The overall vision for seamless product development and manufacturing management in a “package” thus seems to have become a bit too complex and expensive to develop in times when focus and resources need to be put on embedding AI in PTC’s systems. It is complex enough, but as PTC’s Nordic Head, Filip Stål, points out, when we discuss the deal:
“PTC’s vision is still to tie together essential parts of the value chain. All the PLM pieces with CAD, ALM, SLM, and other things will remain and be sharpened with AI, and for aftermarket and services, there is the entire portfolio with Arbortext, Servigistics, and Servicemax. But the chain will also continue to be held together towards production with the help of third-party solutions. Note, for example, that Manufacturing Planning in Windchill remains when it comes to production management. In short, our customers are calm and there is strong confidence that TPG will invest in building the solutions even stronger,” says Stål, adding that ”all customers running Navigate will receive continued support directly from PTC.”
Overall Positive Comments
Overall, comments on PTC’s sale are surprisingly positive for both PTC and its customers. For example, analyst CIMdata writes that, “the sale will strengthen the value for PTC’s, ThingWorx’s, and Kepware’s customers. It will enable PTC to increase its focus on core technologies, as they continue to expand their vision for intelligent product lifecycles, while enabling ThingWorx and Kepware users to expand the reach of these technologies.”
That may be the case, but it also depends on what TPG can do to develop the solutions. They have the financial muscles which normally helps to establish the resources, innovation, and integration skills needed to advance the solution capabilities further. However, it is still a challenging job.
Market analyst and tech evangelist Michael Finocchiaro is on a track similar to CIMdata’s views on the matter: “PTC is returning to what it does best – product design, configuration and service. Expect a renewed emphasis on Creo, Windchill, Codebeamer and ServiceMax, now incorporated with AI copilots,” he writes in a LinkedIn post, adding that, “PTC is signaling that its future is less about broader IoT connectivity stacks and more about lifecycle design and simulation; this aligns better with NVIDIA’s focus on visual-digital simulation.” This is in response to PTC’s recent deal with NVIDIA to integrate Omniverse technology into the Vuforia suite, which PTC is retaining.
Finocchiaro also writes that when PTC bought ThingWorx (2013) and Kepware (2016), they wanted to connect the digital thread from design to factory and to the use of products in the hands of end users: “But the architecture was fractured, the cloud transition slow, and IoT margins thin.” He adds that Kepware, for example, “couldn’t evolve into a cloud platform.” However, this conclusion may be a bit sweeping. Kepware is a strong on-premise bridge to PLCs (Programmable Logic Controllers). Within the framework of the concept PTC has set out, this is of great importance as PLCs are the “brains” of automation systems, where they read signals from sensors that control equipment such as motors, valves and robots, and thereby ensure the supply of manufacturing and automation data to the IIoT solution, in this case ThingWorx. And PTC has actually developed solutions to enable cloud integration for Kepware. For example, PTC has offered solutions such as Kepware Edge, a lightweight, containerized version designed for Linux environments that specifically integrates with both local and cloud applications using standards such as OPC UA and MQTT.
There is also a hybrid SaaS offering called Kepware+, which is designed to manage distributions and integrate data across the entire enterprise, including to the cloud. Furthermore, Kepware’s solutions (both KEPServerEX and Kepware Edge) are explicitly designed to connect OT data to IT and cloud platforms, including AWS and Microsoft Azure, facilitating data delivery to IIoT solutions like ThingWorx. For example, the IoT Gateway plugin is used to securely stream data to cloud platforms. The answer to whether this works well or poorly varies, but the idea of moving towards the concept has certainly been addressed.
ThingWorx and Kepware under TPG’s Ownership
In PTC’s own press materials surrounding the sale of ThingWorx and Kepware, a lot is written about TPG to reassure any concerned users of the solutions. Neil Barua, for example, points out that the deal, if it goes through, will provide the two PTC solutions with “additional capital and expertise to accelerate growth.” There’s also, the PTC chief notes, a continued growing need for the connectivity and capacity to manage data in manufacturing organizations that both solutions can contribute to, and he believes that the deal with TPG will be able to contribute to the continued positive development of the digital tools needed to address these needs.
