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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 Copyright 2016 ABI Research Downloaded by [email protected] 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. Copyright Allied Business Intelligence, Inc. All Rights Reserved. This document is protected by US and International Copyright Law. No part of this document may be republished or entered into an information storage / retrieval system or database of any kind without the expressed written permission of ABI Research. Copyright 2016 ABI Research Downloaded by [email protected]