1. PTC: THINGWORX IoT PLATFORM
AHMED ALI

2. Company summary
PTC is a global provider of software solutions and services for computer-aided design (CAD), product lifecycle management (PLM) and service lifecycle management (SLM). The vendor is a strong contender in the IoT market with its application enablement platform (AEP), ThingWorx, and its supported analytics and augmented reality solutions.
The company relied on a series of acquisitions from 2013 to to build its IoT platform. It has integrated the technologies as modular elements of the ThingWorx platform. In the IoT space, PTC faces strong competition from different types of platform providers including AWS, Microsoft, IBM, GE Digital and SAP.
In addition to acquiring technologies, PTC’s approach to IoT relies on building and expanding its ecosystem. ThingWorx lists 119 partners including chip vendors such as Intel, mobile operators such as AT&T, system integrators such as Accenture and solution providers such as Sasken.
ThingWorx Marketplace allows PTC and its partners to publish and sell platform extensions and IoT applications directly. As of September 2017, the marketplace listed more than 120 extensions and 90 solutions. Also, ThingWorx Certification programme provides training for developers.
To accelerate the adoption of its platform further, PTC targets academic groups with the IoT Passport educational programme for students and researchers.
Figure 1: PTC company facts
Founded
1985
Offices
Headquarter: Needham, Massachusetts, United States
88 locations: 26 in North America, 2 in Latin America, 31 in Europe, 28 in Asia and 1 in Australia
Employees
5800 (September 2016)
Regional focus
Global
Revenue
USD1164 million (FY 2017)
Customers
active customers
Selected key customers (IoT)
ABC Manufacturing, Aridea Solutions, HIROTEC, ICURO, Panasonic, RailComm, SmartPatch, Splunk, Springpath, Sysmex Corporation, TU Darmstadt, Vodafone
Partnerships (IoT)
119 partners : Accenture, AWS, CalAmp, Dell, Deloitte, Device Authority, Elisa, Glassbeam, HPE, Intel, Libelium, Marvell, Microchip, NXP, Option, Portugal Telecom, Tata Consultancy Services, Tech Mahindra, Telkomsel, Wind River, Wipro

3. Company summary: financials
PTC categorises its products into two groups; Solutions and IoT. The Solutions Group represents PTC’s core business line including CAD, PLM and SLM products. This group makes the majority of the company’s revenue. The IoT Group is where the company sees growth. As well as IoT, it contains analytics and augmented reality solutions.
PTC reported a total revenue of USD1164 million in FY2017 for software sales and services. Gross profit grew by 2.5% in reaching USD835 million. The IoT Group revenues, with the aid of strategic acquisitions such as of ThingWorx and Axeda, have been increasing. The newly established group generated a total of USD103 million (FY 2017) which accounted for about 9% of the total revenue and 28% YOY growth.
In terms of sales channels, the company generates most of its revenues through direct sales to large accounts, which made 74% of its 2017 revenue. Third-party channels tend to address small to medium businesses. This segment revenue stayed in the range of 22% to 26% of sales since 2011.
PTC’s largest regional market is the Americas with 43% of revenues as shown in Figure 3. According to FY16 filings, the vast majority of this region revenues, 95%, were generated in the USA. In Europe, Germany is the company’s biggest market with 39% regional sales in FY16. Japan is a significant market in Asia-Pacific with 46% of the regional sales in FY16
Figure 2: PTC’s revenue and profit, worldwide, 2014 to 2017
Figure 3: PTC’s revenue by region, worldwide, 2017

4. Strategic direction
PTC’s solutions are sold through four methods; subscription, support, perpetual licenses and professional services. In 2014, the company started to shift its licensing strategy from a perpetual model to a subscription model. The subscription model charges lower upfront fees which affects revenue reporting but PTC projects long term growth with this model. The recovering growth that started to appear in 2017 results validates the strategic shift.
From January 2018, new contracts will all use the subscription model in the Americas and Western Europe. Old perpetual contract customers can still use their licenses but as PTC continue to migrate to the subscription-based model, perpetual licensing revenues will continue to decline (Figure 4).
PTC is also changing how it supports customers. Subscription contracts include support, while for perpetual licenses, support can be offered separately but is generally bundled with licenses.
In addition to changing its sales strategies, PTC is investing heavily in establishing its IoT product division. The company has spent about USD550 million on its five main IoT related acquisitions including Axeda and ThingWorx which defined PTC’s role in the market as an AEP provider.
PTC’s strongest presence is in the industrial products segment which makes 32% of the company’s sales. This also justifies PTC’s focus on Industrial IoT (IIoT). Other top segments include federal & defence, electronics & high tech, and automotive (Figure 5).
Figure 4: PTC’s revenue by business line, worldwide,
Figure 5: PTC’s revenue by targeted industry, worldwide, 2017

