(A New Version Review and Post-Acquisition Update )
On March 26, 2014, PTC Influencer Relations invited nearly 200 industry analysts covering the Services Lifecycle Management (SLM), Product Lifecycle Management (PLM), Internet of Things (IoT) and related technology segments to participate in an “informative webcast” that would provide a “deep-dive demonstration” of the Company’s newly-acquired (i.e., December 2013) ThingWorx award-winning product.
Russ Fadel, President & General Manager, and John Schaefer, SVP Development, of ThingWorx, the still-autonomous division of PTC, provided both an industry update of what the Company has accomplished in the past 90 days post- acquisition, as well as a demo of the new functionalities embedded in the new version (i.e., v5.0) of the solution, now in limited release among selected customers.
In his introductory remarks, Fadel made it clear that ThingWorx will continue to run both as a “separate business” and “under its own brand,” with Fadel reporting directly to Jim Heppelmann, President and CEO of the US$1.5 billion+ Company. One of the main differences, however, is that, now, ThingWorx can also tap into PTC’s extensive global base of PLM and SLM customers by using the Internet of Things as the common thread, or catalyst, for providing a more coordinated point of entry. In fact, Fadel was excited to announce that ThingWorx had just received its first order earlier in the day from a lead developed through the PTC sales prospecting base.
Internet of Things (IoT) / ThingWorx Background
ThingWorx bills itself as “the first platform designed to build and run the applications of the connected world, … [reducing] the time, cost, and risk required to build innovative applications for smart, connected products.” SFG℠‘s own recent research on the growing adoption and use of remote services and M2M technology confirms that the global marketplace has generally accepted the reality that the types of IoT-based solutions that ThingWorx – and, through its acquisition, PTC – now offers have become an increasingly important building block for both the Service and Product Lifecycle Management segments moving forward.
This foundation is apparently gaining strong momentum as PTC estimates that the number of “things” connected to the Internet “presently exceeds the total number of humans on the planet” and is “accelerating to as many as 50 billion connected devices by the end of the decade.” That’s billions! It also cites a 2013 McKinsey Global Institute report forecasting that “the Internet of Things (IoT) has the potential to unleash as much as $6.2 trillion in new global economic value annually by 2025” and “that 80 to 100 percent of all manufacturers will be using IoT applications by then.”
There are no two ways about it – the Internet of Things represents the primary catalyst of growth for both the present – and the future – of the ubiquitous and pervasive Service and Product Lifecycle Management markets.
PTC / ThingWorx Accomplishments in the 90 Days Post-Acquisition
The accomplishments realized by PTC/ThingWorx in the first 90 days post-acquisition have, thus far, been quite impressive as presented by Fadel and supported by a series of corresponding charts and figures. First off, however, it was made clear from the get-go that the ThingWorx strategy will remain unchanged – that is, that the main focus will remain on the Company’s three principal markets, namely:
- Connected Industries / Connected Operations
- Connected Products / Remote Services and Analytics
- Connected Systems / Powered-by-ThingWorx Independent Software Vendors (ISVs)
Of the three primary markets, the initial point of entry for ThingWorx has historically been Connected Industries. However, it is the Connected Products side of the market where there is likely the “biggest overlap” between the traditional ThingWorx base and the existing PTC customer base (now ready for cross-pollination on a much grander scale). Nonetheless, the Connected Systems market also represents a strong growth potential for the Company in areas including Smart Business, Smart Farming, Smart Cities, and the like. Overall, PTC’s existing base of approximately 27,000 customers also adds a strong prospecting component for ThingWorx to include in its newly-enhanced market outreach.
Fadel went on to explain how the sudden surge in business opportunities stimulated by both an expansive market forecast and the synergies made available through parent Company PTC’s extensive market presence, sales force and related resources, has resulted in a corresponding need for a more aggressive approach to internal expansion in terms of business locations and staffing.
For example, in Q1 2014, ThingWorx expanded its EMEA (i.e., Europe, Middle East and Africa) presence by more than 70 percent, and will also be expanding its Asia-Pacific presence significantly later on in Q2 2014. The Americas sales force is also undergoing a near-continuous expansion, with new positions being offered on a relatively ongoing basis. PTC also brings to the table a complimentary business development channel encompassing roughly 350 sales reps.
Fadel believes that this expansion is necessary in order to meet forecasted growth estimates and, as such, has chartered the Company to “double down on development in order to maintain our developmental lead.” To further support this expected growth, ThingWorx has also embarked on an even more aggressive effort geared toward an expansion in the number of its existing strategic partnerships with the end result being to provide a full complement of IoT resources to the global SLM and PLM market base.
Before ThingWorx, Fadel explained, the market consisted primarily of sensors, devices and equipment; communications elements; general purpose development tools and fixed applications, all trying to work together through a common operating network to connect in as best a fashion as possible. However, they typically consisted of “rigid packaged applications,” and/or “brittle custom applications” that may best be described as requiring complex programming in support of platform services built on a project basis. Even worse, they were also typically difficult to maintain and evolve, high risk/high cost undertakings and generally standalone efforts that essentially created barriers to any future innovation. As a result, according to Fadel, this is why the first generation of M2M and the Internet of Things “failed.’
