How are the positions of the IoT market’s main actors developing?

The question doesn’t have an easy answer, but the analyst IDC has looked closely at the matter in its new MarketScape report "Worldwide Industrial IoT Platforms and Applications in Manufacturing 2021 Vendor Assessment." In its evaluation, IDC concludes that out of the nine players evaluated, a quartet consisting of Microsoft, Siemens, PTC and SAP are the clear leaders. This is not surprising in itself, but the absence of Dassault Systems and Autodesk from the report is more notable.

But what mainly strikes me in the report is that both Microsoft and Siemens have made a run around PTC in the leadership area, according to the MarketScape graphic. An interesting conclusion is that Siemens Digital Industries Software's success with their MindSphere operating system for IoT and IIoT continues.

PTC's positioning in MarketScape's defined leadership area is more expected, although their third-place position is a bit surprising. PTC was the earliest among the PLM developers with its investment in the ThingWorx IoT platform; an investment that continues to develop. Siemens got started in earnest a few years later, but since then they have moved ahead at full steam—at such a high pace that, according to the MarketScape line-up, its MindSphere IoT operating system can actually be considered a shared leader.

But Siemens’ Ray Kok, senior VP for Cloud Application Services, is not surprised by the top ranking.

“Our IoT solution with MindSphere has been crucial for the transformation of our manufacturing customers' business, improved stability and consistency in product quality and also reduced costs because you can avoid unplanned downtime,” he says.

Unsurprisingly, PTC’s Jim Heppelmann is more skeptical when I discussed the matter with him.

“I claim that this type of analysis is not quantitative enough to explain small movements in one direction or another in terms of strategies and executive capacity. The ranking is subjective and based on the authors' reaction to information from suppliers. The only part that is quantitative is market share, and I am happy to see that PTC remains a leader even against companies many times our size,” he says.

Is he right? I have examined IDC’s conclusions, and it is clear that there are certain pieces that must be weighed in the MarketSpace assessment—factors that are important and affect what conclusions can be drawn.

Both Microsoft and Siemens have run around PTC as a leader in IIoT and IoT related to manufacturing, according to analyst IDC's latest MarketScape lineup. An interesting conclusion is that Siemens Digital Industries Software's success with their MindSphere operating system for IoT and IIoT, continues. PTC's positioning in MarketScape's defined leadership area is more expected, although the third-place position is a bit surprising. PTC was the earliest among the PLM developers with its investment in the ThingWorx platform; an investment that continues to develop. Siemens got started in earnest a few years later, but since then has established such a high pace that this time they can be considered a shared leader.

A Shared Leadership

One interpretation of the lineup in IDC's latest MarketScape for IIoT (2021) below is that Microsoft, with its position in the graphics leadership area, is a shared leader in the field, with Siemens Digital Industries following close at hand. The latter is even in the lead when it comes to the strategy axis.

PTC appears to be third, even though the company's market size is among the largest of all. PTC is closely followed by SAP.

How to examine this in more detail depends a bit on how you evaluate the axes and criteria with which IDC builds the chart. In the case of the axes, the capabilities of the solutions are represented in the vertical axis, while the horizontal axis concerns the assessment of strategies.

Difficulty Measuring Qualitative Values Against Quantitative

The quantitative parameters, which are part of the set of criteria used, are one thing. Quantitative is essentially always more measurable and comparable. Qualitative assessments are another matter. Here it is more up to the analyst's general and domain competence.

As a result, the qualitative criteria—which are mainly based on what IoT developers’ customers and users think of the systems—become more difficult to assess in that they are often based on hard-to-measure opinions. These opinions can in themselves can be true, close to the truth, based on incomplete handling/implementation or generally depend on how much the assessor has in terms of knowledge of the system's capabilities.

How correct, or incorrect, the analyst's conclusions become therefore depend on the delicate balance between the qualitative and quantitative factors. This can be good to keep in mind when looking at IDC's conclusions in the MarketScape line-up, which I will discuss further in the article.

Furthermore, it is also the case that several components of the assessment criteria are related to what each player's ecosystem looks like. It is often on the partner side that one finds specific, industry-oriented strengths, support, training and implementation quality. This in itself, if we are talking about highly competent partners, can add great value to a system.

