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PTC Keeps Growing Its Industrial IoT Strategy with Kepware
Acquisition: Part One
by Eugenio Pasqua
PTC Acquires Kepware Technologies
It appears that PTC really enjoys its Christmas shopping. At the very end of 2013 PTC announced the acquisition
of ThingWorx, which represented their most decisive step towards the emerging IoT market. This year, just a
couple of days before Christmas, PTC has repeated itself by announcing it has signed a definitive agreement to
acquire Kepware Technologies, a software development company that provides connectivity solutions to industrial
automation environments. According to the announcement the transaction will be finalized in early 2016 and will
cost PTC approximatively $100 million plus up to an additional $18 million based on a number of strategic and
financial goals. PTC also revealed its intention to maintain Kepware’s partner ecosystem and to further develop
Kepware’s technology after the acquisition.
What Does Kepware bring to PTC's Portfolio
Kepware Technologies has been in business since 1995, helping its customers in such industries as
manufacturing, oil and gas, building automation, and power and utilities bridging the communication gap between
their Operational Technologies (OT) and Information Technologies (IT) through their software solutions. Their
main product, KEPServerEX, is an industrial communication platform that leverages OPC - the interoperability
standard for industrial automation connectivity, see OPC-UA: At the Heart of the Fourth Industrial Evolution?- and
different IT-centric communication protocols to connect, manage, monitor, and control a variety of industrial
automation devices such as PLCs, RTUs, PACs and other control devices, as well as software applications
through a single user interface. In well-connected and relatively integrated environments such as manufacturing
plants, the server resides locally at the control system’s edge, while in more distributed and remote environments,
like oil and gas sites, it is usually located at the enterprise level, with the different sites connecting to it typically via
an access point like a router or gateway. The latest addition to their portfolio was the IoT Gateway for
KEPServerEX – released in October 2015 -, a software plug-in that complements the platform’s numerous OPC
interfaces by streaming industrial data directly into third-party Big Data and analytic software applications, either
on-premise or in the cloud.
Under the PTC umbrella, Kepware’s software portfolio will play a strategic role in extending the capabilities of the
ThingWorx IoT Platform, PTC’s racehorse in the IoT space with particular focus on the manufacturing industry.
The integration of the two products will enable machine generated data collected through the Kepware solution to
be aggregated into the ThingWorx Platform, integrated with a bunch of other external and internal data and then
analyzed using ThingWorx’s own machine learning algorithms. As PTC’s president and CEO Jim Heppelmann
stated in the press release, “with this acquisition, we will gain entry into heterogeneous factory and operating
environments with robust technology, an impressive list of customers, and a high-quality, profitable company with
incredibly talented employees.”
An "IoT-zation" Process Started in 2014
Kepware’s acquisition represents only the latest of a series of strategic moves that are transforming PTC in an IoT
powerhouse. As already mentioned, PTC’s “IoT-zation” strategy became reality when, at the end of 2013, they
acquired ThingWorx, a leading IoT Platform vendor that provides a drag-and-drop environment for quickly and
easily building IoT apps, for approximately $112 million (see Analyzing PTC’s ThingWorx Acquisition: Part Oneand
Part Twofor ABI Research’s take on the deal). Until then, PTC was a renowned software and services solution
provider for the manufacturing industry, where it supported its customers in creating, building, managing, and
servicing products at several points in the value chain, including engineering, supply chain, manufacturing, quality
assurance, sales, and service/support. To do so, PTC has built over the years a broad product portfolio that
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includes product lifecycle management (PLM), computer-aided design (CAD), application lifecycle management
(ALM), supply chain management (SCM), and service lifecycle management (SLM).
As the emergence of IoT technologies become more and more a reality, PTC was among the “non-native
M2M/IoT” companies that first realized the extent of disruption that these technologies would have brought to the
manufacturing industry. Having identified the IoT as the key to a new generation of product (PLM) and service
(SLM) lifecycle management solutions, PTC thus decided to invest heavily in these technologies, and the
acquisition of ThingWorx allowed the company to make a decisive entry into the emergent end of the market. This
strategy was further advanced when in Q3 2014 PTC acquired Axeda, another leading IoT platform provider that
complemented their ThingWorx rapid application development platform and further enhanced their PLM and SLM
offering (for a deeper analysis of the deal, have a look at Analyzing PTC’s Axeda Acquisition: Part Oneand Part
Two).
But while the 2014 acquisitions of ThingWorx and Axeda can be seen as the result of a horizontal IoT strategy,
since the two platforms provide a more general-purpose technological base to build their IoT offering, it is in 2015
that PTC has someway steered its IoT strategy more towards the manufacturing industry, with the acquisitions of
Kepware and the analytics software company ColdLight in addition to a number of more industrially focused
partnerships with sector leaders. We’ll discuss this in the second part of this insight.
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