Monday, September 18, 2017

Interesting News in Engineering, IoT, PLM, Industry 4.0, and Telecom Vol. 2

These 27 news stories caught my attention last week (Sep 10-17, 2017). These stories are across automotive, aerospace, IoT, drones, 3D printing, PLM, and telecom.

·       Automotive
o   China’s big electric vehicle push is about to get even bigger: The country is planning to end the sale of fossil fuel-powered vehicles entirely. China is world’s largest auto market with about 28 million vehicles sold last year, and this push will accelerate worldwide EV adoption.  (Read here).
o   Automotive OEMs are giving timelines and financial commitments to their EV plans.  Mercedes-Benz to embrace electrification, announcing that it will be electrifying its entire vehicle lineup by 2022. (Read here). VW announces massive $84 billion investment in electric cars and batteries to bring 300 EV models to the market by 2030. (Read here). BMW readies mass production of electric cars, 12 models by 2025. (Read here).Ford’s Lincoln will electrify all its models by 2022. (Read here).
o   BMW goes a step further and announces how it will finance its EV push. It aims to cut roughly $2.4 billion from its annual purchasing bill by squeezing costs for transmission components and other parts to help finance the shift to electric vehicles. (Read here).
o   EV is not limited to cars only. There are news stories about the electric truck and the electric tractor also. Daimler delivers first electric trucks with UPS as its first US commercial customer. (Read here). Escort unveils plans for India’s first electric tractor. India is the largest market for tractor by volume, and this can have a major impact on the adoption of electric tractors. (Read here)
o   There are other interesting technology developments in automotive. Tesla extended the battery life of its cars to help Florida residents flee Hurricane Irma. This is an interesting use case of over the air upgrade of the car. (Read here). SEAT has struck a deal with Amazon to bring the firm’s personal assistant tech Alexa into its new models. Other VW models will follow soon while some other OEMs are using Apple’s Siri or Microsoft Cortana. Connected cars is another battleground where Amazon, Microsoft, and Apple will fight for their customer share. (Read here). IBM is collaborating with  ZF Friedrichshafen and  UBS to jointly develop an open automotive transaction platform for mobility services based on the blockchain. “Car eWallet,” which was originally announced by ZF in January, is a digital assistant that makes it easy to pay for electric car charging while on the go. (Read here).
o   There is activity in investments in automotive innovation. Samsung announced two major pieces of news to take its automotive strategy up a gear. It has launched the Samsung Automotive Innovation Fund, a $300 million fund to back startups and other interesting bets in the automotive market. And as a first investment out of that fund, Samsung has put €75 million into TTTech, an Austria-based developer of platforms and safety software for connected cars, alongside a corresponding investment from Audi. (Read here).
o   Engineering service providers are also making investments in automotive space. Wipro opens automotive center of excellence in Romania. (Read here).
·       Aerospace
o   In Aerospace, new programs are almost complete, and focus is now on optimizing production and supply chain to clear the backlog and optimize cost. Boeing will accelerate its 787 production to 14 aircraft per month from the current production rate of 12 aircraft per month. Boeing has 787 order backlog of about 700 airplanes. (Read here).
o   ATR challenges P&W’s dominance in turboprop engine market. ATR and  Bombardier dominate the market of about 100 regional turboprop aircraft a year, and both exclusively use P&W engines. This move can help GE Aviation. (Read here). While  ATR wants to end the monopoly of P&W in turboprop engine, Embraer wants to end the duopoly of ATR and Bombardier in regional turboprop aircraft. Embraer is considering to build a new turboprop aircraft. (Read here).
o   Global civil aircraft fleet was about 19,000 at the beginning of 2016, and it will be double to 38000+ by 2034. The majority of growth in aircraft will come from Asia and Asian Airlines are preparing themselves for financing these additional airplanes. AirAsia plans to sell every non-core investment as it plans to add 30 new aircraft every year gearing to expand its fleet to 500 aircraft by 2027. For engineering service providers it will be an opportunity to work on customization, interiors, training and AMS/ MRO services in Asia.(Read here).
o   Cyient to acquire B&F Design for $5.5 million to augment its capabilities in build and maintain phase of aerospace engineering. (Read here).
o   Cyient is also divesting its 49% stake in Infotech Aerospace Services, Inc. ("IASI") to Pratt & Whitney, a division of United Technologies Corporation. In my view, this highlights challenges in scaling up defense segment in engineering services. (Read here).
·       IoT
o   Ever since Jeffery Immelt has stepped down, the success of  GE’s digital and IoT strategy is in spotlight. Now according to a news story, GE is bringing in financial discipline to its IoT business. It's scaling back its 2020 target and will focus its Predix solution to three industries only – energy, aerospace and oil and gas. The jury is out whether a horizontal strategy or a vertical strategy will be more successful in IoT platforms. (Read here).
·       Drones
o   Drone Inspection as a Service is catching up as evident from three news stories this week from Honeywell, GE, and MIT. Honeywell launches its UAV industrial inspection service in collaboration with Intel. (Read here). GE’s Avitas Systems Teams With NVIDIA to Enhance AI for Drone Inspections. (Read here). This MIT drone can pinpoint a specific package in a giant warehouse (Read here).
·       3D printing.
o   Two stories are highlighting how 3D printing is progressing and getting into the mainstream. One of the Chinese provinces is asking all 3D printing shops to register with the police. This move will help in keeping a check on printing of dangerous products (weapons) and patent and copyright infringement. (Read here). The other story is approval of first 3D part for end use in oil and gas by Llyod’s Register. Till now 3D printing was mainly for prototypes in oil and gas and this is a good beginning of the integration of 3D printing into production (Read here).
·       PLM
o   PROLIM acquires Ally PLM and augments its Siemens PLM capabilities. After the acquisition of Geometric by HCL, there are very few independent PLM service providers left with some scale. PROLIM or couple of other PLM service providers can consolidate small PLM providers and bring scale in this fast-growing market. A couple of large engineering service providers have a PLM hole in their portfolio and also few other engineering service providers want to scale their PLM practice by acquisitions. PLM consolidation will be an interesting trend to watch. (Read here).
·       Telecom

