Altium moves AGAIN!

[EEVblog]

http://www.asx.com.au/asxpdf/20140430/pdf/42p8l2n6249lpy.pdf

Altium to Relocate its PCB CAD Division to the USA

Altium takes the next step with its growth strategy by relocating its core R&D and PCB CAD Division to San Diego, USA

Sydney, Australia - 30 April 2014 - Electronics design software company Altium Limited (ASX:ALU) has announced that it intends to relocate the management of its PCB CAD division and its core R&D team from Shanghai, China to San Diego, USA. The relocation to the USA, where Altium has had a long-established sales and operational presence, represents a natural next-step in the implementation of Altium’s renewed growth strategy.

In 2011, Altium moved its R&D function from Australia to China on the basis of a technology pursuit, which required access to world-class engineering talent and the desire to be close to technology partners that could assist Altium to realise its vision. The objectives behind that journey have been, for the most part, achieved. The company has also re-defined its Internet of Things (IOT) strategy to be in alignment with its core business of the development of world-class PCB (printed circuit board) design tools.

China remains an important market for Altium, and is the best location for the company’s IOT division, including its associated development services and support teams.

The Board believes that the management of Altium’s PCB CAD division will be better placed in markets where Altium derives most of its revenue and the USA is the best location and offers the best opportunity for the execution of Altium’s product development strategy focused on “Closing the Capability Gaps” with high-end PCB design tools. This strategy will support the expansion of Altium’s market reach into larger customers, while consolidating its position as a world-leader in the provision of PCB design tools to the mainstream market.

The CEO and key executives in the Altium corporate office also will relocate from Shanghai, China to the USA. In time, the USA is expected to become Altium’s strongest operational centre as Altium succeeds in closing the capability gaps with providers of high-end design tools.

The relocation of Altium’s PCB CAD division to the USA is planned to occur, for the most part, in Q4 2014. This move is expected to be cost-neutral.

 
So that's now, unless I've forgotten something:
Tasmania -> Sydney -> Silicon Valley -> Sydney -> China (+Ukraine R&D) -> San Diego

[gregariz]

You need to keep blogging for another 3 years Dave. Then it'll be back to Sydney and they'll be calling.

[EEVblog]

Translation:

Altium takes the next step with its growth strategy by relocating its core R&D and PCB CAD Division to San Diego, USA

The China moves failed, and everyone was getting sick of living in Shanghai. The smart ones had already left. Let's move again to somewhere nicer before the few remaining key people leave as well.

Sydney, Australia - 30 April 2014 - Electronics design software company Altium Limited (ASX:ALU) has announced that it intends to relocate the management of its PCB CAD division and its core R&D team from Shanghai, China to San Diego, USA. The relocation to the USA, where Altium has had a long-established sales and operational presence, represents a natural next-step in the implementation of Altium’s renewed growth strategy.

We though we could get plenty of cheap R&D programmers in China, but we discovered that was a myth. Oops.

In 2011, Altium moved its R&D function from Australia to China on the basis of a technology pursuit, which required access to world-class engineering talent and the desire to be close to technology partners that could assist Altium to realise its vision. The objectives behind that journey have been, for the most part, achieved.

We can't tell the shareholders we failed and the vision was just another in a long line of stupid moves, so let's just say it's "mostly achieved" and everyone's happy.

The company has also re-defined its Internet of Things (IOT) strategy to be in alignment with its core business of the development of world-class PCB (printed circuit board) design tools.

We admit that the Internet of Things was a complete failure and the most stupid strategy we could have chased. That's why we booted out our former founder and CEO and are now focusing back on the core PCB product.

China remains an important market for Altium, and is the best location for the company’s IOT division, including its associated development services and support teams.

China was a flop, but we'll still keep a token presence there of course.

The Board believes that the management of Altium’s PCB CAD division will be better placed in markets where Altium derives most of its revenue and the USA is the best location and offers the best opportunity for the execution of Altium’s product development strategy focused on “Closing the Capability Gaps” with high-end PCB design tools. This strategy will support the expansion of Altium’s market reach into larger customers, while consolidating its position as a world-leader in the provision of PCB design tools to the mainstream market.

See above. China was supposed to be the biggest growth area, but because that failed miserably we'll now try the US again, because everyone hated living and working in China. A change is as good as a holiday. Insert a few wank words to make it sound like we know what we are talking about.

The CEO and key executives in the Altium corporate office also will relocate from Shanghai, China to the USA. In time, the USA is expected to become Altium’s strongest operational centre as Altium succeeds in closing the capability gaps with providers of high-end design tools.

We really, really hated living and working in Shanghai, did we mention that?

