As a result, local software outlets that cater to manufacturers are mining the new market of midsize customers.
Take Waltham-based Colubris Networks Inc., a 90-employee, privately held company that relies on contract manufacturers to make its wireless LAN products. The 5-year-old company has spent about $75,000 within the past year to upgrade its product lifecycle management technology, said Steve Cohen, Colubris’ operations director.
Colubris spokesman Bob Olson said competition drives the company’s technology needs.
“Our biggest competitor is Cisco Systems,” Olson said. “We need to continually invest in (our technology system) so we can compete.”
Midmarket manufacturers –those with annual revenue between $430 million and $999 million — are ramping up their purchases of software to manage various facets of the manufacturing process, according to a September report by Boston-based AMR Research Inc.
According to the report, smaller manufacturers are buying more software to support their role as global suppliers or manufacturers. Companies with less than $1 billion in revenue spent $2.4 billion on product lifecycle management software in 2003 and are projected to spend about $5.1 billion in 2008, according to AMR.
Local companies such as Aras Corp. of Lawrence and Needham-based Parametric Technology Corp. are the beneficiaries.
Aras, a privately held company that specializes in serving midsize manufacturers, is growing in tandem with its market. Aras, which was founded in 2000, had about 10 employees at the end of last year and has ballooned to about 40, said CEO Rick Lucier. Since most of the established companies offering product lifecycle management were serving Fortune 500 companies, Aras built a business by selling an integrated product to lower-tier players, said founder and Chief Technical Office Peter Schroer.
“We were starting to recognize that there was a void, there was an emptiness,” Schroer said.
Last month, PTC cited its strong sales to small and midsize businesses as a factor driving its financial strength during fiscal 2004, which ended Sept. 30.
While PTC’s revenue of $660 million during the most recent fiscal year declined from $671.9 million the prior fiscal year, the company’s bottom line improved. PTC recorded net income of $34.8 million for the year, compared with a net loss of $98.3 million the year earlier.
With 80 new resellers on its roster during the past fiscal year, PTC now has more than 270 resellers to reach the small to midsize market.
“We have gained significant traction in the (small and midsize business) market in 2004, outpacing the growth of our closest competitors who serve this space,” PTC President and CEO C. Richard Harrison said in a statement.
