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Jeff Rowe
Jeff Rowe
Jeffrey Rowe has almost 40 years of experience in all aspects of industrial design, mechanical engineering, and manufacturing. On the publishing side, he has written well over 1,000 articles for CAD, CAM, CAE, and other technical publications, as well as consulting in many capacities in the design … More »

PTC Strengthens IoT Position By Acquiring Axeda

July 25th, 2014 by Jeff Rowe

It appears that PTC is wading deeper into Internet of Things (IoT) waters with the announcement that it has signed a definitive agreement to acquire privately-held Axeda Corp., a pioneer in the development of technologies that connect machines and sensors to the cloud. Paying approximately $170 million in cash, PTC’s primary motivations behind the acquisition are Axeda’s innovative technology, customer base, and partnerships that could directly complement the PTC ThingWorx business across the entire Internet of Things technology stack.

Axeda IoT ROI and Value Curve Overview

Like virtually all acquisitions these days, this one is subject to satisfying customary closing conditions and certain regulatory approvals. If everything goes according to plan, the transaction is expected to be completed in PTC’s fiscal Q4 2014.

The Internet of Things (IoT) refers to uniquely identifiable objects and their virtual representations in an Internet-like structure. The term Internet of Things was proposed by Kevin Ashton in 1999, although the concept had been discussed since 1991.

Radio-frequency identification (RFID) was seen as a prerequisite for the Internet of Things in the early days. If all objects and people in daily life were equipped with identifiers, they could be managed and inventoried by computers.

Today, the term IoT is used to denote advanced connectivity of devices, systems, and services that goes beyond machine-to-machine (M2M) communications and covers a variety of protocols, domains, and applications.

PTC got into IoT in a big way when it acquired ThingWorx in December 2013 for its platform for building and running connected IoT applications.

Secure connectivity, and the ability to leverage machine data to create new business value, are critical components of the Internet of Things (IoT) technology stack and are in increasing demand as more companies pursue a smart, connected product strategy. In the IoT technology market, Axeda currently serves more than 150 customers, processing hundreds of millions of machine messages daily across multiple industry sectors.

Crucial to Axeda’s IoT technology is the ability to enable companies to establish secure connectivity and remotely monitor and manage a wide range of machines, sensors, and devices. An example of this ability is the Axeda Machine Cloud Service that includes M2M and IoT connectivity services, software agents, and toolkits that let companies connect their products to the cloud using several communications channels, such as cellular networks, the Internet, WiFi, or satellite. Axeda’s end-to-end security strategy covers all levels of the IoT technology stack, including network, application, user, and data security.

In addition, the Axeda Connected Machine Management application set lets companies remotely monitor and service products, including the ability to deliver “live” software updates.

In the burgeoning IoT era, PTC realizes that its customers are developing increasingly smart and connected products that can generate value in new ways as streams of real-time operational data are captured, analyzed, and shared to deepen a company’s understanding of its products’ performance, use, and reliability. PTC said that it intends to leverage the Axeda technology portfolio to complement its existing ThingWorx rapid application development platform.

Jim Heppelmann, CEO of PTC,  said, “In less than a year, PTC has quickly scaled to a position of leadership in helping manufacturers seize the opportunity presented by a smart, connected world. We believe the combination of ThingWorx, Axeda, and our existing SLM and PLM solution portfolio, will establish PTC as the only provider of true closed-loop lifecycle management solutions for the Internet of Things.”

Again, if all goes according to plan, the acquisition is expected to add $25 million to $30 million of revenue in FY’15. Seems like a pretty good return on an investment, not only for the company being acquired, but also for PTC’s continuing push and commitment for IoT.

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