However, the research-driven ThingWorx platform introduced a whole new way of operating and supporting users in a much more user-friendly manner through its “design for purpose.” The unique ThingWorx application platform is built around a number of innovative technologies that integrate new functionalities, including a mashup builder, squeal and third-party tools to support complete system service integration, business logic (i.e., properties, services, events, etc.) and a 3D storage engine, among others. Empowered by the Cloud, these innovations also rely heavily on new communications capabilities such as AlwaysOn™ technologies, wireless provisioning and others.
The end result for the customer/user is that the ThingWorx platform was designed to reduce the overall time required to build their IoT/M2M applications, and to run them at “10x faster” – a dual promise that ThingWorx still makes to each of its customers today (and quite a compelling value proposition). As such, its last two versions (i.e., v3.x and v4.x) were presented to market essentially in terms of their speed of build and “ease of use.” According to Fadel, it was at this point where PTC President & CEO, Jim Heppelmann, came to the realization that, “We have to buy this company, because they have exactly what we’re planning to build, but it will take us years to develop and stabilize a product to the point at which the ThingWorx platform exists today.”
New/Improved Functionality of ThingWorx Version 5.0
The latest ThingWorx release (i.e. v5.0) builds upon past releases by adding new and expanded areas of “deployability and scalability” – two areas that really excite the ThingWorx team! However, the first step will be to “educate the marketplace in realizing this functionality” (i.e., in that it really exists!) “Federation” is the term that ThingWorx likes to use to tie these two areas together.
Federation essentially answers the prospective customer’s question, “How do I scale the management of my remote operations? I manage 100K devices today, but will be expanding to 1 million in a year, and more than 5 million over the next several years. How do I grow the solution?” The Federation Phase 1 offering addresses this question by providing a number of new (and expanded) functionalities, as follows:
- API Server with Manage Edge Thing Connections that allows scale to any number of connected things by adding stateless request/response servers; and
- Next Generation Web Socket Edge MicroServer with a configurable duty cycle, Web Socket integration to the ThingWorx Platform Server, improved Store & Forward, Software Update to edge devices (including EMS updates) and SDKs for Java, .NET, iOS, Android, & C, with others planned (e.g., Python, Node.js)
Other innovations now available via ThingWorx v5.0 include:
- Matrixed multi-tenancy for the collaborative world (i.e., visibility control via hierarchical “organization” entities to manage access to Model assets and data sources)
- Improved alerts (i.e., rules for generating alerts from properties, priorities for contextualization, alert acknowledgement, new service to return properties and alert status for summary views)
- Localization of runtime
- Productivity updates
- Improved integration to source control systems, with differential exports to individual files, organized by collections
- Additional options for branding and personalization
In a more practical sense, what all this means to the ThingWorx user is an improved level of functionality via version 5.0 that assures:
- Once the device calls in (or is called) for the first time, it remains in the system “for good” (i.e., no need to re-enter, re-submit or re-key, per event)
- Quicker time-to-value and, therefore, quicker time-to-productivity
- Ability to put the customer’s own brand on the application
- Ability to share assets across organizations (with discrete sharing of individual device information/data, as applicable)
- Individualized “theming”, or the ability to provide a uniquely different “feel” for each user on a highly scalable and easy-to-use basis
- Ability to “mashup” widgets, “renderers”, layouts, and visual data displays, as desired, simply via “a few clicks”, and “drag and drop”
- Ability to see the actual movement of trucks/vehicles, etc., on the screen in real time
- Ability to “push” new data automatically (i.e., without needing to initiate a request)
- Many others
[Please note that this Analyst’s Take focuses primarily on the market aspects of the Company’s industry update and new v5.0 version functionality, and not the technical aspects of the platform itself. For more information, please contact ThingWorx directly.]
Basically, SVP Schaefer describes ThingWorx as “a complete events-driven solution” and one whose mission is “to radically change the effort it takes to build an IoT app through the use of open APIs, the integration with third-party systems and reduced risk” – and all at 10x the speed! He also cites the ThingWorx platform as being built squarely on the concept of “Federation”, which he refers to as the “big bang” coming out of the v5.0 release.
Finally, when asked by this analyst “Which side of the market does ThingWorx expect to benefit most from its newfound relationship with PTC? The SLM side of the market, the PLM side – or some combination of the two?” Fadel’s response was immediate and clear – initially, the primary focus will be on the SLM side, as the overall value proposition would be more easily explained and justifiable to prospective customers in terms of attaining higher levels of Service Level Agreement (SLA) compliance, quicker response time and other metrics used as conventions for measuring service delivery performance in the global community.
However, in the long run, Fadel believes that the PLM and manufacturing side, fraught with ongoing production- and quality-related issues, will ultimately represent the Company’s primary target market as it ramps up the curve in terms of the adoption and use of Internet of Things-based platforms and solutions. Overall, each segment has its own unique (to them) story about how the IoT can support their long-term goals and objectives, and, as a result, both represent the future for the Internet of Things – as well as for ThingWorx and PTC.