In a Digitally Transformed World, PLC Differentiation Is More Challenging

Until 2023, only Beckhoff and CODESYS offered virtual Programmable Logic Controllers (vPLCs). Now, a range of companies offer vPLCs, including Siemens, Emerson Electric, and Schneider Electric, and vPLC revenue is expected to become 16% of the total PLC market by 2030 (see ABI Research Industrial Automation Software Defined Automation market data (MD-SDA-101)). The clearest differentiator within the vPLC market is the transition to event-based control and Open Software Defined Automation (OSDA), driven by Schneider Electric (see more in ABI Insight Schneider Electric’s Open Foxboro SDA Fuels Debate Between SDA and OSDA in Manufacturer’s Digital Transformations). AI innovation is also taking hold with engineering agents coming to market in the last 12 months.

vPLCs challenge traditional business models offered by industrial automation hardware providers due to the software-defined transition demanding that suppliers introduce licensing, value-added, and as-a-Service models. Differentiators such as Input/Output (I/O) capacity and scalability become moot in a virtual world, as access to memory and the vendor’s business model choice determine them.

AI also has a role to play in commoditizing Programmable Logic Controllers (PLCs). From a programming perspective, Agentic Artificial Intelligence (AI) enables generating PLC code autonomously, making the Integrated Development Environment (IDE) a much less important differentiator for adopters of agentic tools, as the interaction will be defined by prompting an agent and reviewing its output. AI will also threaten the future of virtual controllers in the way it has for consumer-oriented software tools; it enables an increasingly tech-savvy customer to develop a vPLC through prompting—a capability shown by Siemens Eigen Engineering Agent—avoiding the need to purchase an expensive control software plan.

Finally, a push from Schneider Electric, Phoenix Contact, and the rest of Universal Automation Group is threatening the most important differentiator and business model in automation, propriety. OSDA and International Electrotechnical Commission (IEC) 61499 adoption aim to make all software and hardware interoperable, shifting the automation ecosystem to every component being best-of-breed. This threatens companies that generate business from current clients of PLCs for their other automation offerings. OSDA adoption is currently hindered by both ecosystem immaturity and being unclear where to go in the event of technical issues. However, there is a customer desire for interoperability, which if that strengthens will force vendors to deprecate their ability to enforce lock-in.

The runway for vPLCs to differentiate industrial automation offerings is shortening, as the number of suppliers without a vPLC is decreasing. Therefore, pursuing new differentiators, such as SIL3 compliance for safety will be critical.

Being able to provide tangible points of differentiation between AI models is an important task, which may be challenged as the co-innovation strategy used by many vendors could produce similar AI tools, because they are built on the same foundation from companies such as NVIDIA, Microsoft, and Amazon. Therefore, adopting unique AI strategies, such as implementing Model Context Protocol (MCP), is an avenue for differentiation—as seen by Beckhoff and CODESYS.

OSDA is a threat to other PLC suppliers’ offerings as the SDA market matures. Currently, customers are skeptical about, although receptive to, the principles of OSDA, shown by OSDA’s champion, Schneider Electric, which is leading vPLC market share with 17%. However, adoption is currently driven by innovative early adopters, accounting for less than 1% of new PLC installations in 2025 (per ABI Research’s Industrial Automation: Software-Defined Automation (SDA) market data (MD-SDA-101). In the intermediary period, PLC suppliers should continue to adopt open communication protocols under IEC 61131 and be prepared to make the standard switch to IEC 61499 if market trends shift, which a robust AI strategy will make easier.

The true beneficiaries of developments in virtualization and AI are IPC providers with technologies that enable vPLCs and have the capacity to power compute-intensive tasks such as AI (Advantech), and players that offer both Industrial Personal Computers (IPCs) and PLCs (Siemens, Beckhoff, and Rockwell Automation). (Please see these companies’ respective market shares in ABI Research’s Industrial Automation Hardware market data (MD-IAH-101). IPC vendors will be able to provide both advanced offerings to improve AI performance by integrating powerful Graphics Processing Units (GPUs) and the means for scaling vPLCs by offering configurations with more memory.