Advantech Partners with Strategic Partners to Build an Open and Shared Platform for Embedded IoT

—— Interview with Advantech's IoT Embedded Platform Business Group Deputy General Manager Zhang Jiahao

2016 - Advantech, the global leader in Intelligent Systems (IS), hosted the 2016 Advantech Embedded IoT Partner Summit at the newly completed IoT Park Phase II Manufacturing Centre in Taipei. the summit Advantech invited more than 300 partners and customers from 21 countries around the world to attend the summit, and Advantech executives were also present. During the conference, the latest products and technologies of Advantech Embedded IoT solutions were showcased and explained by dedicated product managers and technical experts.

The summit was divided into two main sections: the opening keynote speech on the first day and the partner summit on the second day. Advantech's Chairman, Mr K.C. Liu, delivered a keynote speech. In addition, Advantech invited strategic partners such as Intel, Microsoft, ARM, and IBM to share their future strategies and cooperation. Through keynote speeches, round-table discussions, Q&A sessions and other forms, the conference provided a comprehensive and in-depth introduction of Advantech's IoT embedded products, services, technologies and company strategies. The atmosphere of the conference was positive and enthusiastic, and the audience asked questions enthusiastically, which truly embodied the spirit of openness, sharing, assistance and win-win situation of IoT.

This time, Advantech also specially invited OFweek IoT reporter to attend the whole event and conducted an exclusive interview with Mr. Chia-Hao Chang, Deputy General Manager of IoT Embedded Platform Business Group. Mr Zhang joined Advantech in 2006 and took over Advantech Embedded Business Unit in 2009. Before that, Advantech's business thinking tended to be hardware manufacturing. But coming from a software engineer background, he has a different perspective and vision on the IoT industry, which plays a very crucial role in Advantech's transition from a hardware-based manufacturer to software development and platform building as its strategic goal.  

The following is a transcript of the interview:

Reporter: From the two most talked-about mergers and acquisitions in the field of Internet of Things (IoT) this year: SoftBank's acquisition of ARM and Qualcomm's acquisition of NXP, which was just announced recently, it can be seen that tech giants are very bullish on the prospects of IoT and are actively seeking to transform themselves. So, Advantech is also considering acquisitions to quickly enter a new field, to strengthen their own strength?

Zhang Jiahao: We are very concerned about these two acquisitions, and the biggest reason behind them is actually the Internet of Things (IoT). The Internet of Things can allow many industries to cross-border integration. ARM is the most obvious example, Softbank is a very large enterprise in Japan, involved in many areas, such as telecommunications, robotics, etc., while ARM is a software and services licensing, licensing chip companies have very many IP (intellectual property rights). And ARM is doing software and service licensing, licensing to chip factory companies, with a very large number of IP (intellectual property rights). Softbank's purpose is to master the most core technology of the Internet of Things, in addition to the chip, and then rise one layer inward, that is, IP, this is obviously in the cross-border vertical integration.

Plus Qualcomm's acquisition of NXP, Qualcomm is the world's largest handheld device chip factory, NXP is the world's largest automotive computer chip factory, the Internet of Things chip supplier, these two are the Internet of Things in the field of the two hottest industries, their combination can be said to be a strong combination.

As for Advantech, the past few years of M&A strategy is more inclined to upstream and downstream integration, mainly in the channel and product acquisition, such as mergers and acquisitions of channel business, such as the Japanese channel, the European channel. At the same time to expand the sales team and product expansion. These are easier to expand the business, but there is no way to expand the company's pattern, just one more product, channel or business.

In the past few years, there has been a big shift towards focusing on IoT-related solutions and ecosystems, such as software and wireless communications, with a greater emphasis on the expansion of core capabilities. Wireless technology is a very important technology for the future of the IoT industry, and is a critical step in building core capabilities. One more thing is that we are starting to expand from the traditional IntelX86 platform to ARM/RISC-based platform. Advantech has launched an internal programme to establish business units for ARM and RISC platforms, which is why we are working with ARM. Advantech's core strategy for M&A is in the three main areas of software, wireless communications, and ARM/RISC-based platforms.

Reporter: In the era of IoT, technology giants are building their own ecosystems, is Advantech IoT also building its own ecosystem? What is the company's future product positioning and strategic direction?