“We are of course very pleased with IDC's placement of Siemens in the Leader category in their IDC MarketScape, and we are determined to develop more advanced solutions as we continue this journey into the future with our customers,” says Ray Kok, who is leading the Cloud Application Solutions business segment. He is responsible for the MindSphere Industrial IoT and Mentor Embedded software offerings.

Partnerships Among Several of the Actors

Moreover, it should be clear that almost everyone in this context has existing connections to each other, but mainly to Microsoft and its Azure platform. Here we can find partnerships with almost all of their manufacturing software competitors, including Siemens and PTC. This means, for example, that even if you have Siemens Digital Industries software suites on the PLM and factory automation side, like Volkswagen you likely have Microsoft Azure as a technical platform.

Equally important to keep in mind is from which point of departure the systems emanate. If the manufacturing criterion is at the core of the survey, as it is in this IDC MarketScape, then this is exactly where the main weighting lies.

There is nothing wrong with that. However, when you assess the whole of the value chain, which determines how quickly, with what quality, at what costs and according to which business model (Product-as-a-Service, or "regular" product sales) you can reach the market, the aspects that are both before and after the manufacturing sequence will have a proportionally greater significance in terms of their impact on the whole.

It is also the case that in today's increasingly complex world of product realization, the value chain tends to become increasingly integrated, and increasingly includes both earlier and later phases. For example, the product development processes on the one hand, and distribution and aftermarket on the other. At the end of the day, this gives an advantage to more complete PLM and automation-interconnected systems—which Siemens has above all—but also things that PTC is in full swing to develop in collaboration with Rockwell Automation.

With the above information in mind, let’s take a closer look at the quartet whose solutions landed in the leadership space of IDC's MarketScape. This is what the analyst's assessments look like.

In April 2020, Swedish IT consultant Sigma became one of the first in the world to become IIoT certified by Microsoft. Earlier this year, Microsoft launched the opportunity for its specialist partners around the world to conduct certification tests on Azure IoT. Sigma was then among the first in the world to certify several of its specialists in the IoT field.

Microsoft Azure is the Pillar in the Offering

From an IIoT perspective, Microsoft’s Azure IoT portfolio is the pillar of the offering.

“The solution offers a wide range of features, including device-level IoT software and various PaaS to build, distribute, manage and secure IoT applications, as well as SaaS applications and IoT reference architectures and accelerators. An important initiative within Microsoft going forward is the company's industry-cloud strategy. These industry clouds combine Azure, Dynamics 365 (D365) and Microsoft 365 (M365) into one solution stack,” notes IDC.

IoT Platform

The Azure IoT portfolio consists of three categories of IoT products: IoT and Edge Device Support, Azure Services for IoT and Azure IoT Solutions. Organizations can leverage individual platform services to develop an edge-to-cloud IoT architecture—or alternatively, to purchase Microsoft's Azure IoT Central solution, which is a SaaS-based IoT platform.

Manufacturing

Microsoft offers IIoT applications for all manufacturing DX strategic priorities (DX, or Data Exchange, is used in conjunction with OPC, or OLE for Process Control), with supply chain optimization and smart manufacturing use cases, which IDC believes are the company's strongest areas.

Microsoft focuses on basic applications and solutions, while its partners often offer vertical-specific variants.

Strengths

Ecosystem: Microsoft offers opportunities up and down the technology stack, states IDC, adding that this IT giant has also ensured that the company's portfolio attracts a broad customer base. Developers are an important target group for IoT services, but the company has also made significant efforts to reach OEMs with its plug-and-play device strategy.

Focus on security: Microsoft offers a variety of security features, such as Azure Sphere IoT security features that range from device to cloud.

Innovative edge: Microsoft has a broad strategy to support edge computing, from hardware and software to various form factors and usage cases.

Challenges

Portfolio simplification: This generally applies to all IoT providers. But even if specific developers appreciate the possibility of having a wide range of tools for building applications, it can be tough to keep up when new products and features are constantly being added at a furious pace. It is desirable, according to IDC, that the company combines and integrates services according to patterns customary for industrial customers. "This would reduce the technical burden on customers."

Maintaining its own competence: Due to changes related to technical changes, organizations increasingly rely on industry-based ecosystems for expertise in such things as more in-depth data sharing and insights on shared applications. Microsoft's challenge is to integrate this and at the same time expand its own competence and development capacity.

