer profile that we’re targeting.” Obviously, that’s predicated on whom we do business with today, looking at our database of clientele and saying, “This is the nougaty center of that customer base,” as an example, and then trying to build a product that suits their needs. While we did that, I don’t think that is central to why somebody would select a particular level, quite frankly.
We’ve really looked at the cloud capabilities, the Altium 365 capability, in seven buckets. This has to do with your needs for data management, library management, mechanical collaboration, and commenting and collaboration. One component of that is the priority technical support consideration as well. So, while we did package these things to address a particular persona, any one of those things you may decide justifies the lift to the next rung on the subscription level ladder, as it were. For example, at the standard level, you get some of those things: mechanical collaboration, commenting and markup capabilities, and you get some capability in the library management space, and so forth.
But at the pro level, you just get more of those things. For example, the mechanical is the one I like to mention, because it’s very easy to understand. What you get in standard is this real-time, bi-directional collaboration with mechanical CAD through 365. There’s a plug-in on the Altium Designer side, there’s a plug-in on the mechanical CAD side, and you push and pull changes through Altium 365 in real time. It’s really fantastic. All that comes with the standard level at no additional cost. If you go pro, however, you’ll have additional capabilities at the mechanical CAD bucket, such as the ability to exchange copper and via information. In that example, you say, “I actually need to do thermal analysis on the mechanical side of my printed circuit boards,” in which case pro makes perfect sense for you, and maybe that’s the only reason you’ve opted to go up a level.
Likewise, you may justify the cost of going up to pro, simply because you want priority technical support. Another good reason to opt for the pro level is because you’d like to jump the line as it relates to technical support. I want to note, Andy, that we’re not talking about a dramatic price difference between the two levels.
Shaughnessy: It sounds to me like most of the customers are probably going to lean toward the pro, wouldn’t you say?
Romine: I don’t know. To our existing customer base, I would say that if you’re an existing subscriber, a standard subscriber, you already have it. We’re not asking you for any additional dollars over and above what you’ve already been subscribing to; instead, you’re getting even more than before with access to Altium 365, which you’ve seen us now show and tell a couple of times, at least.
Shaughnessy: You’re just getting more of it.
Romine: Again, all of those on existing subscriptions already have access to Altium 365, but now our hope is that we empower them. We give them all the tools necessary and support them to adopt as much or as little of that as they see fit. If and when they decide that they’d like more, they can absolutely upgrade to pro with a premium at only $1,000 a year, per subscription. It’s not a steep financial curve there if you want to go from standard to pro.
Shaughnessy: Everyone has been working from home during the pandemic. Have you seen changes in the way your customers use your tools since COVID began?
Romine: Yes, immediately. It’s an interesting business because we deal with those who are creating vanguard technologies. A great example of this is our friend Happy Holden, who was responsible for manufacturing how many iPhones? It was in the millions—staggering—yet he carries a flip phone. He really is a great example. At least through my experience, we deal with those creating vanguard technologies, but for some reason our customer base also resists vanguard technologies, and one of those is the cloud. Prior to COVID, we would talk to customers and the cloud was somewhat taboo, but now we’ve seen the complete opposite happening. In fact, many companies we engage with now come to us specifically because of the cloud; their company are mandating it. If you think about it, it’s more secure, it’s certainly less expensive, it’s instant on, and really the onus is put onto the supplier to maintain the service level versus maintaining an internal infrastructure of people and equipment.
Shaughnessy: It is funny how we’re in this super high-tech industry and a lot of people still have this old-school way of looking at things.
Romine: The short answer to your question is yes, COVID was a gamechanger, and we accelerated our plans dramatically. We were early adopters of work-from-home. That all started in March, by April we went full mainstream with Altium 365, and immediately we had takers.
Shaughnessy: Right. So what does an existing customer have to do? Let’s say they already are using Altium Designer; do they still have a perpetual license?
Romine: We’re not pushing anybody to turn in their perpetual licenses. First, Altium’s track record is pretty solid in this regard, almost to a fault. I don’t recall any time we’ve ever removed something from a customer. We’ve never done that, and we’re not doing that in this case. As a matter of fact, as I said, as long as they’re paying a subscription already, which is the majority of our users, nothing changes for them. They still own perpetual licenses, they’re still paying the same amount of subscription dollars they were paying before this happened, they just get more stuff.
All they need to do is reach out to their account manager or to one of our technical folks online, via the chat interface, our Altium Academy, YouTube channel, or the my.altium page within Altium Designer itself. There’s a whole host of content and resources available for them to set up their workspace and take advantage of the stuff they already have access to.
Shaughnessy: That’s a really good idea.
Romine: Like I said, they really have nothing to lose, Andy. I think that they’d be foolish not to at least look under the covers and give it a test drive.
Shaughnessy: Cool. Is there anything else you want to add, Lawrence?
Romine: As I said, we believe that the time is right for something like this and the reality is that nobody else has it. In true Altium fashion, and if you’ve been around us any length of time, you would see that here we go again. We’ve created some revolutionary capabilities and technologies and we’re just making it available to our existing customer base for no additional charge. It reminds me very much of when we released 3D capabilities back in 2006-07. It changed the industry dramatically, and we charged nothing additional for it. Here we go again. I just urge the Altium faithful already on subscription that you’ve got nothing to lose and we’re here to support you. We’ll do anything we can to help you adopt the technology and you can do some damage with it.
Shaughnessy: With Lawrence Romine, I’m Andy Shaughnessy for Design007. Thanks for listening.