BOSTON – Closed-loop product development is finally here and with it comes a new wave of innovation.
But many people have yet to catch on to the next evolution of technology that is the Internet of Things (IoT)—the network of connected products with vast potential in manufacturing—PTC president and CEO Jim Heppelmann told more than 2,000 attendees at the kickoff of the annual PTC Live Global.
“Most of the world doesn’t really get it,” Heppelmann said from a stage in the Boston Convention and Exhibition Center. “The IoT isn’t really about the Internet, it’s about the things. The things are what’s changing. That’s where the innovation is really happening.”
PTC is banking on it. Even as Heppelmann was speaking, the company announced the $50 million acquisition of Atego, a British developer of engineering systems that manufacturers can use to integrate software alongside their products’ mechanical and electrical components. That’s on top of the $112 million PTC spent in December to buy ThingWorx, creator of a platform that enables manufacturers to build and operate applications that take advantage of the IoT.
After all, said Heppelmann, the IoT “starts with a physical product. It’s really our heritage. And mechanical design remains the lifeblood of many of our customers.”
But that’s no longer enough, he said. Manufacturers going need to add a “smart” dimension to their products.
“And by ‘smart,’ I mean sensors that sense what’s going on,” Heppelmann said. “They’re connected to some sort of microprocessor. And then there’s very likely some kind of human-user interface.”
That raises new design challenges that are being worked on by the likes of Atego, Heppelmann said. “We know how critical systems engineering is to products moving forward.”
The McKinsey Global Institute estimates that the IoT will generate $2.3 trillion of global economic impact by 2025, and Cisco Systems predicts that 50 billion devices will be connected to the Internet, up from the current nine billion—six for every man, woman, and child.
“We truly are seeing the rise of a smart, connected world,” Heppelmann said. “We’re in the early days, maybe the second inning, of a massive wave of innovation.”
The first pitch came in 2010, marking the point at which more things were connected to the Internet than there are people on earth, he said.
“The basic math suggests that these things aren’t just smartphones, tablets, and computers any more. They must be something else.”
“We’re talking about everything around us. Cars, buildings, appliances, machinery, farms cities, hospitals—all kinds of things. Now there’s a computer of sorts inside just about everything, and all those things are capable of connecting.”
PTC isn’t the only business excited about the possibilities around the IoT. The market has already attracted $1.9 trillion of investment, according to the research firm IDC. McKinsey rates it among the top dozen most disruptive technologies, just ahead of cloud computing and above 3D printing.
And while the IoT is so far best known for allowing homeowners to remotely adjust their thermostats or automobile dealerships to monitor car engines, it has enormous implications for manufacturing. Operators can monitor their equipment, figure out more efficient ways to use it, or predict when it might fail and dispatch preventive maintenance, or measure the performance of their products before designing the next-generation versions.
“While we know everything there is to know about the product when it’s in engineering, and while we know everything there is to know about the product when it’s in manufacturing, we lose sight of it once it leaves the factory. What if you always knew what was going on? That’s the vision that’s really been driving our thinking,” Heppelmann said.
“There’s a reason why the world and PTC are making such big investments, and that’s because so much value can be created by this phenomenon.”
That doesn’t mean it’s easy, conceded some manufacturers who have started to commercialize the IoT.
Trane, the heating and air-conditioning company who also presented at PTC Live Global, now earns half of its revenues and most of its profits from services and not from products and equipment, said Dane Taival, vice president of service and customer care. But, he said, customers still have to be convinced why the additional expense of connectivity is worth the money.
“We’ve only just begun,” Taival said. “The concept is intangible to explain to customers, because the idea is to avoid problems.”
But David Riddle, director of information technology at ThermoFisher Scientific, said it was by listening to customers that the company developed a connected handheld chemical detector called TruDefender, used by police, fire, and military hazardous-material teams. The device uses cellular telephone and Internet technology to send results to commanders in real-time, or to scientists who can identify a substance that’s not immediately recognized.
Adding capabilities like this give ThermoScientific a competitive advantage over rivals who sell only products, and not services, Riddle said.
“Everybody in this room will be participating in and will be affected by the explosion of smart connected products,” Heppelmann said. “It will change strategies for competition. It’s even a bit scary. But I think personally that change is good.”
It all starts with a product, or a manufacturing process, Heppelmann told his audience.
“There is no Internet of Things,” he said, “without your things.”
Photo by Yoshi Murakawa