Schneider Electric’s US$23.7 Billion Planned Acquisition of PTC Sends Shots at Industrial Competitors Siemens and Dassault Systèmes

Schneider Electric has been in pursuit of its own digital thread to drive its Artificial Intelligence (AI) strategy, and the announcement to acquire PTC is the latest in the line. Following Cognite this summer (see ABI Insight “Schneider Electric’s US$3.1 Billion Cognite Acquisition to Challenge Incumbents’ Industrial Data Analytics and AI Insights Leadership” for more), and AVEVA’s acquisition being completed in 2023, Schneider Electric has been building out a robust internal but disparate set of systems to provide a comprehensive machine data-based digital thread. Adding PTC into the equation provides the critical product data that could close the manufacturing loop and critical upstream engineering data to provide sufficient context to get the most out of Cognite. At best, the updated Schneider Electric is clearly targeting Dassault Systèmes, with a digital thread story that started out by building up the surrounding software context, and is now moving toward control with the still nebulous integration of Ascon into the DELMIA platform.

If the deal closes, Schneider Electric’s acquisition of PTC brings it one step closer to fulfilling the digital thread narrative that is coming to dominate the leading manufacturing discussion. It also places it firmly in a class shared by Siemens and Dassault Systèmes, which has two of the most complete digital thread narratives in the manufacturing space, ranging all the way from product design tools such as Computer-Aided Design (CAD) to Manufacturing Execution Systems (MESs)—or as they both prefer, Manufacturing Operations Management (MOM) software. Missing from the Dassault Systèmes profile is a clear automation and control heritage, which it is aiming to rectify through the acquisition of Ascon. For Siemens’ side, clarity is the name of the game and is at risk of having too much.

Meanwhile, PTC alone could be described as being at risk of being too much (see “Schneider Electric Rises, PTC Falls, in Mammoth Acquisition” for a PTC-oriented perspective), with two different CAD systems in Onshape and Creo, two different Product Lifecycle Management (PLM) systems in Windchill and Arena, Application Lifecycle Management (ALM) software Codebeamer, and a menagerie of other industrial software oddities. Folding this into the Schneider Electric profile will take careful integration and leaving it at arm’s distance like it does AVEVA may not serve Schneider Electric or its customers well. That would not fundamentally change the digital thread story from what it was before, just putting it all under one roof. In the near term, a special integration tool will be a good start, but not doing anything further will do little to shake its process industry-focused appearance, calling into question the point of the acquisition in the first place.

Schneider Electric must make it clear what its integration strategy will be as soon as possible to give both Schneider Electric and PTC customers a better understanding of the timeline and how they will be impacted. Currently, possible outcomes range from an AVEVA-style largely independent operating structure to a full integration as part of the product suite—a handful of EcoStruxure Design Expert type tools could be a useful toolbox. The second question to dispel is the impact the acquisition has on openness, with the company that has been building a profile based on interoperability slowly buying up the ecosystem openness supports. Tight integration here also takes what was already a strong acquisition of Cognite and supercharges its data fabric and AI tools with a whole new class of customer access.

For competitors, an acquisition of this scale should inspire a few internal discussions, chief among them a deep look at your own portfolios to see what gaps are missing in your capabilities as the lines between all industrial software is blurring. For Siemens, Dassault Systèmes, Autodesk, and other companies positioning for an integrated digital thread, time is likely on your side right now. PTC is a behemoth that will not easily be folded into the ecosystem in a value generating way. However, these companies are not understood to be easy for users to integrate either, so as digital threads become increasingly complete, streamlining ease of use for customers is the next step to ensure success for these titan-class industrial services providers.