TPG will continue to invest in the ThingWorx and Kepware businesses through TPG Capital, which is the company’s US and European private equity platform. The idea is that this support from TPG will enable users of the solutions to continue to expand their digital wireless capabilities both internally (e.g. integration and manufacturing equipment and processes) and externally (e.g. linking equipment used to service systems for proactive maintenance).
About TPG, it can be noted that it is a global player with alternative capital management on the agenda. Founded in San Francisco in 1992, the firm manages $286 billion of assets with operational teams around the world. TPG invests across a broadly diversified set of strategies, including private equity, impact, credit, real estate, and market solutions. In the press release, the company says that their ”team combines deep product and industry experience with broad skills and expertise to develop differentiated insights and add value for our fund investors, portfolio companies, management teams and communities.” Whether this is enough to lift ThingWorx and Kepware to new levels of innovation remains to be seen.
For TPG, partner Art Heidrich (pictured left) noted:
“There is a generational opportunity to advance and improve manufacturing through solutions that bridge the gap between operations and information technology,” he said, adding, “Kepware and ThingWorx are driving the digital transformation of the shop floor and helping customers manage and improve their production processes. We are excited to partner with PTC and look forward to supporting the next chapter of growth for these software platforms.”
But Barua also stressed that for PTC, the divestiture increases the focus on delivering on the company’s vision, “of an intelligent product lifecycle for customers through our core offerings in CAD, PLM, ALM and SLM, as well as the continued adoption of AI and SaaS.” He added: “With our resources and investments focused on these areas, we are confident that we can help our customers address their most pressing challenges by enabling them to fully leverage the value of their product data and transform every step of the product lifecycle.”
Decent Financial Figures for PTC
It is clear that Neil Barua has gained decent momentum in the company’s earning capacity. This is shown, if nothing else, by the report for PTC’s broken financial year 2025. The key figure for SaaS companies is, of course, ARR (Annual Recurring Revenue), and PTC landed at an 8.5% increase, which is not a top result, but as said, decent. If you look at the revenue increase of 19% compared to the previous FY and the just over $2.7 billion it brought in in FY2025, it is not far from the milestone of $3 billion. Comparatively, achieving such a milestone would mean approaching half of the revenue that its toughest high-end competitors Siemens Digital Industries Software and Dassault Systemes brought in during their most recently reported FY.
This would be a feather in the cap for PTC, which got its real boost by being the first to market with a commercial solution for parametric CAD (Pro/E, now Creo). In the late 1990s and a few years later, the company simply owned the CAD market.
The Heppelmann Model
Since then, much water has flowed under the bridge and in the company’s continued development, Jim Heppelmann’s PLM visions – with Windchill as a cPDm backbone (collaborative Product Definition management) and primary system engine – have been about establishing a broad product development and realization platform, something that has played an important role in PTC’s self-image and in terms of the competitive situation in the market. All this has been garnished with continued investments in the ”broad” track with things like a redesign of Creo CAD, focus on the SLM area to support concepts around products as a service (Product-as-a-Service), and spare parts management, etc (Service Lifecycle Management, Servigistics). This has then been gradually built on with IIoT a la ThingWorx and Kepware, a heavy focus on SaaS as a business model, as well as sharp solutions for ALM (Application Lifecycle Management, ”software management”, Codebeamer) and for XR/AR (immersive Augmented Reality solutions, Vuforia).
There is more, like the Onshape investment and mainstream CAD/PDM, etc, and SaaS in the cloud, paired with the Arena PLM purchase and the creation of the Atlas package. But basically, it boils down to the stated ambition to primarily make a mark in the high-end market with a heavy, seamless SaaS-based product realization platform.
No High-Level Commercial Breakthrough Despite Large Investments
For a long time, this has looked quite successful with top rankings in various analysts’ market evaluations and technical positionings of IoT, IIoT, and PLM solutions. Gartner, Forrester, IDC, and others have found that PTC’s solutions are among the leaders in the industry. But as a listed company, PTC is also evaluated by its shareholders and investors, ”the market”, and what Wall Street has seen is, on the one hand inspiring visions and promising technical advances, but on the other hand, over time, not quite the commercial breakthrough that all the technology that has been added to the company would result in. The step that would bring PTC up from the ”cemented” third place among the Big Three, with revenues equivalent to just under a third compared to Siemens and DS, to at least revenue parity with the commercial market leaders.
