SECTIONS - Boardroom Report
August 29, 2016

PTC: The Sum of the Parts Creates A Whole New Paradigm

I have a distrust of mergers and acquisitions. It comes from my years buying communications equipment, where companies were bought and the products I understood became discontinued or “upgraded” into something that lost the feature set I needed. My general rule of thumb has been to stop buying from the vendor after the merger and to wait a year to see what was lost and what remains.

Having said that, the expansion of portfolios has been at times been well executed. HP’s acquisition of Tandem did well, and we can make a case that Sun being brought into Oracle kept Java as the back-end choice for most businesses.

Staying on the software side of the equation, if you look at the history of Adobe you see a company that managed transitions from printer fonts to web services fairly well. While sometimes it’s been hard to see the justifications for its 43 acquisitions, in general we can say Adobe has done a decent job of surviving criticism and shifting to paradigms of the future.

Adobe Systems stock shows a general trust in the management of the company as well, since the company has had a strong year and the market cap is almost $50 billion. 

If we look back at the history of when Adobe laid the groundwork for being considered a leader in web design, it was with the addition of Macromedia, which it acquired in 2005 for $3.5 billion. Looking back, that vision was right on the money.

Today we are seeing a similar vision being carried out by Jim Heppelmann, the CEO of PTC.

Like Adobe, PTC is in the process of pivoting from a CAD/CAM company

to an IoT company. Now we have to take a step back and admit that at the time Adobe was pivoting it was pretty clear what the web was about. I am not sure we can say that IoT is more nebulous. My recent presentation at Verizon was about the fact that everyone is like a blind monk and has a tendency to touch a piece of the elephant (IoT) and declare they understand the whole opportunity.

Heppelmann, with the help of Michael Porter, acquired 10 companies that make PTC the equivalent of Adobe Systems for IoT. Like web development, IoT development in the vision from PTC is a cradle-to-grave implementation. 

Using ThingWorx modeling to design an IoT solution, it has added Vuforia to make it so the IoT implementation has an augmented reality component.

I am not sure if ThingWorx or Vuforia represent the equivalent of Adobe’s Macromedia, but I can say that it has made a suite out of the components that make sense as a way to service the entire requirement of supporting the operations associated with IoT. 

Like Adobe’s Creative Suite, which is now offered via the software-as-a-service model, PTC is making the components available as modules, including AgileWorx, a software tool for managing development.

Playing for the long term, PTC has been a sponsor of Dean Kamen’s First Inspire program, where students learn to work engineering problems. My expectation is that Heppelmann has guessed right as to where the market will be for generations to come. 

Are we there today? Not yet. Our biggest gap is in the holes of the existing workforce view of the way to implement IoT. However, when the workforce catches up to the opportunity today, PTC intends to be there. Since 2010 the company’s stock has been on the rise, and the company has a market cap of almost $5 billion – nowhere near Adobe, yet.

Edited by Ken Briodagh

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