Industrial IoT platforms at HMI 2019: AWS and Microsoft are becoming the digital platforms of the German manufacturing backbone

At HMI 2019, two bold announcements of partnership were made in the context of industrial IoT platforms: AWS with VW and BMW with Microsoft. Both partnerships underpin the fact that hyperscalers are increasingly becoming the cloud infrastructure for the backbone of the German manufacturing industry, the automotive sector. The evolution to this new digital core is certainly not going to stop at the infrastructure layer (IaaS) and will also spread into the platform layer (PaaS). Let’s take a quick look at what was announced.

After the launch of the Volkswagen Automotive Cloud in cooperation with Microsoft, and to build a foundation comprised of external mobility services of Volkswagen (VW), VW and Amazon Web Services (AWS) announced the development of the Volkswagen Industrial Cloud with a goal to integrate all internal processes around production and logistics. In a first step, the Volkswagen Industrial Cloud is planned to combine all shop-floor data from all 122 facilities of the Volkswagen Group. The first applications for this are expected to become available by the end of 2019. In the second step, the global supply chain of the VW Group with over 1,500 suppliers and partner companies at more than 30,000 locations should also be integrated. In the third step, VW is planning to create an open-industry platform which other partners from industry, logistics and sales may use in the future. The execution of this plan will create a huge industrial ecosystem, based on one common digital platform. A big opportunity to improve internal efficiency and interoperability for VW. However, participation for the whole supplier ecosystem around VW will not really be “free”; it will be mandatory for doing business with Volkswagen in the future. Directly afterwards, Siemens announced they would join that cooperation as an integration partner around its IoT platform Siemens MindSphere. The launch of BMW and Microsoft’s Open Manufacturing Cloud is headed exactly into the same direction, and the public cloud providers are increasingly becoming the foundation for the digital transformation of the German manufacturing sector, not only on the client or business side, but also increasingly on the OT side (operating technology). The window of opportunity will be starting to close in 2020 and no other vendor has so far been able to build a successful industrial IoT platform in the German market.

Let’s take a quick look back to understand what happened in the German manufacturing industry around industrial IoT platforms in the past years. It was back in 2015 when the first industrial company in Germany, TRUMPF, founded a start-up to build its own Industry 4.0 platform, AXOOM. From the beginning, the intention was to establish an app store with industrial applications for the manufacturing industry, especially for the shop floor. For this innovative approach AXOOM won several awards in 2016. In 2017, a joint venture of several German machinery and equipment manufacturers started with the same vision. DMG MORI, Dürr, ZEISS, ASM and Software AG (later also ENGEL and KARL MAYER) founded ADAMOS as an industrial IoT platform. In 2018, two German MES providers (manufacturing execution systems), FORCAM and MPDV, also started with their own industrial IoT platforms, and the ambition to build a partner ecosystem and an open app store around that platform. All these companies were present at the HMI 2019 last week, I visited all of them. They share a common limitation though: None of them has so far been able to really scale by attracting many new partners and many new apps. At the booth of AWS or Microsoft, however, you could get a different picture and many partners were present to show their industrial applications. Only Siemens with its MindSphere lounge was playing in the same league at HMI 2019. As mentioned above, the window of opportunity to become a relevant provider of industrial IoT platforms will be closing in the next 12-24 months. And again, not the technology is the key to success, it’s more about partnering.

Besides open-source-based IoT platforms, augmented reality platforms and data monetization platforms, we will again take a close look at the market segment of industrial IoT platforms with integrated app stores in our upcoming 2019 IoT platform RADAR analysis. Results will be published in July 2019.