Industrial Automation June 2017

Softbank’s Investment in OSIsoft

Tim Dawson
Senior Research Director

Tim is the Senior Research Director and Principal Analyst for IA’s Industrial Automation team. He uses his 20+ year experience to develop best-in-class research for the manufacturing sector and is a frequent speaker on all things research at conferences and industry trade shows across the country.

In short: great synergies, but execution will be key

Last week it was announced that Softbank Group had made an investment in OSIsoft by acquiring the minority interest held by Kleiner Perkins Caufield & Byers (Kleiner Perkins), TCV and Tola Capital.

OSIsoft – a privately held and relatively unassuming company – has, over nearly 40 years, become a critical part of the data fabric for many industrial companies and facilities. It’s solution – the PI System – is a tool that brings together time-series data from a wide array of sources into a single infrastructure, providing analytics to support businesses with the operational processes.

Softbank Group is a Japanese telco and internet titan, founded and led by Masayoshi Son who is also driving the Softbank Vision Fund – the largest tech fund in history.

Great Opportunities

In the short term, there are immediate benefits to OSIsoft. First, Softbank has a longer-term outlook on its investment compared with the previous investors. Its corporate culture is also better aligned to OSIsoft. A joint focus on customers will help with initial alignment and tactical goals.

Second, Softbank’s presence in the telco market will open a new market opportunity for OSIsoft. Historically focused on energy and manufacturing, there is a wealth of unstructured data produced by cell towers that can be processed and put to greater operational use.

Third, Softbank’s strong territorial presence in Japan and South Korea will enable OSIsoft to expand into those markets in a way that may not have been possible without this relationship.

Finally, the other companies that Softbank has invested in – ARM and Sprint to name just two – will give OSIsoft a sandbox to explore new product ideas and solutions.

Investments and Innovation

For Softbank, OSIsoft represents a strong strategic partner as it builds out its vision “…to contribute to people’s happiness through the Information Revolution.”. In recent years and months Softbank has made significant investments in what it sees as the technologies of the future:

The acquisition of Sprint for $21.6bn in 2013.
The acquisition of ARM, the UK headquartered semiconductor design company for $31.4bn in 2016.
A reported investment of $300m in WeWork, a US-based shared workspace company, in 2017.
An investment of $5bn in Didi Chuxing, the Chinese ride-hail company in 2017.
An investment of just over $500m in Improbable, a UK-based virtual simulation company in 2017.

There are opportunities for innovation between OSIsoft and the family of companies that Softbank has made. For example, ARM already has a strong play in IoT technology and there is an instant synergy to be found in deploying OSIsoft IP onto an industrial IoT chip design.

Beyond this, scenarios could be envisaged where the OSIsoft skill-set is applied to the vast quantities of data produced from shared mobility (Didi) or the virtual simulation technology from Improbable is layered over the analytics produced by OSIsoft.

Measuring success

In the short term, it seems clear that expansion into the telco vertical will be one key measure of the success of this investment. Beyond that, innovation will be the measure of future success.

But there must be a cautionary approach here. Of the many activities that OSIsoft and Softbank can be involved in; many will be difficult to realise and, worse, could cause a detrimental lack of focus. The answer may be to stick to the fundamentals – focus on customers and communities and there is an opportunity to win big in the industry of the future.

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Posted in: Industrial Automation.