OT integration: Operational Technology is of course a key functionality when it comes to IIoT systems for manufacturing. In general, customers from the IDC survey said that they believed Microsoft was stronger than it actually is when it comes to being able to integrate with IT systems over OT systems.

“When Microsoft works with a partner-led solution, the partner may have expertise in different types of OT equipment, but for customers who build their own solutions on Azure, it will be important for Microsoft to continue to develop its own capabilities in this area," IDC sums up.

As engineering.com previously reported in several articles and analyses, Siemens Digital Industries Software offers a set-up model with digital twins partly with regard to the product, partly with regard to manufacturing and production and partly as a basis for optimizing performance and decision-making throughout the life cycle, even in the end user's hands.

Siemens Digital Industries Is the IIoT Arena's Big "Runner Up"

Siemens was one of nine suppliers evaluated, which was generally done based on a comprehensive set of criteria, including the robustness of the offer including IoT applications, edge application frameworks and runtimes, advanced analysis including ML/AI and the company's marketing strategy. With this they thus emerged as a shared market leader, as shown in the MarketScape illustration above.

The report emphasized Siemens' digital twin strategy and commented on the approach, "Digital twins are an important innovation area for Siemens' long-term R&D goals."

As engineering.com previously reported in several articles and analyses, Siemens offers a digital twin model with twins partly with regard to the product, partly with regard to manufacturing and production, and partly as a basis for optimizing performance and decision-making throughout the life cycle, even in the end user's hands.

“By providing industrial companies with a common way to access, manage and visualize IoT data, as well as build and distribute IoT applications, industrial IoT platforms play a key role in supporting the goals of manufacturing organizations today,” comments Stacy Crook, VP of research for IoT at IDC.

“Our assessment showed that in addition to Siemens' own experience of operational processes, it also has a significant ecosystem of manufacturing customers, which can be used for knowledge exchange,” Crook continued. “This is backed up by references that indicate the extent to which they trust MindSphere's and the ecosystem's ability to constantly learn and innovate.”

IoT platform

Siemens MindSphere is the operating system for IoT/IIoT. It can be used in both SaaS or PaaS environments and forms the basis for all Siemens' and the company's external partners to develop vertically specific applications and digital services. The IoT portfolio also includes the low-code platform Mendix, with which you can develop your own customized applications and create an accurate picture of the status of the production chain and which units are included. It also contains opportunities to reconnect to product development instances.

Edge capabilities are part of MindSphere’s capabilities, which means that edge calculation and storage with unit times, applications and management functions are included in the environment.

Manufacturing

Siemens offers solutions in all four manufacturing chains, where discrete manufacturing (EOVC, Engineering-Oriented Value Chains; and TOVC, Technology Oriented Values Chains) is the company's largest manufacturing segment. The company has industrial IoT applications for all manufacturing strategies for DX, with smart manufacturing and product innovation as strong areas.

The overall focus is on connecting and remotely monitoring operational assets and guiding manufacturers along the digital path. This includes advanced solutions for analyzing data to predict results, establishing predictive maintenance and for using data within frameworks such as, "the product as a service."

Strengths

Industry competence/ecosystem: Siemens not only has its own PLM and automation competence in terms of industrial IT support, but it can also rely on a large ecosystem of its own manufacturing subsidiaries within the Siemens group.

Digital twin strategy: Siemens builds this on digital twins of the product being developed, of the production line and the devices that build it and later for the product in the hands of users—all to optimize decision-making and performance throughout the life cycle.

Customer support: Reference companies in IDC's survey consistently pointed out the level of support that Siemens gives them as a strength.

Challenges

User Interface: The Siemens user interface was cited by several users as an area that needs to be improved.

Project management: Some participating references also pointed out project management as an area for Siemens to improve.

Integration: For manufacturing-specific systems such as MES, SCADA/PLC and others, Siemens has capabilities that allow you to connect them out-of-the-box, but some references indicated that this was more difficult to achieve than expected.

PTC's IoT/IIoT platform ThingWorx has tools for connecting various industrial devices and applications; to build or expand applications; to analyze IoT data; and to manage connected devices, processes and systems.

PTC was Earliest of All PLM Developers with IoT

PTC's strength lies, among other things, in its roots within the PLM and CAD space, according to IDC. On the IoT side, there is a similar strength in being out early, and PTC was probably the earliest of all to address and integrate IoT with their PLM platform Windchill. One consequence is that PTC's IoT strategy is rooted in both the concept of digital twins and the digital thread. The latter gives different stakeholders within an organization the opportunity to use a single source of truth for data related to, for example, a factory facility or a process across several systems.

