EXCLUSIVE PTC is looking to new partner Rockwell Automation to help it fulfil the smart factory ambitions that have fuelled acquisitions totalling $300 million in recent years. But the deal has left some questioning how it effects earlier, ongoing partnerships.
At the company’s LiveWorx show in Boston this week, PTC CEO Jim Heppelmann filled in some key details on the software company’s deal with the industrial automation giant, signed last week.
As reported by Internet of Business, Rockwell Automation is investing $1 billion in PTC, which the partners claim will help them in a joint push in the smart factory space. But what happens to PTC’s existing partnership with General Electric (GE)?
“We do have a partnership with GE, but frankly, that partnership is not as active, because in the era of a new CEO, GE has retrenched a little bit when it comes to their own digital aspirations,” Heppelmann told Internet of Business.
“So at this point, I would say that the Rockwell partnership is many times more important to us than the GE partnership, but the GE partnership remains technically in place.”
It’s clear, then, that working with Rockwell is now the main priority at PTC.
A go-to-market strategy, meanwhile, is already in place. Rockwell and PTC will package up a number of their software offerings as a smart factory ‘bundle’ for customers. These include PTC’s Vuforia augmented reality (AR) tech, its Kepware integration software, and its ThingWorx IoT platform, alongside Rockwell’s FactoryTalk analytics and suite of manufacturing execution applications.
Reach is the key, and with Rockwell’s sales teams on its side, PTC will be much better able to get a foot in the doors that count, not just with the discrete manufacturers where it already has many customers, but also in process manufacturing, where it is less well connected.
As Heppelmann explained, most of PTC’s smart factory sales have been handled by the company’s own direct sales group, which numbers around 330 sales teams. But only around 25 of these are focused specifically on factory environments.
Rockwell, by contrast, has over 1,000 sales teams that work specifically with factories, and a strong presence in key process manufacturing sectors, particularly pharmaceuticals. In other words, this deal could help PTC sell its three most relevant industrial IoT applications (all acquired technology) into a far broader base of manufacturers.
But Heppelmann was keen to stress that the deal helps Rockwell, too. “Rockwell has had a connected enterprise story for some time; it’s their view of what happens when operational technology [OT] and IT come together to create a more efficient, effective enterprise,” he explained.
“So they’re coming at it from the OT side of things, trying to push their way upstream into the IT side. And when they look across the fence between OT and IT, they see us in a very strong position. Frankly, I think they concluded it would be a lot better to partner with us than compete with us.”
Elsewhere at the show, there were other updates about PTC’s more traditional products: the latest update (version 5) to its flagship computer-aided design (CAD) suite, Creo, was announced, with new capabilities for additive manufacturing, such as 3D printing.
The company also trailed a new tie-up with simulation software specialist Ansys, so that those capabilities can be integrated directly into Creo.
Internet of Business says
It was very clear that the real focus for future growth at PTC is in smart factories and industrial IoT.
The company’s IIoT software business, said Heppelmann, is growing at around 40 percent annually. In revenue contribution terms, it’s already as big as the company’s longstanding product lifecycle management (PLM) business, represented by the Windchill line, and will overtake that business next year.
While still not as big as the company’s CAD software business, Heppelmann expects IIoT to overtake CAD in 2020.
So the Rockwell partnership is key to Heppelmann’s vision of PTC’s future, which has seen him pour millions of dollars into acquiring new technologies in recent years.
The three products involved in this partnership – Thingworx, Kepware, and Vuforia – have come to PTC at a price tag of almost $300 million. And while they’ve clearly been successful for PTC, there’s a lot more potential to be realised from them in sales terms.
Said Heppelmann: “We’re not a small company, but we’re not a massive company either, so we need some force-multipliers to help us. We’ve got some great technologies for factories, but it’s a big world out there. So we asked ourselves, ‘What are we going to do?’ And the answer was to find a great partnership with a key player like Rockwell.”