5. Strategic direction: IoT
The IoT Group revenues show growth in all its sales channels as seen in Figure 6. Subscription sales made more than 53% of the IoT sales in 2016, faster in line with the overall growth in the IoT market and the strong position ThingWorx has secured.
PTC’s biggest IoT acquisitions; ThingWorx and Axeda generate most of the company’s IoT revenues. In 2015, these platforms made USD32.5 million and USD18.6 million respectively. As all the acquired platforms are consolidating under ThingWorx, PTC has stopped reporting individual components revenues.
Despite its growing IoT presence, PTC operates in a competitive IoT segment which requires vendors to continue differentiating their solutions to maintain a leading role and share of the market.
In terms of technical differentiation, PTC introduced AR developing capabilities for the IoT platform through its Vuforia Studio. AR is still emerging in the industrial use cases but PTC continues to strongly promote the use of the technology and its benefits. The company also made a move in the application development space by launching its manufacturing apps in June 2017.
PTC aims to expand its role in IoT projects beyond technology provision by offering different supporting elements like its partner ecosystem, marketplace and training programmes (Fig 7). PTC also leverages partnerships with mobile operators to sell ThingWorx in their domestic markets. Examples include Tele2, Telefonica and NTT DoCoMo.
Figure 6: PTC’s IoT revenue by business line, worldwide,
Figure 7: PTC’s IoT solution technologies and ecosystem strategies
Technical assets
Ecosystem building strategies
Augmented Reality
Technology partners
ThingWorx Platform & Apps
Analytics
Resale partners
Application Enablement
Academic & Research support
Device Management
App marketplace
Industrial Connectivity
Certification programme & training
Source: Analysys Mason

6. Key acquisitions and mergers
Figure 8: PTC’s key IoT acquisitions and mergers,
Date
Company
Description
January 2016
Kepware
Founded in 1995 in the USA, Kepware offered communication software drivers for industrial controllers and devices. The company was acquired for almost USD100 million. Its technology is integrated into ThingWorx and supports the Industrial Connectivity features of the platform.
November 2015
Vuforia
Founded in 2008 in the USA, Vuforia offers a development platform for augmented reality applications. PTC acquired the company from Qualcomm Inc for USD64.8 million. PTC offers Vuforia as its AR platform solution and as integrated component of ThingWorx through ThingWorx Studio.
May 2015
ColdLight
Founded in 2007 in the USA, ColdLight offered machine learning and predictive analytics solutions. PTC acquired the company for USD98.6 million to strengthen ThingWorx analytics capabilities. PTC fully integrated ColdLight into ThingWorx Analytics and no longer uses the ColdLight brand.
January 2015
Caugnate
Founded in 2014, Caugnate develops computer vision and augmented reality solutions. The start up is now part of the Vuforia division.
August 2014
Axeda
Founded in 2000 in the USA, Axeda offered a cloud-based device management platform. PTC acquired the company for USD166 million and fully merged the technology with the ThingWorx platform.
December 2013
ThingWorx
Founded in 2009 in the USA, ThingWorx formed the foundation of PTC IoT solution with its application enablement and development platform and tools. It was acquired for USD112 million.

7. Product summary Figure 9: PTC ThingWorx components Product
Subcomponents
Description
ThingWorx Foundation
Foundation Core
Foundation Communication services
Foundation edge
ThingWorx Foundation is the central component of the ThingWorx IoT platform and it connects to the other platform extensions. ThingWorx Foundation Core offers the main AEP tools and platform services while the Connection Services include protocol adapters and servers. ThingWorx Foundation Edge provides device servers and development kits for optimising device power and data consumption.
ThingWorx Utilities
IoT Capabilities for Device Management
IoT Integration
IoT Process Workflow
ThingWorx Utilities provides the device management capabilities for the IoT platform. It allows remote device monitoring and configuration and provides IoT integration tools to connect IoT elements with enterprises existing systems. IoT Process Workflow offers an environment for non-developers to manage IoT business process and create rules and alerts for the connected devices.
ThingWorx Analytics
ThingWorx Analytics Server
ThingWatcher
ThingPredictor
ThingOptimizer
ThingWorx Analytics Server acts as the analytics engine for the applications developed on ThingWorx. Through three analytics building and executing components, it covers different use cases for historic and real-time data. ThingWatcher is deployed for anomaly detection while ThingPredictor provides predictive analytics capabilities. ThingOptimizer supports prescriptive analytics and simulation to forecast future behaviour of the IoT system.
ThingWorx Studio
ThingWorx Studio
ThingMark
ThingWorx Viewer
ThingWorx Studio allows users to develop and publish Augmented Reality (AR) solutions for their connected devices to improve their product design process and their customers’ experience. ThingWorx Studio simplifies the app creation process by providing existing models. ThingMark acts as an image that is included in the physical device to trigger launching the AR app when the device is pointed at by the user’s mobile device. ThingWorx Viewer allows developers to download external mobile apps and link them with the AR experience.
ThingWorx Industrial Connectivity
KEPServerEX
Industrial Connectivity which is built on Kepware focuses on improve interoperability in industrial environments. It allows unified control and management for diverse devices and applications through extensions such as the ThingWorx native clients and the IoT Gateway plug-ins.