PTC's IoT platform, ThingWorx, plays a key role in this strategy—one which, according to IDC, "enables organizations to collect, contextualize and orchestrate real-time data within the digital thread."

Of course, IDC also points at the value of the PLM developer's deep partnership with Rockwell Automation around the FactoryTalk Innovation Suite. The solution is powered by PTC, also with Microsoft “on the bandwagon,” which provides a scalable basis for the ThingWorx platform and additionally with CAE capabilities from Ansys for customers who want to simulate with digital twins.

IoT platform

ThingWorx has a core that enables developers and staff to create IoT applications centered around the concept of a "case model" and a set of applications and solutions that cover common industrial IoT applications. “ThingWorx has tools for connecting various industrial devices and applications; to build or expand applications; to analyze IoT data; and to manage connected devices, processes and systems,” IDC notes.

Connection point: PTC's Kepware product is an important piece of the puzzle. This serves as the center point for the IIoT portfolio's “connect functions.” Kepware can translate a variety of protocols into a common format to give applications a single "source of truth" for industrial automation data.

Visual strength: IDC also notes that PTC's Vuforia Studio allows companies to use their IoT data to create augmented reality (AR) experiences.

Manufacturing

PTC has solutions in all four manufacturing type chains, where discrete industries (EOVC and TOVC) are the company's largest manufacturing segments. It also has IIoT applications for all manufacturing DX strategic priorities, where field service and product innovation cases are traditionally the company's strongest areas.

The company's collaboration with Rockwell around the FactoryTalk Innovation Suite has also built on the capacity of the company's broader smart manufacturing approach.

Strengths

The digital thread: MarketScape highlights the digital thread as an undeniable advantage: "IoT is an enabling technology for designing, managing and improving products, services and experiences that manufacturers demand today." Based on the company's broad PLM portfolio in the Windchill Suite, it has capabilities in a number of important sub-PLM areas. In addition to IoT/IIoT, we are talking about things such as PLM, AR, ALM (Application Lifecycle Management) and SLM (Service Lifecycle Management). According to the analyst, PTC therefore has the ability to support integration, association and decision support for data, processes, resources and people from companies, IT, technology, R&D, production, supply chain and service.

Augmented Reality: IDC points out here that during the pandemic, PTC was able to demonstrate the value of the company's augmented reality strategy and also the increased focus on SaaS (Software-as-a-Service), where organizations relied on this technology to connect employees in different locations to support the operation, maintenance and repair of all types of products and equipment.

Functional breadth: Customers gave ThingWorx high marks for the platform's functional breadth, flexible distribution options and integration options.

Challenges

Competitive landscape: Competition in industrial IoT is constantly increasing, especially in the guise of “technology giants continuing to add industrial IoT capabilities to other core product lines.” PTC has created a "better together strategy" with Microsoft and Rockwell Automation, but as the middle layer in this triple partnership, PTC must continue to create its own differentiating market value.

Balancing the strategy: There are two branches of PTC's IoT strategy: Smart Connected Products (SCP) and Smart Connected Operations (SCO). Initially, PTC's focus was more on product and service innovation, i.e., the SCP side of the strategy. With the Rockwell co-collaboration, the second part—SCO—has come into focus. This is good, but contains risks that the first part, SCP, ends up in a bit of a developmental froth, IDC notes. “Although these types of use cases are not always the low hanging fruit on the market, they are well adapted to PTC's portfolio, and when organizations succeed in launching connected product initiatives, there are great opportunities to scale up.”

SAP's Thomas Saueressig, a member of the board of SAP SE, where he leads the area of SAP Product Engineering, publishes the text on the company's Industry 4.0-related investment in IoT and IIoT.

SAP IoT/IIoT: Focused on Industry 4.0

SAP's IoT technology has always been part of the company's "intelligent" technology portfolio, which today is placed in the company's Business Technology Platform (BTP).

During the coronavirus pandemic in 2020, the German ERP giant decided to shift ownership of the IoT strategy to the more industry-focused “Industry4.Now” initiative. This is part of SAP's broader supply chain strategy and focuses on the role that SAP technology can play in enabling Industry 4.0.

