Proving the Business Case for the Internet of Things

PTC targets industrial internet with $170 million Axeda buy

Iain Morris
July 30, 2014
Software player PTC has agreed a $170 million takeover of Internet of Things (IoT) specialist Axeda as it looks to address emerging industrial internet opportunities.

PTC (Needham, MA, USA) believes that with Axeda’s (Foxboro, MA, USA) connectivity expertise it will be able to develop new services allowing manufacturers to gather and analyze data from machines deployed in the field, improving supply chain management and making logistics more efficient.

The acquisition is still pending regulatory approval but PTC expects to complete the transaction in the fourth quarter of this year.

Axeda currently employs around 160 members of staff and is expected to add between $25 million and $30 million of revenue to PTC’s sales figures in 2015.

The move follows PTC’s $112 million acquisition of ThingWorx (Exton, PA, USA), another IoT platform provider, in December 2013, with PTC describing Axeda’s technology, customer base and partnerships as complementary to the ThingWorx business.

“PTC wanted the customers of Axeda – plain and simple,” said Steve Hilton, the managing director of market-research company MachNation, in commenting on the deal. “It would appear PTC didn’t value the technology very highly of Axeda compared to ThingWorx, as evidenced by the revenue-to-value multiple paid in the two acquisitions, but customers under multi-year contracts are valuable.”

Axeda currently serves more than 150 customers, processing hundreds of millions of machine messages each day across multiple industry sectors.

It also has a broad partner ecosystem, including leading mobile network operators, device makers, systems integrators and analytics providers.

Hilton expects the application customers of Axeda to be moved to ThingWorx following the acquisition, but notes that Axeda also has an attractive device management solution that helped convince PTC of the merits of a takeover.

“The world we live in is changing around us, and the pace of that change is accelerating as more and more machines, sensors, and products connect via the Internet, to their makers, and to each other,” Jim Heppelmann, PTC’s president and chief executive. “In recent years, products have become tremendous sources of intelligence as they have been increasingly instrumented with sensors.”

Heppelmann says manufacturers have been constrained in their ability to securely collect and make sense of data and expects to be able to address this issue following PTC’s takeover of Axeda.

The target’s machine cloud service allows companies to connect products to the cloud via cellular networks, Wi-Fi or satellite, while its connected machine management application set allows customers to remotely monitor and service products – providing software updates ‘over the air’.

“Axeda was early to see the potential of the IoT space and we consider ourselves a true market innovator,” said Todd DeSisto, Axeda’s president and chief executive. “Our technology solutions enable companies to connect to, and manage machines and the data they generate to create new business opportunities.”
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