At the end of 2015, Advantech acquired the U.S. industrial networking firm B+B SmartWorx. By integrating B+B SmartWorx with Advantech's industrial automation business group and jointly developing new products for the industrial IoT market, a new intelligent networking business was born.
Industrial networking is an important part of Industrial IoT (IIoT) development. For the past 5 years, Advantech has invested in IoT research and development. At the end of 2015, Advantech acquired B+B SmartWorx to expand its IIoT portfolio. By leveraging B+B SmartWorx's renowned brand image and established marketing channels in the U.S., European and Middle East regions, Advantech expects to expand its global market share and become a powerhouse of the global industrial networking field within the next 3 to 5 years.
Advantech Investment Department Project Manager Su Song-kai revealed that after the acquisition, B+B SmartWorx retained most of its original corporate business structure while collaborating with Advantech's Automation Business Group to integrate and leverage product development and strategy. In terms of organization, two business and marketing, Advantech will rely on B+B SmartWorx's brand power to gain access to the European and American markets and mutual resources will be integrated to expand the channel models for IIoT.
Wireless and Smart Terminals: A Future Trend for the Industrial Networking Market
Su also stated that a major reason for this acquisition was that B+B SmartWorx had been concentrating on the industrial networking market for a long time, with its business group gaining prestige and credibility. Additionally, the two companies' products and services complimented each other, creating a win-win situation for both parties. In terms of channels, B+B SmartWorx owns a complete channel distribution network in America, as well as a 58% U.S. market share, 28% European market share, and 14% for other regions and sectors. Coupled with Advantech;s resources in Asia, the newly formed enterprise is expected to become a dominant player in the global industrial networking market.
B+B SmartWorx primarily manufactures fiber media converters, 3G/4G wireless cellular routers, edge intelligent industrial routers/gateways, and Wzzard wireless sensor networks. These sectors represent the markets that Advantech has not yet gained access to as well as the future trends in industrial networking equipment.
Considering the overall development of industrial networking, several developmental stages can be identified. The first stage involved sensor and network terminal equipment that gave mechanical devices networking capabilities, with the benefits of remote access. Then as the entire industry moved into the industrial networking phase, mechanical equipment adopted IP-based protocols. Because the equipment already possessed networking capabilities, the devices could not only interact with other devices but also search for and upload data to the cloud 24/7. Finally, by analyzing the data now available, managers can devise superior strategies for improving efficiency and productivity.
Over time, wireless technology will become less costly and more ubiquitous, while terminal equipment will feature built-in processing capabilities. According to U.S. research institute estimates, the wireless network and smart terminal equipment markets are expected to grow rapidly, presenting great opportunities for B+B SmartWorx and Advantech.
Advantech and B+B's Complementary Products Provide the Most Comprehensive Industrial Networking Solution
According to Su, B+B SmartWorx products not only complete Advantech's blueprint for industrial networking, but also shorten total R&D time. Consider wireless cellular routers for example, at least 2 years are normally required for product R&D before the final product is introduced to the market. Because the specifications of several certifications and telecommunication laws and regulations must be strictly followed (with different countries and regions enforcing different laws and regulations), the R&D period is typically quite long. However, since merging with B+B SmartWorx, Advantech's R&D time lines are expected to decrease, as many products already comply with global regulations and can be brought to market quickly.
Regarding organizational adjustment after the acquisition, Advantech's business department has adopted a low integration strategy to maintain B+B SmartWorx's business independence. B+B SmartWorx remains responsible for the American and European markets, while Advantech is responsible for introducing B+B SmartWorx products to the Asian market. Su stated that because industrial automation fields rarely overlap, B+B can focus entirely on the industrial networking sector while also expanding its market share. At the same time, B+B can also upsell Advantech products to satisfy new customer demands.
The IIoT value chain has great coverage, from the lowest level to the highest level, including hardware, networking, system platforms, software/APP, customization services, and system integration. By acquiring B+B SmartWorx, Advantech can provide the most comprehensive IoT solutions to both customers and partners, enabling them to better concentrate on developing value-added software/APPs or services without distraction.
About B+B SmartWorx
B+B SmartWorx was founded in 1981. In the early day, the company primarily provided dealership services. In 2006, B+B SmartWorx created its own brand and began emphasizing the development and marketing of various wireless or wired smart industrial networking products and solutions. As a well-established, profit-oriented company, B+B SmartWorx achieved an annual revenue of US %5.5 million in 2014, with a gross profit margin of 50%.
Article by Lin Long with images provided by Advantech. Interview with Advantech Investment Department Project Manager, Su-Song Kai.