Smart factories broadly refer to the fully connected and flexible production systems that leverage persistent data streams from connected manufacturing devices to learn and adapt to dynamic conditions. It represents a leap forward from traditional automation by allowing autonomous operation of entire production processes. The latest technology, including smart sensors and advanced robotics, allows next-generation interconnectivity between equipment, facilities, and processes across the value chain. IoT advances allow a new level of real-time data transmission and synthesis between smart devices and machines. The result is more efficient and agile manufacturing systems with less production downtime and better competitive advantages in the marketplace.
By leveraging their capital and innovation capabilities while taking advantage of long-standing relationships with manufacturers, incumbents in the smart factory industry have captured considerable market size in each of these segments.
Of these seven segments, the data analytics, predictive maintenance, and advanced robotics categories are the most highly populated with disruptors and watchlist companies. Startups have been capable of capturing market share in these segments by leveraging risk-taking cultures to produce highly digitized products in a high-stakes physical factory environment to go head-to-head with established firms.
Most incumbents entered the smart factory market by introducing “Industry 4.0” Internet of Things (IoT) solutions. Some acquired smaller companies or formed partnerships to accelerate growth and synergize their competitive advantages. The result is that legacy players in the infrastructure management industry, such as Honeywell and Siemens, are gradually becoming software vendors as industrial IoT matures.
Following this trend, it is expected that larger incumbents will extend their dominant stance by merging smaller, innovative startups with their own development teams. Furthermore, incumbents are expected to diversify into multiple product offerings to provide vertical integration within the factory digitalization industry. Most of the incumbents identified below have acquired smaller companies and developed partnerships while developing in-house products.
However, many startups may be able to compete against the incumbents. Not only are they generally faster innovators and more agile, but possessing digital vision at the leadership level and a risk-taking culture of producing highly-digitized products for high-stakes physical spaces provide potential competitive advantages.
On the other hand, incumbents have more access to capital and can also leverage their longstanding relationships with manufacturers to develop stronger sales channels. This unique competitive landscape makes the smart factory industry a sector to watch closely.