PTC Buys MKS, Adds System and Software Management to PLM

Now that PTC has just snatched up MKS Inc., two lifecycle management product portfolios are about to come together: PTC's product lifecycle management (PLM) and MKS's System and Software Lifecycle Management (SSLM). The acquisition brings together PTC's Creo Elements and Windchill modules with MKS Integrity, a change-management platform for recording, monitoring, and tracking embedded systems and software.

MKS software products are used by engineers, designers, and manufacturers who incorporate electrical components, microprocessors, and system control software into their products. It's a field that's growing fast, because, in almost every facet of modern products, software now performs what used to be accomplished by mechanical parts. The switch from moving pins and gears to embedded software is one of the primary reasons our personal devices like smart phones and handheld tablets can deliver so many functions without taking up so much space in our pockets.

Software Takes Center Stage

According to MKS, "Software is a significant innovation parameter in business today; companies that are not 'software forward,' will simply not be competitive. No matter what the business, a measurable percentage of the differentiation in products today comes from software."

PTC currently offers customers the ability to incorporate printed circuit board and electrical wire designs into mechanical assemblies using the Creo Elements/View Validate for ECAD module, bridging mechanical design (MCAD) with electrical design (ECAD). But the solution focuses on modeling geometry, not system and control software behavior. PTC's Windchill PLM products give manufacturers a solution to propose, monitor, and track changes in design development, but PLM generally doesn't concern itself with in-depth management and traceability of system software.

MKS Integrity, described as an "Engineering Change platform for software development [that] provides true end-to-end visibility across all software engineering assets," is expected to fill the gaps where embedded software plays a critical role in product design. The combination of MCAD, ECAD, and system-wide simulation and traceability functions could bolster PTC's offerings in mechatronics -- an emerging discipline that focuses on the intersection of mechanical engineering, electronic engineering, computer engineering, software engineering, and control engineering deployment.

"Software engineering has become a fundamental backbone element in today’s product development process,” said James Heppelmann, president and CEO of PTC. “As a result, companies are seeking a much more comprehensive management approach to their product lifecycle. By combining MKS Integrity with our PLM portfolio, PTC is setting a new standard for unified product lifecycle management with the industry’s only truly integral product configuration, collaboration and change management solution.”

MKS's portfolio and market reach are attractive enough for PTC to pay, as stated in the FAQ page for the transaction, an "aggregate cash consideration of approximately $300 million. PTC drew approximately $250 million of debt from its revolving credit facility and used approximately $50 million of available cash to finance the transaction."

Open Letter to MKS Customers

According to an open letter sent to MKS customers, "PTC recognizes that you have made a significant investment in MKS solutions and that you rely upon these solutions to help drive critical business processes within your company. We want you to know that PTC and MKS will work together to build an integration plan that will enable MKS to grow and thrive within PTC."

The letter outlines PTC's post-acquisition goals to:

• maintain, enhance and further develop MKS Integrity;
• continue to offer MKS Integrity as a stand-alone offering; and
• integrate MKS solutions with complementary PTC solutions.