8. Significant customers
Figure 10: Examples of PTC’s IoT customers
Customer
Country
Scope
DHL
Germany
Deutsche Post, a DHL division, is increasing its efficiency by operating a connected vehicle solution for postal delivery. The fleet management application required for such solution was developed on ThingWorx to enable remote and real-time monitoring and control of the electric vehicles using Wi-Fi or cellular networks. The company aims to leverage ThingWorx’s analytics and machine learning features to develop automatic charging capabilities in future enhancements for the solution.
RailComm
Global
RailComm is a provider of automation software and solutions for freight and rail industries. The company is using ThingWorx to build its IoT rail management solutions. The solutions combine automation and device management capabilities from RailComm with data analytics tools from ThingWorx to improve customers’ operation efficiency.
Vodafone
Vodafone has a strong position in the IoT connectivity management market. The operator’s own connectivity management platform is widely used by its subsidiaries and partners worldwide. However, for IoT application development, Vodafone complements its software stack by leveraging ThingWorx both for own application development efforts and for its customers’ solutions.
ABC Manufacturing
ABC produces components for the automobile, satellite and weather equipment industries. The complicated and expensive manufacturing process means that inefficiency, slow production or defective products translate into significant losses for the company. ABC, which owns a number of large factories, was struggling to handle the large amount of data generated by its facilities and analyse them in a timely manner. ThingWorx allowed ABC to leverage machine learning to adapt rapidly to the increasing data traffic while producing meaningful patterns that explain machine behaviour and detect and prevent future failures.
DeviceLynk
DeviceLynk used ThingWorx to develop an industrial device monitoring solution that has a customizable dashboard support. The solution collects the data through ThingWorx and then offers different customisation options for data visualisation and analytics based on pre-configured permissions for admins and standard users.

9. Analysis: strengths, weaknesses, opportunities and threats
A strong selling point for ThingWorx is that it offers easy to use dashboards and interfaces. The platform provides mashup and graphical drag-and-drop tools to simplify app building for non-developers.
ThingWorx has a wide recognition within the developer community through good documentation, training and support.
The vendor’s IoT ecosystem is well developed and continues to attract partners from different types.
The open marketplace incentivises partners and customers to use the platform and publish their solutions.
Vuforia and its AR capabilities offers differentiation opportunity for ThingWorx and strengthens its industrial offering. The opportunity relies on the level of AR adoption which is uncertain.
PTC is exploring the app developing space by launching its own industrial app solutions based on ThingWorx. This could result in opportunities for ThingWorx with smaller industrial players.
Given its role in device management, analytics and industrial connectivity, PTC next move can target edge computing with a dedicated IoT solution.
The strong acquisition strategy suggests that PTC’s internal research and development played a limited role in building its IoT solution. With the high competition in the IoT platform space, PTC needs to continue developing and producing platform features and tools. Relying solely on acquisitions will be hard to maintain and could slow PTC’s growth.
PTC does not own cloud infrastructure which might be a cost disadvantage especially that many of PTC’s platform competitors like AWS (which is PTC’s cloud partner as well) and Microsoft are known to compete with lower prices using their own clouds.
Despite its widespread adoption, PTC’s ThingWorx is challenged by the rapid growth of established SaaS and PaaS providers like AWS, IBM and Microsoft into the IoT space. These providers already have a large community of developers using their development platforms and continue to attract developers by introducing new platform features and maintaining competitive prices.
Industrial IoT platform market is also attracting big vendors such as Dell, Hitachi and Mitsubishi. With big investments and industrial backgrounds, these vendors can be strong competitors for PTC, especially in the APAC market.

10. About the author
Ahmed Ali (Senior Analyst) is the lead analyst for Analysys Mason's IoT Platforms and Technology research programme. His research covers IoT software, applications and solutions used by service providers to enable their IoT offerings. Prior to joining Analysys Mason, Ahmed worked as a senior analyst at ABI Research for more than 3 years, where he was part of the next-generation mobile network research programme, covering wireless and core mobile markets like small cells, in-building solutions, network virtualisation, unlicensed spectrum, and other 4G and 5G technologies. Ahmed holds a master's degree in Electronics Communications and Computer Engineering from the University of Nottingham and a bachelor's degree in Electrical Engineering from the University of Khartoum, Sudan.

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