IDC notes that SAP focuses on four key areas within Industry4.Now:

Intelligent assets.
Intelligent factories and logistics.
Intelligent products and empowered people.

SAP customers can consume IoT data in three ways: they can build new web applications on the platform, they can buy SAP applications with IoT embedded or they can implement their existing applications with IoT data.

IoT platform

SAP's IIoT platform is called SAP IoT. Here you can generally connect to IoT devices, retrieve data from these devices, and store everything in the cloud. Integrations with Azure IoT and AWS IoT provide options for how users want to connect and manage IoT devices.

Furthermore, through a set of micro-services, customers can build IoT applications with features that include modeling, authorization, event management, business partner management and application development templates for "things." It has IoT support for advanced analysis for data in motion (for example, flow analysis), data at rest (including computer science), data processing (e.g., physics-based simulation) and machine learning.

"A recently available capability for SAP IoT is the ability to automatically enrich events from Auto-ID technology (e.g., RFID) and integrate them into business processes such as Kanban without human intervention," writes IDC.

SAP Edge Services are micro-services intended for distribution on edge data devices. The key services include data stability, flow analysis, predictive analytics and the ability to merge operational data with the company context from SAP systems to make decisions locally.

Manufacturing

In the SAP environment, there are solutions in all four manufacturing chains, with an even division between process manufacturing and discrete manufacturing. IIoT applications for all manufacturing DX strategic priorities are available.

SAP applications that are part of the Industry 4.0 portfolio and utilize IoT data include: SAP product development, SAP's cloud for digital manufacturing and their solution for predictive management and asset information.

"Industry 4.0 solutions from SAP are designed to provide relevant business context for analytical and transaction scenarios to machine data independent of ownership of underlying data infrastructure."

Strengths

Design to drive strategy: SAP's product portfolio offers opportunities throughout the entire manufacturing life cycle, from design and manufacturing to delivery and operation of the products—an extremely broad scope.

Everyone knows what SAP is: IDC also points out that manufacturers generally have a great deal of familiarity with SAP—which feels natural for a company whose software handles 75 percent of global transactions. If most people have SAP, you can understand the system better right from the start. In use cases for connected products, SAP's direct customer is often an OEM who then asks to collect data from the customer's environment. OEMs told IDC that SAP could win projects because customers felt comfortable with SAP's security and data protection model.

Infrastructure: Customers appreciate that SAP offers them choices about where to run their workloads, including a variety of cloud options.

Challenges

Pricing: Here, IDC's observations fit in well with previous market reports and customer cases: that many people believe the pricing model can be difficult to understand.

Integration: One of SAP's most important market tasks is to integrate IoT data with SAP systems. IDC writes, "Although customers believe that it is easier to integrate their IoT data with SAP systems using SAP software, they believed that there was a way to make these integrations more seamless."

Configuration: Customers considered that the user interface and configurability for packaged applications could be improved in the future. Among other things, there were customers who wished it was easier to build content specifically for different user roles.

Strict Requirements for Questions in the Evaluation: ABB, Autodesk and Dassault Did Not Meet the Requirements

Finally, a few words about the strict requirements to be considered as a participant in IDC's MarketScape. The base condition is that their solutions are focused on the manufacturing industry. In order to qualify for this study, an organization must also provide:

A commercially available, and widely available, software platform that can be used to build and distribute IoT applications and manage IoT devices.
Initial support for industrial protocols within the platform offering; at least OPC.
Edge application frameworks and runtimes, in addition to cloud development capabilities.
Analytics tools, including instrument panels and advanced analysis (i.e., machine learning/artificial intelligence).
Security features within the platform architecture.
Tools for creating a “fact model”—a model that abstracts raw sensor data into a hierarchical semantic model and presents it as a “thing” for an application.
API access to IoT data.
Commercially available IoT applications.

In addition, participating suppliers had to:

Have had at least $15 million in IoT platform and software revenue by 2020.
Be able to support global IoT distributions (America, EMEA and APAC).
Have at least 20 percent of their current IoT revenue from manufacturing verticals.
Be able to provide at least two customer references for manufacturing verticals; reference customers must have had at least six months' experience of platforms and applications by January 2021.

Clearly, ABB, Dassault Systèmes, and Autodesk—all with IoT related solutions—did not pass through IDC’s strict MarketScape filters.