Zhang Jiahao: Let's start with the company as a whole, Advantech has three major systems: we are the IoT Embedded Platform Business Group (formerly known as Embedded, now known as Embedded IoT). In fact, before and after the emergence of the Internet of Things, the industry is the same, there are transport, retail, medical, only these years added intelligent manufacturing, more intelligent, better management. But because of the IoT, the management of all industries has to be improved and the efficiency has to be improved. But the industries that the company serves are actually still the same, except that all the old industries need to be upgraded, so the whole industry that the company serves is the IoT industry.

However, our three different business groups have different responsibilities, and we, Embedded IoT, are the core unit of the company. We do platform development, so we need to build the core of software, the core of wireless, and the core of ARM chips, which is the responsibility of our business group.

Two other divisions, one of which specialises in industrial IoT, such as industrial control automation, factory automation, people management and other industrial control equipment. The other one is specialised in service automation, such as transport, healthcare, retail automation and other smart city products. So, our group is centred on our embedded IoT and the other different industries are served by the other two divisions. We are all aiming for IoT, and then each of us will go and upgrade our original industries.

Reporter: At present, IoT is still in the cultivation stage. However, we see that Advantech is constantly moving in the field of IoT, and the company is developing very fast, such as the recently launched M2.COM, how is its market response?

Zhang Jiahao: We have been pushing M2.COM internally for about one and a half years, and promoted it in Europe for the first time in February this year, and got a very good response, then in Japan in June, in Taiwan in July, and in China in September, and pushed it in every country. M2.COM was launched to solve the core of wireless and sensing technology. So far, no company in the world can propose a product that supports both sensing and wireless at the same time, but these two technologies are very important in the IoT industry. Therefore, Advantech spent a lot of resources to research how to combine these two things to come up with this M2.COM product. Advantech has also invited companies that do wireless and software sensing components to work together in Advantech's architecture.

The size of this module is only 2.2cmx3cm, and as long as you put it into the computer, it can immediately support sensing and wireless functions, which is a great progress. In the past few years, no company has been able to design so many sensing and wireless technologies, so we have defined an interface and invited various wireless and sensing technology vendors to join this alliance, so that all of them can work together with Advantech's standards, which is the ecosystem.

This standard was first developed by Advantech and opened to partners in various countries for free, and the market feedback is very good. Recently Qualcomm also used this module, and there are new cases in Europe and Japan. After we make this product, TI, Qualcomm, BOTCH and other companies can make their own products on this basis, customers need such a product can find Advantech, of course, if the customer's design capability is strong enough, you can also directly find them to buy; but if customers want to use our standard products directly, they will come to us. For example, this system it can use TI's WIFI indoors today, and go outdoors tomorrow without WIFI, only 3G/4G, then it can be replaced with Qualcomm's on Advantech's platform. This is the benefit of an open platform, no restrictions, everyone can share the economy on this platform, this is one of our biggest intentions in developing M2.COM.

Reporter: Embedded systems, as the core of the important technology of the Internet of Things, are moving from traditional single-board computers to complete sets of solutions. As a leading embedded design vendor, Advantech launched the WISE-PaaS IoT software service platform last year, how is this platform running at present?

Jiahao Zhang: Advantech has been investing in WISE-PaaS related software development for 10 years, and it was not called WISE-PaaS before, but only started to be called that last year. The company currently has nearly 300 software engineers, of which 200 are in Taiwan and 100 are in mainland China. Of these 100, 80 are based in Xi'an and 20 in Shanghai.

This product was free and not for sale at the beginning, and last year it started to use the WISE PaaS Allied Partner (alliance partner) method, with a $20,000 USD initiation fee. Last year, 61 companies around the world joined. After a year of promotion, we began to do service solutions this year, looking for eco-system Partner (ecological partner) cooperation, found that the user needs are very diverse, need to understand the knowledge-how of various fields, so we look for software developers in various industries, began to do a service solution for various industries, the establishment of WISE-PaaS Marketplace. Advantech is the platform, but when it comes to automotive, medical, transport and other fields, we need these vendors to join in and develop together. WISE-PaaS Marketplace has products developed by Advantech, currently there are 20 products, and it is expected that there will be 40 products a year later, and the partners can either take these products to the market, or put them on our platform to sell them, to expand their business. This year, this part of the promotion got great results.

Reporter: Speaking of WISE-PaaS Marketplace, would you please introduce how WISE Point is used?

