Insight Bite

Industrial Internet of Things firm PTC has signed an agreement to buy Cloud CAD pioneer Onshape for approximately $470 million, pending regulatory approval.

Onshape, which is based close to PTC in Cambridge, Massachusetts, is said to be the only CAD platform using the Software as a service (SaaS) distribution model.

This makes it a highly valued asset for PTC, which plans to keep the firm as an independent unit, and tap its expertise to ease its own transition to a SaaS-based business model. This began in January this year when the company removed perpetual licensing for users of its CAD offerings  in the US and Western Europe.

“The first and most important reason we’re acquiring Onshape is, we see it as a growth engine,” said PTC CEO Jim Heppelmann on an earnings call.  “We have an opportunity to participate in the growth of CAD and PLM … We believe CAD and PLM will go to SaaS. We just can’t understand why that won’t happen.”

As a CAD company, Onshape is also unique in that it runs from a browser, and relies almost entirely on the cloud for computing, data management, file storage, and design tasks. This removes the need for costly hardware and administrative staff, and makes it accessible from any connected location or device.

This pure cloud approach is likely to prove useful for bringing PTC’s existing CAD and product  lifecycle management products – Creo and Windchill – into the era of the cloud.

PTC has a successful track record of making acquisitions like this one to grab a slice of growing industries. The firm delved into IoT in 2013 with the purchase of IoT startup ThingWorx, and bought Vuforia in 2015 to bring together Augmented Reality and enterprise technology.

With footholds in CAD and Cloud SaaS, PTC is now positioning itself at the nexus of two more rapidly growing industries. Integrating the two technologies is likely to help PTC provide cheaper, more efficient, and more scalable CAD services to serve growing demand from the automobile, aerospace, and manufacturing industries.