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Summary

Dassault Systemes (DS) has built a market strategy for its portfolio of engineering solutions around customer experience, and this extends to its approach for the Internet of Things (IoT), or Internet of Experience (IoE). DS has taken time to assess its best entry into IoT, and at the June 2016 industry analyst day it revealed how it segments the IoT market, and how it plans to play to its strengths in the design and experience layers. This is a cautious approach to what is predicted to be one of the biggest technology markets yet. With the current highly fragmented nature of the market, this approach makes a lot of sense, particularly because it will enable DS to bring its existing customers into the IoT journey with it, leveraging its expertise in design, modeling, simulation, and experience technology.

DS segments IoT into five layers, and focuses on design and experience

DS segments the IoT/IoE market into five layers (design, M2M communication, network, IoT data and platform, and experience), starting with where the data is gathered.

The design layer is at the device and sensor level, the root of IoT. DS can virtually validate IoT designs by co-simulation with real-world data. DS solutions help semiconductor manufacturers design and build sensors, including with novel materials and the use of additive manufacturing.

The M2M communication layer includes local gateways, while the network layer covers LAN/WAN, Internet, and communications networks. The IoT data and platform layer includes computing, storing, analyzing, and managing data, on the cloud and on-premise.

The experience layer is the application layer, where IoT data feeds into novel, smart applications including smart building, smart energy, smart factory, smart city, and others. Here DS sees its expertise applied to provide solutions connected to the running of systems, with digitally augmented operations, and to optimize systems, with real-time learning and experience optimization.

DS sees its existing portfolio of engineering technology solutions as best fitted to the design and experience layers. The middle tiers are seen as highly fragmented arenas to which DS is not currently intending to enter, unlike its nearest rival PTC, for example, which has made a huge bet on these layers. While this is a cautious approach, it does not rule out making organic ventures or acquisitions in the other layers as market opportunities arise.

DS needs to demonstrate its presence in IoT given the expectations of the importance of this technology, and while some of its rivals are building a vertical slice through the layers, DS is biding its time to see how the market will evolve, while playing to its existing strengths in design and experience. Because the market is relatively young, this is a less risky approach and is still open to opportunities.

The IoT market is highly fragmented and opportunities exist at all levels

Some estimates of the potential size of the IoT market in the decade ahead are embarrassingly high, in the trillion-dollar range, which is frustrating to the players in the market that do not see anything like this in current activity. This is because the market is highly fragmented and spend is distributed across many vendors of platforms and tools, and across many industry verticals looking to exploit the IoT. The market is relatively immature, in the early stages of formation, and standards are few, with vendors more concerned with locking in their customers.

Appendix

Author

Michael Azoff, Principal Analyst, Ovum Infrastructure Solutions Group

michael.azoff@ovum.com

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