Digital Disruption: Shaping the Future of the Auto Industry

By | Aquisition, Automotive, PLM | No Comments

Industry in Turmoil

Automakers have been keeping a steady pace of technology innovation and manufacturing excellence for over a century. Since the breakthrough of the highly efficient assembly line, auto manufacturers were in the forefront of engineering innovation, designing and building cars that were successively better, safer and cleaner. For many decades, the industry has been at the center of the US economic development, and, to many, an industrial and social icon.

But over the past decade or so, the iconic and seemingly stable industry has been in turmoil. It has been undergoing massive changes caused by the cumulative effect of rapid technology innovation, disruptive business models, aggressive new competitors, and an emerging supply chain ecosystem whose full impact is not fully comprehended yet.

One of the most profound changes the auto industry is grappling with is the emergence of connected and autonomous cars. Most industry visionaries and practitioners portray a bold vision of a future in which cars, occupants, and cloud-based information and control systems communicate and exchange information in the omnipresent Internet of Things cloud. Cars are becoming part of the Internet, or, in today’s parlance, they are yet additional, if unconventional, “things” in the Internet of Things (IoT). Read More

Transverse Line Kandisnky

LiveWorx 2016 – PTC’s Internet of Things Strategy

By | Aquisition, Internet of Things, M2M, Service Lifecycle Management (SLM), Strategy | One Comment

LiveWorx 2016

PTC’s LiveWorx, the annual event that demonstrates and affirms PTC’s commitment to the Industrial Internet of Things (IoT) space, concluded last week in Boston. It was larger and richer than the previous LiveWorx conference by far.

LiveWorx serves well to clarify PTC’s Industrial IoT strategy and to articulate the role of the various technology pavestones that form PTC’s elaborate IoT path. Not surprisingly, PTC’s CEO James Heppelmann’ keynote centered on IoT application to enhance equipment service and maintenance operations, as were systems demonstrated on the main stage by Caterpillar, Trane and Flowserve, although it was obvious that these were proofs of concept rather than deployed systems. As Mr. Heppelmann reiterated a cornerstone in PTC’s strategy: “service is the killer app of the industrial IoT”.
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PTC Expands the ThingWorx Platform, Adds ColdLight Analytics

By | Aquisition, Internet of Things, IT Strategy, M&A, Strategy | One Comment

PTC LiveWorx 2015 concluded earlier this week. PTC brought together a good mix of users and prospects, technology vendors and systems integrators, analysts and the press, in a series of presentations and discussions that created much enthusiasm and probably greater expectations from PTC as it seeks to establish a leadership position in the Internet of Things (IoT) marketplace.

One of the more important announcements made during LiveWorx that did not get as much attention as it deserved was the acquisition of analytics software company ColdLight.

ColdLight’s Neuron software presumably provides “automated predictive analytics” by “using artificial intelligence and machine learning technology to automatically and continuously learn from data, discover patterns, build validated predictive models.” A brief conversation with the company’s CTO didn’t reveal much in way of artificial intelligence or deep learning. The software, which appears to be more of multivariate statistics and a hint of a neural network type learning), certainly does not demonstrate sufficient domain-specific semantic understanding to be able to fulfill some of the promises made in the press release. The video advertising Neuron as a brain-like learning machine was uploaded in 2009. Perhaps the product direction has changed in the course of the last five years.

With reported run-rate subscription revenue of less than $8 million, and no apparent experience in manufacturing, which is the industry PTC targets as the prime market for IoT, the term Predictive Analytics Leader used to describe ColdLight may be a bit difficult to justify, and the price tag of approximately $105 million may also raise some eyebrows on Wall Street.

So why do I maintain that the addition of ColdLight to the ThingWorx IoT platform is so important?

As I’ve discussed and written in the past, the business value of the IoT is not in connecting and managing devices, although these are critical to form the necessary foundation for value realization. The real value lies in the ability to shorten the latency in decision-making. The ability to create rich multidisciplinary context for better decision-making is actually realized outside the IoT platform—in PTC’s case ThingWorx—and requires a broad set of data and a highly capable analytic tool.

PTC’s IoT strategy remains horizontal. ThingWorx is a general purpose IoT platform, augmented by tools such as ColdLight that enable customers and systems integrators to build domain-specific big data analytic applications.

This last point should serve to highlight the challenges ThingWorx is going to face.

  • First, as PTC readily admits, IoT applications require deep domain expertise, both technical and business. The ThingWorx platform and ColdLight analytics do not provide those “out of the box.” PTC’s response to this challenge is aggressive growth of its technology and implementation partner ecosystem, which was highly evident at LiveWorx.
  • Specific to ColdLight, the company will have to prove that its technology can handle analytic and predictive tasks in a range of data types and semantics and provide deep and rich insight in a cost effective manner. At present, it appears that the Neuron software requires a significant level of professional services.
  • Lastly, as PTC targets ColdLight as ThingWorx’s main analytic tool, it will no doubt have to figure out how to cohabit with mainstream enterprise BI tools such as Cognos, BusinessObjects, HANA and SAS. This is not a question of analytic capabilities. It’s conceivable that a deeply embedded ColdLight will offer better analytic using ThingWorx generated data, but high fidelity enterprise-level decision making must incorporate a broader range of multidisciplinary data, much of which is stored in the enterprise ERP system, out of the reach of the IoT platform.