Zhang Jiahao: WISE Point is actually another way for Advantech to establish software pricing. This is a little difficult, we all know that software charges for many vendors is difficult to promote acceptance, especially in China. As I said earlier, you need to pay $20,000 for membership, and then you can get 2,000 WISE Points, a point equivalent to $10. This point can be used to buy software on the platform. In reality, the customer still has to pay, and when the points run out they have to pay for it, but it feels like they're not paying for it. This is actually another way of telling the customer that the software is valuable. So our main purpose is to promote the value of the software, and on a deeper level, it's actually shaping a virtual currency trading platform for the IoT industry, similar to Bitcoin. In order to sell other products on this platform in the future, we are also open to other vendors to sell on the platform, there is no restriction that only Advantech products can be sold.

Reporter: As Microsoft's global authorised embedded services distributor, Advantech will officially become a global Azure CSP (Cloud Solution Provider) at the end of this year, becoming a cloud service provider and launching the Cloud Layout 1-2-3 three-phase introduction service together with Microsoft, what kind of strategic significance does this have for Advantech? What is the strategic significance of this for Advantech and how will the co-operation between the two parties be carried out?

Zhang Jiahao: Advantech used to do traditional business and software, these are one-time business, the customer whether to buy 100 units or 1,000 units of equipment, basically used to the end of the bad, three or five years later may buy again, these businesses in fact, we are very familiar with the business. We are working with Intel and ARM to create another business model. We talk about cloud services is this, it can be a recurring source of income (recycling revenues), customers buy the equipment, the relevant cloud services can be charged, so we launched the cloud services 1-2-3. that is, customers buy Advantech hardware, then buy Advantech software, and then send the data to the cloud to operate, processing, the operation of the process there will be the flow of information, space storage and transmission of data, etc. problems, space storage and passing data, etc., all of which need to be paid for, and we hope to turn it into a new business model.

The co-operation with Microsoft is moving forward very quickly because we were already his reseller. This month, we also signed a co-operation with ARM. Service this thing, may be different from country to country, for example, in Singapore, our customers need to use Amazon's services; in mainland China, Microsoft may not be so many people use, people use Ali, so we cooperate with Ali; in South Korea, we cooperate with KT Korea Telecom; so the cloud services due to legal restrictions in each country's relationship, then we cooperate with local companies. In China we also signed a contract with Microsoft, but not comprehensive.

Industrial cloud services promotion is not easy, we are mainly divided into two steps: the first step to replace the traditional server traffic and storage, customers look at your information data; the second step of the data to be analysed, computing, management; the third step of the data prediction, transformed into business value. Currently walking is still in the first step, is expected to go at least five years, which will have a long education process.

Reporter: IBM Watson IoT has been working in various vertical application areas for a long time, Advantech is currently cooperating with their products and sales team, can you specifically introduce the application areas and business model of this cooperative product?

Zhang Jiahao: In fact, we also with their R & D team also have cooperation. Let's talk directly in Japan, IBM Watson was originally a research team, Advantech and they are more cooperation in factory automation, because Japan has a very large automation industry to upgrade, and automation manufacturers are very much. IBM Watson IoT team proposed a very large number of how to assist the Japanese manufacturers to upgrade the industry practice. But the problem is, you want to upgrade, you have to have hardware first. So, the first step of its cooperation with Advantech is in fact the hardware, it will Advantech gateway to the design in, so IBM is now with Advantech cooperation is the gateway and the lowest layer of the sensor (Sensor) are using Advantech, IBM then also put at the same time, how to manage these gateways, as well as how to manage these Sensor software by Advantech, IBM do the upper layer of the application (application). IBM does the upper layer of Application. This is what we are doing now, we have a big conference with IBM in July in Japan, mainly in the Smart Manufacturing (Smart Manufacturing) this part of the co-operation, very successful.

Reporter: Recently Advantech and ARM signed a contract to cooperate on mbed server, and take the mbed OS operating system as the standardised hardware architecture and communication protocol, and jointly publish the M2.COM open standard, which will have an impact on both parties as well as the industry chain vendors?

Zhang Jiahao: Now Advantech is using a large part of the Intel X86 chip architecture, but we expect that ARM will have a very large growth space in the future IOT field, customers will use ARM RISC-based products. So the problem is, we have been doing this for so long, Intel and Microsoft are more tightly bound, ARM and Linux and Android are more tightly bound, they are two completely different ecosystems, so one of the big reasons for us to cooperate with ARM is that we want to jump from the traditional Intel X86 architecture that we are very familiar with to jump to open up another ARM/RISK ecosystem, and this is where Advantech is going to be the most important partner. RISK ecosystem, which is Advantech's biggest strategic goal. This is Advantech's biggest strategic goal at the moment. Because of this, we need to make a big connection with ARM and ARM-related community or Eco System. Linux has a lot of community, and ARM/RISK also has different communities on it. ARM has launched a mbed OS and mbed Cloud Server, which are very big business opportunities in the future IOT field. Advantech is also very active in working with them, since we worked with them earlier this year, we have met TI, NST, etc., and they are now helping us to introduce business, and that's a completely different source of business, and Softbank is now working with us. So the different eco-partnerships are indeed different from the traditional ones before. It's fun, it's hard work, but it's also quite rewarding.

