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July 7th, 2010
Hexagon’s Acquisition of Intergraph Promises to Speed CAD and GIS Convergence

Ola Rollén, president and CEO of Hexagon, delivered an in-depth press presentation regarding the acquisition in which he offered detailed analysis of Intergraph’s business units, the technology offerings, their market position, their business model, as well as the financial performance. The global reach of Intergraph, and their diversity in terms of markets served, has meant that their overall revenue dropped only five percent last year, despite the global downturn, and this is only true of their market reflected in U.S. dollars. If the performance is based on local currencies, without exchange rates and currency fluctuations, the drop is only one percent. In 2009, approximately 40 per cent of Intergraph’s sales were generated from the US, 36 per cent from EMEA, 15 per cent from Asia Pacific and 9 per cent from the rest of the world.

Sweden-based Hexagon has grown phenomenally through acquisitions over the past ten years. The company was built from nothing through acquisitions of Brown and Sharp in 2000, Leica Geosystems in 2004, NovAtel in 2007, and now Intergraph in 2010. The vision has been steadily focused on measurement, and now with the Intergraph piece they add another means to visualize and present their measurement information.

Intergraph altered their approach to the geospatial marketplace with a change in management in 2003. Intergraph moved away from a competitive position with both CAD and GIS vendors at that time, with a focus more directly on solutions to specific industries. Rollén calls the success of this strategy “pure luck” because today major players such as Microsoft, IBM, Oracle and Google control a lot of the data server and general storage market, which would have constrained their growth in both areas. Intergraph’s open and collaborative approach has put them in a good position to work with these large players to grow their solutions alongside these vendors rather than compete.

Rollén spoke to the disruption of scanning technology and the company’s merging of measurement capabilities of all of their measurement tools into the point cloud space. The point cloud helps bridge the input of measurements into both CAD and GIS, and speeds the merger of the two separate markets.

The approach of Hexagon has been horizontal to date, penetrating different markets with the same technology. With the new acquisition of Intergraph, Hexagon is looking to tailor solutions for specific industry applications with different features. The product offering becomes much more compelling with this ability to tailor their approach. The fusion of sensors and software are essential to realizing these custom solutions.

The move toward 3D, as well as the ability to constantly update and improve models over time, are key motivators for the acquisition. The long-term collaboration with owner operators of built infrastructure provides a much better revenue picture for Hexagon, instead of a short project win that is only realized during the design phase of a project. The company will reap much better revenue over a longer-term window by enabling an ongoing interaction with the model to manage and operate the facility. The measurement to facility management shift is seen as a huge revenue opportunity.

Hexagon is paying more than $2 Billion USD for this acquisition. They envision a strong future for the company both as a piece in their overall strategy, and as a vital player in a changing world, with solutions for energy, security and infrastructure.

You may view Rollén’s presentation here.