PTC gets into AR with Vuforia acquisition

Oct 12, 2015 | Hot Topics

Interesting news — from the “I didn’t see this coming” department: PTC just announced that it is acquiring Qualcomm’s Vuforia business for $65 million. Vuforia makes augmented reality (AR) technology, which PTC says is “the industry’s most advanced and widely adopted AR technology platform”. PTC says Vuforia will “accelerate PTCs strategy as a leading provider of technologies and solutions that blend the digital and physical worlds”.

Vuforia is a platform for app developers; it enables them to create digital experiences that combine physical and digital experiences. So far, Vuforia’s global ecosystem of 175,000 developers has built more than 20,000 apps, installed over 200 million times worldwide. The list of brands on the Vuforia website is stunning: BMW, Ford, Hyundai, Mercedes; Nescafe, Pizza Hut, Pepsi, Coca Cola among many, many others. I downloaded the Fisher Price Babygear Interactive Virtual Experience to see what it was all about; basically, in this case, Mattel wants you to virtually try baby accessories before buying by superimposing an image of the Fisher Price product onto your home environment. I’ve done this sort of imagining in my head for, well, ever, but I can see how it would help people figure out if the proposed purchase really fits — and, of course, it starts the desire cycle because he or she now “sees” the family owning this product and being happy with it.

According to PTC, Vuforia has been adopted by 37 of the Interbrand 100 (not sure what that is, but it sounds impressive, no?) and has been awarded Best Tool at Augmented World Expo in each of the last three years. Vuforia currently supports iOS and Android phones, tablets, and selected mobile eyewear — I’d imagine Windows can’t be far behind if this is to get into the more corporate, IoT world.

PTC sees Vuforia’s AR and its existing IoT ThingWorx brands as transformational, delivering “a new class of products that merge the digital and physical worlds … [unlocking] a world of possibilities for creating new ways to design products, to monitor and control products, and to instruct operators and technicians in the appropriate methods of use and service.”

A quick scan of Qualcomm-related news shows that the company recently announced $1.4 billion in cost-cutting to satisfy activist investor demands. Since that could include selling off non-core businesses, perhaps this deal wasn’t quite at the revenue multiples of some recent acquisitions.

I like this combination. For $65 million, PTC gets a pile of technology, cements connection with the merchandising arm of customers and prospects and, perhaps, does get an advantage when it comes to commercializing IoT. AR is certainly a big area of interest in all of the operations and services businesses I speak with –in AEC, for example, it’s crucial to train workers and ensure operator safety– and is a great way to move the use of design models into operations. Train workers before the plant/product exist and in total safety. I’m looking forward to seeing how PTC integrates Vuforia with its SLM offerings, in addition to IoT.

The announcement says Vuforia’s annual revenue isn’t material to PTC’s financial results, and PTC does not see it having an impact on FY16 non-GAAP EPS. The transaction is expected to close by the end of the calendar year.

Update: I neglected to mention in the initial post that Vuforia is priced on a monthly basis, with a starter version that’s free (but watermarked) all the way up to enterprise cloud models. Yet another product pushing PTC into the subscription world.