Instead, PTC has, despite all the investments, remained in bronze place year after year with basically the same commercial distance to the two leaders as before. But in the end, what the board, the owners, and the investors want to see is strong revenue growth and preferably also a company that rises to the top in industrial IT support, such as PLM, not least in light of the recurring expensive investments. Somewhere at the intersection of technological broadening and commercial growth, the expected ”boost” has not occurred for PTC.
Barua’s Vision for PTC’s Path Forward
So, today, the idea of what the vision and the journey forward should look like has changed. And Neil Barua, who took over the CEO chair in February 2024, instead talks about ”solutions for the Intelligent Product Lifecycle (IPL).” Manufacturing connections will certainly remain, but to an increasing extent, based on third-party solutions. In itself, not a bad idea from the perspective that focused development work can often produce sharp technical advances. An ecosystem of partner companies in the development work can provide increased diversity, faster innovation speed, and breadth.
A central part of PTC’s strategy is to build a strong “Intelligent Product Data Foundation,” meaning that data is seamlessly integrated across the entire product lifecycle so that AI capabilities can be effectively applied to drive innovation, improve efficiency, and address labor shortages.
This concept also includes taking PTC’s customers on a long-term journey towards a Software-as-a-Service (SaaS) model, which Barua believes offers benefits such as lower total cost of ownership, improved security, and enhanced real-time collaboration.
The overall goal of the IPL concept is to help customers design, engineer, manufacture, and service complex products faster and with higher quality, essentially helping them “burn the backlog” in product development efforts.
”The Vision Alines with Demands”
In an interesting interview from this summer, conducted by Camille Rustici for Direct Industry/Emag, Barua elaborates on these thoughts about where he wants to take the company:
“We are now investing heavily in what we call the Intelligent Product Data Foundation. It’s about integrating our software – such as Codebeamer, Windchill, and Creo – so that data flows seamlessly across the entire product lifecycle. This enables our customers to reduce complexity, accelerate development, and ultimately apply AI capabilities effectively on top of the connected data,” the PTC boss said in the interview, adding: “Moving ahead, we are focused on accelerating product development in the industries we serve, particularly medical technology, aerospace and defense, industrial equipment, and high-tech electronics. These are areas where we believe companies need to have faster product development cycles with higher quality. Our vision is to help our customers design, engineer, manufacture, and service products faster and with higher quality.”
He further pointed out that these ambitions play well with what remain challenges today: Such as a shrinking and difficult-to-replace workforce in terms of skills.
Barua also linked this to AI, among other things. He exemplified the matter with a visit he made to one of the world’s largest manufacturers of industrial equipment.
”They want to use our capabilities to apply generative AI because they want to feed AI into humanoid robots in their factories, because they can’t find enough people to actually build their equipment. We make sure they have the right solutions and a solid database, because the only way to get value from AI is by having a strong, intelligent database. Without that, you can’t apply AI with good results.”
But generally speaking about PTC’s continued path forward, Neil Barua believes there is a lot to do not only in terms of AI but also with the continued digitalization of companies. Here, the PTC boss believes, there is great commercial potential.
“We are adding a layer of generative AI to accelerate this theme of digital transformation and to support our customers in these efforts. Right now, it is absolutely critical that our customers use technology that enables seamless operations – as they navigate an increasingly competitive environment.”
Keys to Success
Often, companies that have failed to broaden their product offerings talk about returning to their core business. Whether PTC can achieve its goals through such a ”back to basics return” – with the new IPL vision – and by adding layers of AI on top of existing solutions remains to be seen. In an upcoming article PLM&ERP News will take a closer look on PTC’s AI approach.
Keys to a prosperous future for PTC include successfully capitalizing on the strong demand for digital transformation, particularly in vertical markets such as aerospace and defense, automotive and medical technology, and by improving the pace and predictability of its product roadmap execution. As well as keeping a close eye on and developing the work of third-party suppliers to create sharp connections and solutions, in order to establish seamlessness between the product development side and smart factory operation set-ups, such as automated closed-loop manufacturing concepts. A specific challenge will be to advance the depth of the integration into PTC’s product development and service lifecycle solutions.
It’s not an easy job, but it can be done.
