Virtual reality design tools company Division Group Plc is already seeing the benefits of divesting itself of its hardware division (CI No 2,979) and focusing on software, with losses down and gross margins up. The Bristol, UK company reported losses of 965,000 pounds, down significantly from losses last time of 2.4m pounds on revenue that fell 21% to 2.4m pounds. However, chief executive Charles Grimsdale says the company is now focusing on profit rather than revenue, and gross margins have risen to 71% from 45% last year as a result. He also believes the market for Division’s products is really maturing. Grimsdale makes it clear that Division is not in the virtual reality market per se. Indeed, he goes as far as to say that there is no such thing as a virtual reality market. There are, he says, markets for virtual reality tools, and Division has focused on the engineering and manufacturing markets, with specific emphasis on what it calls interactive product simulation. This, he says, is why Division should not be compared to the likes of Superscape VR Plc or the bankrupt Virtuality Group Plc. The company’s biggest competitor is US-based Engineering Animation Inc, which is also targeting the Computer Aided Design market. Division’s tools enable companies to import Computer Aided Designs from most of the well known CAD packages, and to simulate all parts of the actual product in three dimensions, up to and including the whole finished product. The company focuses on the end user, he says, and provides a solution to the problem of seeing how a product will actually perform when built. Users tend to be in the mechanical design business, automotive, aerospace, transport including trains and boats, and high end construction, such as oil refineries, and chemical plants. Unusually for a UK software firm, the company sees 45% of its sales from the US, with 26% in the UK and the remainder in Europe and the Far East. Grimshaw says with the focus now entirely on software and services, Division’s sales force has been recruited from the CAD industry, and sells software, consultancy and maintenance services. According to Grimshaw, not only are the designers turning more and more to these interactive three-dimensional tools at the design stage, but customers will soon be using them over the Internet to chose a car, camera, washing machine or other consumer product. They will also be used by maintenance engineers in the field, and component suppliers. So the future, according to Grimshaw, is looking very positive. The company’s licensing agreement with Electronic Data Systems Corp, (CI No 2,888), whereby the US company’s Unigraphics division will integrate Division’s dVise software in its Unigraphics software has now been finalised, and the company expects to see royalty payments ensuing before the end of the year. The company does not pay dividends
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