Harman International Acquires Red Bend Software

By | Aquisition, M&A, Telematics | No Comments

On January 22, Harman international announced the acquisition of venture backed Red Bend Software, a provider of software and services for remotely updating mobile device software using Firmware Over The Air (FOTA) technology. The company claims a customer base of over 80 mobile device manufacturers, cellular operators and semiconductor manufacturers, all an all managing some 1.75 billion mobile devices around the globe.

The $170 million transaction will be split into approximately $99 million in stock and $71 million in cash. Harman simultaneously announced the acquisition of software services firm Symphony Teleca.

Harman indicated that Red Bend will continue to operate as a separate business unit under the current management structure, which is more or less the standard language used when announcing this type of deals

Although the $71 million cash outlay made hardly a dent in Harman’s deep pockets, this acquisition certainly raises as many questions as it answers.

Connected Car, Take Two?

Harman is a major supplier of audio equipment and infotainment systems to the automotive industry, but Dinesh C. Paliwal, the company’s Chairman, President, and CEO wants a bigger pie of the connected car technology space. In 2012, Harman announced the formation of a Connected Car Software Engineering Center in Chicago, but apparently Paliwal wants to pick up the pace.

Harman’s previous acquisitions to establish a role in the connected car space didn’t play out well.

In 2004, Harman had acquired QNX Software Systems, the developer of the real-time operating system and several embedded software solutions for $138 million. Six years later, Harman sold off QNX for $200 million to Research In Motion (RIM), giving only a vague explanation for the divestiture. Today, QNX software is found in more automotive infotainment than any other software. Recently Ford announced that QNX will replace Microsoft as the operating system of the next version of its infotainment system.

Can Red Bend technology help Harman assume a more competitive role in connected cars?

In addition to FOTA technology, Harman gets access to Red Bend’s cyber security and mobile device management technologies. Harman could be thinking outside the audio equipment box here. The challenge for Harman—as it has been for Red Bend—is that these will require it to develop process expertise and closer relationship with parts of the automaker’s organization it does not currently possess.

Over the years, Red Bend has been hard at work developing relationship with OEMs and forging partnerships with wireless carriers and industry groups, trying to get them to adopt its FOTA software. While these efforts certainly made Red Bend is a recognized brand, the company wasn’t able to generate significant and sustained OEM business.

One successful outcome of Red Bend’s steady effort to take its technology to the automotive industry is a relationship it struck with AT&T to be the FOTA technology provider for AT&T Drive Connected Car Platform, which is in the center of the company’s connected car strategy. AT&T had a major win when it displaced Verizon at General Motors to become the telecom provider for OnStar starting 2015 model year.

With AT&Ts aggressive investment in automotive y and Harman’s broad footprint, is there a Harman-AT&T partnership in the making?

How Will Red Bend’s Major Customers Respond?

As a small independent provider of highly specialized technology, Red Bend was able to offer FOTA technology components and services to multiple mobile device companies. It’s unlikely that Harman has much interest in this space.

Will Red Bend’s customers see too much risk in using a technology owned by a company who is focused on selling car head units and home audio systems? Will they look for alternative sources to provide core device management capabilities and come with fewer strings attached? One example that comes to mind is Mformation, who might use the acquisition as an opportunity to offer an industry neutral alternative.


Kalypso Acquires GoEngineer

By | Aquisition, M&A, PLM, Strategy | No Comments

PLM consulting firm Kalypso announced a strategic partnership with GoEngineer, a reseller of Oracle Agile PLM and Dassault Systèmes SOLIDWORKS 3D CAD software, and provider of PLM hosting, integration, implementation and training services. Although according to the press release “Kalypso has acquired GoEngineer’s implementation services business” no financial information was disclosed.

Under the new structure, Kalypso gets GoEngineer’s implementation services business and GoEngineer will continue to focus on providing PLM cloud services.


GoEngineer’s implementation services strengthen Kalypso’s portfolio and delivery capabilities in a number of ways, allowing it to broaden its reach into industries and product lifecycle activities in which Kalypso wasn’t as strong:

  • eCAD customers. GoEngineer has a Zuken practice.
  • 3D Printing: GoEngineer has capabilities in 3D printers from Stratasys and Objet (merged with Stratasys in 2012)
  • Industries: GoEngineer has strong presence in manufacturing, high-tech, medical equipment and energy

And, of course, Kalypso will benefit from additional PLM implementation resources as well as experience and facilities for hosted PLM software. The latter supports Kalypso’s previous announcement of the launch of managed services for PLM applications.

Kalypso customers will certainly benefit from a broader ser of expertise and capabilities.

Overall, this deal is yet another step in a number of acquisitions and relationships Kalypso is pursuing to enhance their position in PLM implementation services (most notably, the merger with Integware in May, 2014) and ability to serve both large enterprises and small and medium-sized business (SMB).

A Defensive Move

The new arrangement is defensive move that offers Kalypso a couple of advantages. First, it supplements Kalypso’s “innovation” consulting business, which is complex, requires expensive and scarce talent, and is becoming more competitive and harder to scale as top-tier consultants like Accenture, CapGemini and Deloitte are offering product innovation and development consulting services.

At the same time, by adding more implementation and integration services, and acquiring customers in new industries, the Kalypso is well positioned to compete with PLM service providers, including Accenture, KPIT, Prolim, and the PLM software vendors themselves.

GoEngineer stands to benefit by getting a much needed business focus. Over the years the company expanded into many industries and functional areas and has become too thin to the point it couldn’t scale. Relinquishing the implementation services to Kalypso and focusing on running the hosting services separately will help GoEngineer capitalize on the growing interest in hosted on demand PLM solutions.