Sunday, September 24, 2017

Interesting News in Engineering, IoT, PLM, Industry 4.0, and Telecom - Vol 3

These 50 news stories caught my attention last week. These stories are across automotive, aerospace, rail, off-highway, IoT, robotics, drones, healthcare, AR, hi-tech, software, PLM, and telecom.


  • ·       OEMs are continuing to disclose their EV plans. Daimler and BYD plan new EVs for China. BYD is backed by Warren Buffet and leads in EV sales in the first seven months of this year, delivering 46,855 cars. By contrast, GM sold only 738 EV cars in China. (Read here). Mazda says most of its cars will be hybrid or electric by 2035. ( Read here). Tesla China sold about 11,000 EVs last year. Tesla doesn't get any EV incentives and even subjected to 25% import duty. Tesla is saying it will have 1000 supercharges in China by the end of the year. (Read here). Porsche's stunning Tesla rival will arrive in 2019 and cost $85,000 (Read here). Nissan will launch 12 all-electric cars over the next six years, and EVs will represent 30% of the group sales by 2022. (Read here). Mahindra and Ford sign a 3-year agreement for EVs. (Read here).
  • ·       EV buses, trucks and tractors are picking up too. Volvo got its largest order ever for electric buses (25 buses) from the city of Trondheim, Norway.  (Read here). Mahindra showcases driverless tractors. It is working on electric tractors too. (Read here). Daimler plans $1B investment in Vance, Alabama to build EQ electric utility vehicles. (Read here). Chinese startup TuSimple to challenge Tesla’s driverless Trucks in Arizona (Read here).
  • ·       There is action on battery front also. Samsung unveils new electric car batteries for up to 600 km of range (Read here). Suzuki to set up India’s first Lithium Ion battery unit with Toshiba & Denso. (Read here). Tesla files a patent for replacing vehicle battery packs. (Read here) So if the charging station is not available battery packs can be replaced in 15 minutes. I found this concept similar to how tires are replaced in F1. Okay, F1 tires are replaced in seconds not minutes!
  • ·       Engineering service providers are also investing in the automotive vertical. QuEST Global acquires DETECH an automotive engineering service provider in Germany. This is the second automotive acquisition by QuEST after EDF, again in Germany. (Read here).
  • ·       Vehicle recalls are again making the news. Fiat Chrysler will recall 494,000 medium and heavy-duty Ram pickups worldwide because of a water pump that could overheat and potentially cause a fire. (Read here).
  • ·       Automotive OEMs are losing interest in the fuel cell technology. VW is not pursuing it on priority and instead focusing on EV. Two major proponents of the fuel cell, Toyota and Hyundai, are also cutting back on it. It’s an idea whose time has not come yet. (Read here). 
  • ·       Automotive OEMs will face billion of fines if they don't meet European CO2 emission standard of 95 gm/ kilometer for their entire model range by 2021. It looks that only 4 out of top 11 car-makers will be able to meet this deadline. OEMs are expediting their EV model launch, but it is unlikely to make much impact by 2021. It may be a good opportunity for engineering service providers to help OEMs in meeting emission standards. (Read here).
  • ·       Among other automotive news, Ford is cutting production at its five North American vehicle plants. (Read here). Bihar may lose its biggest Make in India project for diesel locomotives. The world is moving to electric and who needs new investment in diesel locomotives? (Read here). Peugeot may invest in a new plant in Tamil Nadu in India. I think this is part of Peugeot's turnaround strategy to acquire local brands (acquired Ambassador in India) and open small to mid-size localized factories which produce cars in small lot sizes in focused geographies. Working on the design of localized cars in small lots could be a good opportunity for engineering service providers. (Read here).


  • ·       In robotics, the current R&D effort is to make humans safe while robots and human collaborate more on the shop floor. The two startup news stories highlight two different approaches to solve the same problem. An MIT spinout startup, Humatics, is developing an indoor radar system that should give robots and other industrial systems the ability to track people’s movements very precisely. (Read here). Another startup, Cobotect, is using the decades-old concept of airbags to cushion potentially dangerous robots or automated parts and prevent workers from getting hurt. (Read here).


  • ·       Canadian PM Trudeau threatens to halt Boeing F-18 deal on Bombardier dispute. (Read here).. Another geopolitics based aerospace news, UK signs deal with Qatar for 24 Typhoon jets in a boost for BAE (Read here).  These news items show that without active or strong government support, aircraft manufacturing OEM can't survive Any guesses which will be the next country to support aircraft OEM industry. My bet Russia (Irkut) or China (Comac).
  • ·       Northrop Grumman agreed to buy fellow defense contractor Orbital ATK Inc. for $7.8 billion in cash, as acquisition activity in the aerospace industry ramps up. Northrop will expand its offerings in space and missile defense areas. (Read here). Boeing is also looking for acquisitions in Defense segment. (Read here).
  • ·       Among other aerospace news, Boeing is opening a new engineering center in Bengaluru to focus on IoT, avionics, testing, analytics, etc. (Read here). Turkish Airlines has announced an $11 billion order for 40 Boeing 787-9 Dreamliners. (Read here). 


