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Siemens' acquisition of low-code software development platform provider Mendix underscores the importance of low-code platforms, particularly for IoT strategies.
With the $730 million deal disclosed this week, Siemens intends to combine the Mendix technologies with its MindSphere IoT technology to create an IoT platform driven by low-code development. Mendix will run as an independent entity within the German industrial manufacturing giant and retain its current locations, staff and customers. Mendix also will continue to sell its low-code development platform to enterprise customers and invest to bolster its R&D and its geographic footprint.
Why low code matters
Low-code development platforms help users build applications visually via graphical user interfaces and configuration, instead of traditional procedural computer programming. The goal is to enable nonprogrammers, typically power users, to create applications without having to learn to program, and to help professional developers be more productive by using low-code tools to speed up development.
An open platform based on Mendix and Siemens will enable rapid delivery of apps with a unified, AI-assisted developer experience for connected applications, said Johan den Haan, CTO of Mendix.
John Rymerprincipal analyst, Forrester Research
Most enterprise applications will have to become "smart," able to handle large amounts of data from numerous inputs, including IoT, den Haan said. These apps also must be context-aware and able to guide users through various interaction channels, such as augmented reality.
Siemens' vision is to not only accelerate Mendix's position in the low-code development market, but also extend the Mendix platform to build SaaS solutions under the Siemens umbrella -- and that will be a challenge.
"Siemens is an $83 billion behemoth with six major divisions and all of them are beginning to create SaaS applications and they need help with that," said John Rymer, principal analyst at Forrester Research. "The question is, will the requirements and demands of those folks within Siemens keep Mendix too occupied to innovate?"
Siemens already has a substantial software organization, with 20,000 software engineers across the company, and its Digital Factory software division in which Mendix will live does $13 billion a year in revenue. But Siemens historically has sought technology to enable IoT application development in the industrial space, or help customers design products. The integration of Mendix with Siemens technology stack, as well as its culture and policies, won't be easy.
"This is the first time they've made an acquisition of a general purpose application development player," Rymer said. "It's a departure for them, and they've got a lot of work to do."
This move should put many traditional app platforms players on notice, such as IBM, SAP and Pivotal, some of whom already partner with Mendix, said Charlotte Dunlap, an analyst at GlobalData in Santa Cruz, Calif.
"[The Siemens-Mendix deal] illustrates the changing competitive landscape which traditional software and platform vendors must contend with going forward," she said.
Can Mendix keep up with demand?
For Mendix, this acquisition provides the fuel to further drive its 70% to 80% annual growth, Rymer said. However, the company also must weigh the demands of its new owner with the demands of its customers. Some of them are app platform partners themselves, such as IBM and SAP, which also resell the Mendix low-code platform.
Consolidation in the low-code development space has picked up in the past year and look for more to come, Rymer said, pointing to the recent $360 million funding for OutSystems.
"The financial community [is] starting to bet on and fund leaders," he said. "The same names included Appian, Salesforce, Mendix, OutSystems and ServiceNow. Now Mendix has been acquired. The awareness is focused on a small number of players."