Co eds need cash

DETROIT -- General Motors set the stage for a CAD/CAM battle with IBM last week when it completed the acquisition of a McDonnell Douglas subsidiary supplying software for its highly touted C4 project to prevent its purchase by a proprietary systems company.

The goal of the estimated $350 million to $400 million acquisition by GM's EDS subsidiary is to ensure that the Unigraphics software used to design the GM fleet will remain platform independent. But the move also for the first time positions the giant auto maker, via EDS, as an applications software vendor in the general CAD/CAM market, and its position is squarely against IBM flagship products Catia and Cadam.

One major battlefield, where IBM now has become more vulnerable, is inside GM and involves design seats within its auto units, collectively one of the largest CAD/CAM installations in the world.

That outcome has hardly anticipated when the C4 program (CAD/CAM/CAE/CIM) was launched in 1985, based on the need for standardizing all computer-based operations at the company around multiple Unix platforms, all capable of running versions of the same software from carefully chosen outside vendors, with everything integrated into what the company calls "one common architecture and infrastracture."

Last week's closing on the acquisition of McDonnell Douglas Systems Integration Co. ends a situation which had grown to crisis proportions within the C4 program, a situation triggered first by Hewlett Packard's purchase of Apollo (EN, April 17, 1989), then by Lockheed Corp.'s sale of its Cadam software unit to IBM (Nov. 13, 1989) and finally by McDonnell Douglas putting the subsidiary on the block early this year.

Unigraphics, accounting for some 70 percent of Systems Integration's busness, and Cadam were the two key outside software packages chosen for C4 after a year-long search (EN, Nov. 16, 1987), along with GM's own internally generated Corporate Graphics systems (CGS). In addition another almost 30 support packages from outside vendors, for functions ranging from finite element analysis to rpe and post processing, have been certified for C4. All were to be supported on platforms which initially included workstations from Hewlett Packard, Sun, and Apollo, with IBM hardware conspicuously absent from the list.

When IBM bought Cadam from Lockheed, it almost immedately withdrew support for future versions from all of those platforms, naming it's RS/6000 and MS/DOS systems as the only vehicles for the program.

"We had the experience of IBM buying Cadam, and the hardware independence disappeared," said Tony Affuso, C4 program manager at EDS, in a rare interview last week. For the past two years, as it struggled with the emerging software and hardware situations, GM and EDS have declined virtually all comment on the C4 program.

"IBM is not fully embracing the C4 strategy of multi-vendor platforms," acknowledged Frank Puhl, president of Cadam both before and after the company was acquired by IBM. That, he added, shows "the C4 strategy was vulnerable," a situation EDS is attempting to fix with the Unigraphics acquisition.

Thus when GM learned earlier this year that McDonnell Douglas wanted to sell the Systems Integration Company, whose primary product is Unigraphics, shock waves went through the C4 program. McDonnell's motive was unrelated to C4; it was simply seeking to generte cash to fund its F-12 aircraft program, but to EDS that was hardly of importance.

"Cadam got sold to IBM . . . that left them (GM/EDS) riding McDonnell," said Mr. Puhl. "What happens if McDonnell goes? They're vulnerable," he said in assessing the dilemma EDS found itself in.

Bidding for the Systems Integration Company were at least three potential buyers including, it has been learned, Fujitsu. The situation was almost one of deja vu. Fujitsu had also been an initial bidder for Cadam. IBM, indeed, bought Cadam in large part to prevent the company falling into unfriendly hands. So too with the Systems Integration Company, EDS had a major fear that Unigraphics would become platform dependent, as had happened to Cadam.

"There was a scenario that if they were bought by a hardware company, that could have happened to Unigraghics," Mr. Affuso agreed. Determined not to be outbid, EDS won the company, with an agreement in principle, with an agreement in principle signed a little over two months ago (EN, August 26).

For EDS and GM the acquisition gives the company absolute control over the destiny of Unigraphics, but it also has an unexpected side effect. Along with the software comes 2,000 employees and the ongoing Systems Integration Co. business, estimated to have an almost 5 per cent share of the worldwide CAD/CAM market, and an even larger share when hardware sales related to other vendor's CAD/CAM offerings are excluded. Rather than take Unigraphics internal, EDS instead plans to capitalize on its already massive marketing, sales, and distribution network and double the effort for Unigraphics, plowing in additional resources which debt-laden McDonnell had been loath to allocate in the face of demands by its aircraft business.

EDS and GM have carefully avoided any mention of their own use of Unigraphics or the C4 program in the blizzard of publicity surrounding the Systems Integration Co. acquisition, a move sources attribute to direct orders from top executives at the automaker. Instead, the company is presenting the acquisition as simply a major step in the continued expansion of EDS commercial activities.

The marketing plan mandates that Unigraphics continue to be a multi-platform product, seen as both a key to commercial sales as well as C4 mandate.

"The C4 program is very focused on open systems standards. There is no question EDS will continue to follow that strategy with Unigraphics," Mr. Affuso said. Indeed, a port to the RS/6000 is already under consideration, he confirmed.

That will position EDS as a direct competitor to IBM's Cadam and Catia offerings running not only on competing hardware, but on IBM's own hardware as well for the first time.

The effects inside GM itself are also expected to be significant. GM is a prime, if not the largest, Unigraphhics customer as a result of the C4 program. With EDS now owning the software, it is considered unlikely to spend much time on Cadam any more, undestandably preferring to market its own product to its internal GM customers.

Already, "due to the lack of functionality enhancements we've seen coming out of Cadam, the growth if it (inside GM) hasn't been too large at all," Mr. Affuso said. He said the Cadam program has mainly been used for 2D chasss design, but over the last year or two many GM designers have already been choosing Unigraphics for that task. "Unigraphics has been a very fast grower in the component group, the powertrain area, and is now being used in the chassis are too," he said. GM's internally generated GCS program has been the primary choice for body design.

IBM's expected sale of the non-DOS portion of Cadam to Catia parent Dessault Systemes, indeed, is expected to further erode it's position inside the automaker. That deal, which Mr. Puhl declined to comment on, calls for IBM to retain a so-called "desk-top" version of Cadam, initially on MS/DOS platforms and eventually aimed at low-end systems based on its Power architecture deal with Apple.

Dessault, meanwhile, will receive all rights to higher-end applications of Cadam, which will be merged into its Catia unit. IBM is expected to receive a 40 per cent equity in the merged Cadam-Catia unit.

Industry observers, meanwhile, expect Cadam to rapidly fade as a high end offering in the merged unit.

Together with EDS purchase of Unigraphics, that move will potentially truncate Cadam's use in C4 even further.

"We'll have to better understand what IBM is going to do before we can move forward . . . on how we're going to using that product (Cadam)" in the future, Mr. Affuso said. EDS is evaluating the reported Cadam-Catia deal but waiting for some official word from IBM before making any final decision. He held out little hope, though, for IBM to ever get Catia into the program, or for any other vendor to fill the void left by Cadam. "The more different kinds of CAD/CAMs you have, the tougher it is. Getting it down to as few programs as you can to get the functionality is the best solution," Mr. Affuso said.

His comments lent weight to a Gartner Group assessment that "IBM will be the short and long-term loser inside GM as EDS looks to control CAD much more than before. More subtly, the weight that EDS carries inside GM will likely crush the chances of many independent software vendors that wanted a shot at the C4 project," it noted.