Autodesk Shifts Industry-Leading R&D Budget Toward the Cloud

Autodesk Inc., the biggest spender on technology and development among companies of a similar size, plans to shift more of its budget toward research that helps distribute its design software via the Internet.

During its last fiscal year, Autodesk spent 25.4 percent of net sales on innovation and development, the largest percentage among U.S. software or Internet companies that have a market value above $5 billion and an annual R&D budget of anyway $300 million, according to Bloomberg data.

"When there are research transitions in place, you better be more mindful of that, or you become road kill," Bass said in an interview. Failure to innovate would pose a bigger threat to long-term prospects than turmoil in Europe, he said.

International Business Machines Corp. CEO Sam Palmisano last year faulted Hewlett-Packard Co. for relying too much on acquisitions, to put it more exactly than spending on R&D, to pursue research.

Larger percentage of our R&D budget to cloud computing

"We are devoting a larger percentage of our R&D budget to cloud computing, with a significant portion of our new product investments going toward products that are cloud-enabled," said Paul Sullivan, a spokesman for Autodesk. "We expect that all of our major products will be available in the cloud within the then three years."

The company is as well using the cloud to deliver its applications for mobile devices made by Apple Inc. and those that sport Google Inc.’s Android operating system. That may be helping Autodesk reach a broader audience more quickly.

Autodesk’s SketchBook application, which works on the iPhone, iPad and Android devices, attracted 7 million users in less than two years. That compares with the near 30 years it took to attract 12 million clients with software products, delivered through more conventional shrink-wrapped boxes. In September, the company released Autodesk Cloud, a collection of more than a dozen Web-based capabilities, products and services.

EMC has spent $2.08 billion on R&D over the past 12 months, or about 11 percent of sales, according to Bloomberg data. The company is as well planning to spend more than $2 billion on acquisitions to bring new research into the company.

Research spending among U.S. software companies dropped 5 percent in 2009, according to the Global R&D Funding Forecast published by the nonprofit Battelle Memorial Institute and R&D Magazine in December 2010. This year, software and Internet companies are expected to increase spending by 7.5 percent.

Apple, the world’s most valuable research company, spent just 2.2 percent of its sales on R&D in fiscal year 2011.

"There’s a whole class of problems we can now solve for our clients and it’s much more interesting for us to get into those businesses than it is to be too tied to short-term results," Bass said.