The relocation of Altium’s PCB CAD division to the USA is planned to occur, for the most part, in Q4 2014. This move is expected to be cost-neutral.

Now that the unused expensive Sydney HQ has been written off and still sits there like a ghost building, everything is pretty cost-neutral.

[EEVblog]

You need to keep blogging for another 3 years Dave. Then it'll be back to Sydney and they'll be calling.

The old Altium mega HQ in Sydney will still be vacant in 3 years, so I"m hoping the owner will be so desperate to sell that I can snap it up for a song. 

[GeoffS]

That Sydney building is in a nice location. I used to work in the building next door when it was the only building on the street.

They should have stayed in Tasmania 

[EEVblog]

That Sydney building is in a nice location.

Nice, but useless as far as attracting employees. They always had a hard time finding employees for that reason.
They haven't found a tenant since moving out:
http://www.realcommercial.com.au/property-offices-nsw-belrose-5786979
IIRC it cost them about $8M to abandon it and move to China.
It was state of the art, no expense spared:
http://www.lifepropertygroup.com.au/projects/advisory/altium-3-minna-close-in-belrose
and a video tour:
http://www.tourbuzz.net/public/vtour/display/147151

[gregariz]

I like that statement about closing the capability gaps.

A couple of the large businesses that I have had something to do with this last 8 years or so in the US have made the move to Cadence as the package of choice. A big part of the reason is that they are going to spend millions on licensing pSpice no matter what. Cadence Allegro PCB then comes along for free so they look at the situation and decide to ditch whatever PCB package they have been using and save themselves a few million on another license spend. I know a small business still using Altium but that's because they don't need Spice. None of the larger ones except for some legacy stuff. I had a CM in here recently who stated that the preferred package is now Cadence. I'd be interested to know what went down in China but I wouldn't be surprised if there was not much interest in the tool for similar reasons.

[EEVblog]

Cadence Allegro PCB then comes along for free so they look at the situation and decide to ditch whatever PCB package they have been using and save themselves a few million on another license spend.

Cadence Allegro PCB is free?

[IanB]

Locating ones core R&D function in the USA makes good sense. However, the USA is too large to be "one country", and really works out to be "many local regions". People are not always keen to relocate from one region to another, especially if they are settled with family. San Diego is not bad as a tech location (I am based there), but at the same time it is not the center of the universe. I hope they have done their research.

On the Cadence/pSpice subject, I can't imagine anyone today creating a circuit schematic without being able to simulate it and get the major wrinkles out of the design. If Altium doesn't have an integrated simulator, I have to suppose it should be high on their list of development items.

[IanB]

Cadence Allegro PCB is free?

Sounds like it is free with a pSpice license...

[GiskardReventlov]

Loved that translation!  Sadly it's probably all true.  It's a corporate shell game. Guess where the losses are coming from?  It gives them some plausible deniability later when they report their quarterly (or whatever) financial results. They'll be able to say that the move cost much more than anticipated due to unforseen ______________ (fill in the blank)

And the CFO will wave their hands and spout some blah-blah-blah. It's a script they all work from.

San Diego seems like a strange choice. Maybe just for the weather?

[IanB]

San Diego seems like a strange choice. Maybe just for the weather?

Yes, it's a good choice for executives wanting a nice location.

There is a fairly significant tech industry there too. Qualcomm is the biggest and most well known employer in the electro-tech field, but there are a fair number of other companies engaged in various software and other technology areas.

[DerekG]

China was supposed to be the biggest growth area, but because that failed miserably we'll now try the US again, because everyone hated living and working in China.

It has been obvious since the 2011 move to China (from Altium's own annual reports to shareholders) that sales in the USA, EU & Oceania regions have well outstripped their sales in Asia.

We all know why. The Directors of Altium never understood that the majority of software in most Asian countries is not purchased, it is simply downloaded from certain "free" sites.

Whilst these Asian countries have few (or no) Copyright Laws, this trend will continue unabated. The last thing that Asian governments want is for their local corporations to be sending hard earned cash to far away foreign entities. This reduces profits & therefore reduces tax revenue.

I believe these two icons best represent the management at Altium  and  (currently going around in circles but soon to be scared of their shareholders wrath).

[DrGeoff]

Not surprising. Physical relocation is just stupid in a global marketplace. Provided you can attract and maintain the right talent (and they don't have to be in the same country, let alone city or building these days) then it would not matter if they were still located in Taswegia.

I don't think any of those buildings on the edge of Garrigal have ever been tested in a firestorm. They will be in the next few years and I expect about half of them will be destroyed.