  • ·       Caterpillar is looking for aftermarket services for the growth. (Read here). This is a similar trend that we see in aerospace where OEMs such as Boeing are targeting aftermarket space for the growth. This is good news for PLM and IoT industry. If more OEMs target the aftermarket space, they will have a stronger business case for investing in the digital thread, PLM, and IoT solutions.


  • ·       QuEST Global announces a partnership with Siemens. In my opinion, all engineering service provider will sooner or later enter PLM and digital manufacturing segment. (Read here).
  • ·       Dassault Systemes announced two PLM deals last week. One with Chevron (Read here) and other with Valmet (Read here). It is interesting to see that PLM is picking up in Oil and Gas industry vertical. 
  • ·       Siemens PLM and digital factory acquisitions continue. Last week Siemens acquired  Infolytica Corporation, expanding the company’s simulation suite into electromagnetics.(Read here).


  • ·       Toshiba's chip business is on sale. The potential suitor is Western Digital, but now it looks that Apple is interested in the bidding also. (Read here). The rationale is to protect its chip supply and remove the dependency on its smartphone competitor Samsung for chips. In another news, Tesla is also investing in its own chips. (Read here). It looks that premium brands such as Apple and Tesla need to get into chip design and production to protect themselves from supply chain risk. 


  • ·       One of the reasons IoT is not scaling up is lack of standards. Now some progress is being made. TPC is announcing the TPC Express BenchmarkTM IoT (TPCx-IoT), the industry’s first benchmark standard for measuring the performance of IoT gateway systems. TPCx-IoT was developed to provide the industry with an objective measure of the hardware, operating system, data storage and data management systems for IoT gateway systems. (Read here).
  • ·       Dell signs a multi-year deal with where Dell becomes primary IT infrastructure supplier to GE. Among other things, Dell will collaborate with GE on IoT opportunities. Dell has a strong IT infra footprint among enterprises, and GE Predix could gain from this collaboration. (Read here). 


  • ·       I came across an interesting use case of AR in servicing Coke vending machines in remote locations. The interesting thing is the definition of remote locations, i.e., cruise ships. When you think again, it makes sense. (Read here).

Software Product Engineering

  • ·       Google debuts Tez, a mobile wallet in India. Indian market is ripe for digital payment, but there are challenges. Will Google crack this market? Don't know but interest in developing native solutions for emerging markets by internet companies and ISVs can be a growth driver for software product engineering work.  (Read here).


  • ·       Google is rebooting its hardware strategy with $1.1 Billion investment in HTC. (Read here) Will Google be second time lucky after its Motorola acquisition debacle a few years back? Software hardware acquisitions rarely work as evident from examples of Oracle-Sun, Microsoft- Nokia and recent split of HP software, hardware and services businesses. After all, everyone cannot become Apple!
  • ·       HP Enterprise is planning to cut 5000 jobs. While news of job cuts is not really new, the interesting comment was that rationale of operational cost cutting is to divert spending into R&D. The increase in R&D spending is good news for engineering services sector. (Read here).


  • ·       Insurance companies use drones to assess storm damage in Houston. (Read here).


  • ·       One other technology which proved its usefulness in these storms is telemedicine. Thousands of people in Florida and Texas have made use of remote consults. (Read here).

M&As and Chinese Competition

  • ·       Interesting news about M&As among manufacturing firms. GE is about to sell its industrial solutions unit to ABB for $2.5-3 Billion. (Read here).
  • ·       ThyssenKrupp and Tata Steel are merging their European operations to create second biggest European steel manufacturer with 25% market share. It will generate Euro 600 Million savings. The merger rationale is overcapacity in the sector driven by China. (Read here). 
  • ·       Siemens is said to be in discussion with its two main rivals Bombardier and Alstom for its rail business - JVs or merger. This is in response to increasing competition from the market leader CRRC Corp from China. (Read here).
  • ·       I see many similarities in current competition in rail business to telecom equipment business where a Chinese firm, Huawei, became a world leader and many European telecom equipment firms have to merge together to remain relevant - Nokia, Alcatel, Siemens, and Lucent.  Talking about competition from China there is another industry - Aircraft manufacturing. Comac is moving toward volume production of ARJ21 a 90 seater aircraft although only two ARJ21 are in service currently. (Read here). Comac claims to have orders of about 400 aircrafts from 19 customers. (Read here). 

Toys Industry

  • ·       Another industry hurt by the disruption. Toy'R'Us files for bankruptcy (Read here). It doesn't look that the retail format is the only problem. It’s a  problem across toy industry value chain. In another news, Lego is cutting 1400 workforce as its sales slide. The sales are declining in developed markets but are growing strongly in emerging markets in Asia for Lego. (Read here). It looks that kids nowadays prefer digital over physical toys. Toy makers need to think differently to remain relevant in the digital era. It is a product and solution design problem. Internet of Toys anyone?

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)