Reporter: Mainland China has a large population and dense manufacturing industry, the number of IoT connections figures are huge, requiring a large number of IoT chips, modules, terminals, communication devices, platforms, etc., which is a big market, what is Advantech's layout in the field of IoT in mainland China?

  Zhang Jiahao: At present, Advantech's core products are still done in Taipei, Kunshan, mainland China has a R & D centre, will become another core layout unit, which is divided from the product perspective. In terms of business system, Advantech is divided into three main axes: factory/equipment automation is based in Beijing as the headquarters of the outward layout; service automation (medical, service, transport) to Shanghai as the headquarters of the national layout, the general manager is also in Shanghai; embedded platforms and business centres are based in Shenzhen to expand the business of the country.

There are three different headquarters and persons in charge of promoting the three areas, product development in Shanghai and Kunshan, and the business system is distributed in Beijing, Shanghai and Shenzhen. Advantech in mainland China, no matter which business unit, for the peripheral channels and terminal integration are very sticky. Next we will expand cooperation in software services and government, such as military industry, Kunshan R&D centre will cooperate with local chip company Longxin. Downstream cooperation favours the two teams in Beijing and Shanghai, as they do equipment automation and service automation, so they work directly with downstream contractors, software designers, and system integrators for development.

Reporter: The future outlook of IoT industry is very promising, what are its challenges? How will Advantech face these challenges?

Zhang Jiahao: In fact, there are a lot of challenges, platform standardisation is still very important, IoT product design requires fast, requires efficiency, before an embedded product design can be one year or two years slowly, but now it is not so, the requirements of six months or even three months to be able to go to market. And each platform is not the same standard, need to spend a lot of time to discuss, and then cross-platform and there is no way to integrate, so we believe that the platform standardisation, hardware standardisation and software standardisation is very important, so that the developers have a common standard, whether it is hardware or software, the development time does not need to be so long, so that you can accelerate the product launch cycle. Therefore, the efficiency of the future IoT industry is a great competitive advantage, who can make your products, regardless of software, hardware, can operate more efficiently, who will have more business opportunities, which is both a challenge and an opportunity.

In addition, Taiwan, China and other Asian manufacturers in the traditional manufacturing field in the past one or two decades is very obvious. But how to transform as soon as possible, find another field is very important. Not only to have manufacturing, but also to have the ability to design, if only to build a lot of factories is not necessarily useful, you will only fight with other people's prices, so I think the embedded industry in the Asian region from the very good at manufacturing, lower prices, to very good at design, to win greater profits, is a need to break through the great bottleneck.

Regardless of Taiwan, mainland China, and other Asian regions, how to make the thinking of running a business change from traditional manufacturing-based to design and innovation-based is the key to development. But this change can not be formed in a day or two. But it's pretty certain that if you don't start today, you won't get results next year, and even less in the future. It's the same with our cloud service. Advantech's cloud service is not profitable until today, but if we don't do it now and don't advertise it to our customers, then we still won't be able to make a profit in the future. If we do it now for one year or two years, although there is no very obvious gain, but at least we know which side is wrong and which side can be changed. So I hope that manufacturers in Taiwan, China and the rest of Asia need to hurry up and change their manufacturing mindset to a design mindset, an innovation mindset.

Reporter: Finally, what are your expectations and suggestions for the future development of the embedded IoT industry?

Gary Chang: Our expectation for next year is that we hope that our traditional business will still have good growth because we feel that the IoT trend is getting clearer and clearer, and it's no longer the future, it's happening. We estimate that more industries will switch to IoT next year, so we expect that business opportunities will still have good growth next year. Therefore, we can't wait for the market to mature to grow, but we have to develop more new solutions to stimulate this industry. Advantech's value is not only what we do when customers want something, but a lot of Advantech's value lies in the fact that we can lead customers before they even think about what they want, and I hope that Advantech will continue to maintain such an innovative mindset.

Link to original article:http://news.rfidworld.com.cn/2016_11/0af79a7c13cad2a0.html