[EEVblog]

Locating ones core R&D function in the USA makes good sense. However, the USA is too large to be "one country", and really works out to be "many local regions". People are not always keen to relocate from one region to another, especially if they are settled with family. San Diego is not bad as a tech location (I am based there), but at the same time it is not the center of the universe. I hope they have done their research.

Many people forget that Altium have packed up and moved to the USA before (silicon valley somewhere), with the idea that they needed "to be where the action is".
It didn't work and they moved back to Sydney with their tails between their legs.

[DerekG]

Physical relocation is just stupid in a global marketplace.

Quite right.

Just look at Google who manage their global search engine advertising machine from the low tax country of Ireland.

And Microsoft who utilise The Netherlands for major tax advantages for their shareholders.

And James Hardie Building Products who also utilise the Dutch Double Sandwich for tax reasons.

The three above all have their major markets in other locations ...............

Altium is just a slow learner ....................... well actually the question should be - Do they EVER learn?

[DrGeoff]

Altium is just a slow learner ....................... well actually the question should be - Do they EVER learn?

Unlikely. I think it's a case of management being attracted by shiny baubles again...

[echen1024]

Altium should be housed all in cargo containers, and just rent port-a-potties. Then, they could move every month, and just load everything onto ships.

[EEVblog]

San Diego seems like a strange choice. Maybe just for the weather?

They had an office in Carlsbad, just north of San Diego. A couple of the core PCB guys have always worked there, and they refused to move to China. IIRC that office was just rented, so makes sense to move back to San Diego and base the core group back around those guys who they wouldn't want piss off. They didn't want to relocate before, and likely didn't again.
Remember, the core PCB team is very small (like half a dozen), always has been, even at it's peak, that's no secret.

[EEVblog]

It has been obvious since the 2011 move to China (from Altium's own annual reports to shareholders) that sales in the USA, EU & Oceania regions have well outstripped their sales in Asia.
We all know why. The Directors of Altium never understood that the majority of software in most Asian countries is not purchased, it is simply downloaded from certain "free" sites.

Oh, they understood that very well, they just thought they could change that. Hence they joined an anti-piracy action groups or whatever it was, and joined the Chinese government in some wishy-washy attempt to legitise software purchases.
The other plan was that whilst people would pay for the software, they would pay for training, so they pinned their hopes big by investing big in a triaing centre in China. I guess that never worked out either.

[EEVblog]

And Microsoft who utilise The Netherlands for major tax advantages for their shareholders.

Altium have a big division in the Netherlands, the Tasking group they bought.
They never made anything of that and it just limped along being a bit of a liability. They couldn't sack anyone apparently because of local laws.

Altium is just a slow learner ....................... well actually the question should be - Do they EVER learn?

Under Nick Martin it was plainly obvious to all that since they went public Altium never gave a rats arse about producing a really profitable company. They just kept chasing one silly visionary dream after the next, much to the annoyance of practically ever user who wasn't getting what they needed whilst Altium just pissed away the money on the latest dream that would change every 6 months.
That's why the new management booted Martin out and are trying to (rightly) refocus on the core product.

[gregariz]

Cadence Allegro PCB then comes along for free so they look at the situation and decide to ditch whatever PCB package they have been using and save themselves a few million on another license spend.

Cadence Allegro PCB is free?

Well, most of these big companies buy the full package under a company wide buy which usually means Cadence gets an obscene amount of money to give us everything. So if the interest of alot of the designers is spice and schematic entry, then the PCB side of things is sitting there doing nothing unless they use it. On top of that there are usually alot more designers using schematics and simulation than there are PCB layout guys so theres never a shortage of licenses for that. So more or less its free based on this company wide pricing model. As I said I've seen a couple big companies move to Cadence Allegro PCB for this reason - it just makes everyones life easier rather than having to run a different brand of schematic capture to the layout tool. I've never seen anyone use the Spice tool in Altium. I'm sure it works ok, but there must be some reason for that.

[gregariz]

They had an office in Carlsbad, just north of San Diego. A couple of the core PCB guys have always worked there, and they refused to move to China.

The sand and surf for bottled air? That must have been Accel/Tango. Good for them, no-one in their right mind would leave Carlsbad for Shanghai. If they are going to pick a place in the US thats probably not a bad one. Alot of the hardware businesses moved from the valley down that way because of costs. Its expensive too now though.

[tszaboo]

Translation:
...

Sounds to me, like Altium is led by politicians. Anyway, every time I hear a company going to china for "local talents" (read as: people working for a bowl of rice a day) they usually realize, there are other cultural differences.

[zapta]

Altium gossip is very popular in these forums. Is it because they are Australian? There is almost none about more popular companies like Cadsoft, Fluke, Atmel and Hakko.