o   Chinese telecom ambition roadblock. Donald Trump administration blocks the sale of Lattice semiconductor to Chinese-backed firm citing security concerns. US market is one big hole in the portfolio of Chinese OEMs and it looks that this will remain so in the new administration also. (Read here).

Sunday, September 10, 2017

Interesting News in Engineering, IoT, PLM, Industry 4.0, and Telecom

These seven news stories caught my attention last week. 

UTC is acquiring Rockwell Collins for $30 Billion creating an Aerospace Tier 1 behemoth. Airbus and Boeing are not too happy as consolidation will loose their pricing power. It could be a good news for engineering services if some of the operation synergies and pricing power are diverted into R&D spending.  (Read here)

John Deere is buying an AI startup to automate farming. Blue River Technology builds machine vision tools that help farmers scan fields, assess crops, and get rid of weeds — all at the same time. This acquisition shows how traditional manufacturer can leverage technology to extend their product to solutions and services and thus remain relevant in this era. It also shows that enterprises will not solely rely on technology software and service providers for solutions and might acquire technology startups on their own. To me, this is one of the greatest risks that technology software and service providers will face in future. (Read here)

Talking about enterprise investment in technology startups, there is another interesting news from the telecom world. Swedish telco Telia is investing in eBuilder which will help Telia to automate device care for its customers using machine learning. It will potentially save operating cost, develop a new revenue stream and enhance customer experience. Telia will be the only telco in Sweden to gets to use it exclusively thanks to its investment though telcos outside Sweden can use eBuilder's technology. I wish some telecom service provider would have developed this solution. This again highlight risk that enterprises might bypass technology service providers and acquire technology startups on their own to remain relevant. (Read here)

Altran, the largest engineering service provider by revenue,  acquires GlobalEdge, a 1000 people strong engineering service provider for $65-$80 million. It will help Altran to expand is customer foot print in the US, delivery foot print in India and service foot print in software and embedded engineering. It shows that acquisitions will be the critical part of the growth strategy for engineering service providers to maintain double digit growth. (Read here)

Aras announces $40 Million investment led by Silver Lake and GE Ventures. Aras is an upcoming PLM software provider disrupting the PLM market with its cloud based software. SaaS adoption has been slow in PLM unlike in  HCM and CRM world where Workday and Salesforce have led the disruption. But it looks that it is going to change now. Already Aras has some marquee customers for PLM such as GM and Airbus. GE's investment is interesting. PLM is a big hole in GE's software portfolio, and I thought that GE would acquire one of the top three PLM software provider ( either PTC or Dassault) to compete with Siemens. It looks that Aras may be the option for GE as well. (Read here)

Jaguar Land Rover will be all electric by 2020. This shows that EV is an idea whose time has come. Currently, EV is less than 2% of the global car fleet, and prediction is that by 2035. 6% global car fleet will be EV. I think we will hit the 6% number much earlier than 2035. It's good news for engineering services as Automotive OEMs, and tier 1s will accelerate R&D investment in EV and self-driving cars, they might shift some more of IC mechanical work to engineering service providers. Already some of the EV and self-driving R&D work is coming to engineering service providers. Technology shifts are not bad for the outsourcing industry. Isn't it?  (Read here)

Aveva to merge with Schneider Electric in $3 Billion deal. This shows both challenges and opportunities as industrial manufacturers become ISVs. It's difficult to grow and build scale organically. Engineering ISV consolidation could be a good news for engineering services if some of the operation synergies are diverted into R&D spending. (Read here)