Siemens Snaps Up Mendix; Low-Code Platforms Enter New Phase – Info AI

Siemens announced acquisition of Mendix, a leading low-code development platform, for $730 million in cash, or 7-8 times annual revenues, we estimate. Yes, that's the $83 billion industrial powerhouse, Siemens. Mendix will join Siemens' $13 billion Digital Factory software division, but operate independently and as it did before the acquisition (scheduled to close in October 2018).

This is the third financial event involving a low-code platform vendor and endorsing this market's high growth potential and rapid consolidation. Forrester estimates the market is about $4 billion, growing by 50% annually.

  1. Appian IPO'ed in May 2017 with revenues of about $150 million. On Aug. 1, 2018, Appian's market valuation sat at just under $2 billion.
  2. In July 2018, KKR and Goldman Sachs invested $360 million in OutSystems, a vendor with an estimated $100 million in revenues.
  3. And now Siemens is buying Mendix for a substantial multiple of its annual revenues.

Along with Salesforce, the leading low-code development platform for professional developers by revenue (in our estimation), Microsoft PowerApps for business developers, and ServiceNow, a fast climber among these vendors, these five vendors are separating from the dozens of others in the market. Those vendors will now have to find niches in low-code development, of which there are many including Internet of Things apps, AI, Blockchain, and digital process automation.

In acquiring Mendix, Siemens expands its software strategy outside of industrial applications. The company says Mendix will be the foundation for a growing portfolio of SaaS applications for industrial companies. But according to Mendix, Siemens will measure its ability to accelerate its growth in all industries worldwide, and will invest to support that growth. Longer term, Siemens plans to create a platform suite centered on Mendix and its MindSphere IoT platform to enable new kinds of applications that mix AI, real-time data and events about the physical world, and the business patterns that Mendix specializes in.

This is a powerful vision of applications and automation that many vendors share, but few have the assets to deliver. The fact that Mendix will operate within a $13 billion division rather than get lost in an almost $100 billion behemoth gives us hope, but Mendix and Siemens face much technical integration and market expansion work ahead.Siemens has a presence in IoT application development, but is is not a recognized brand among business-software developers.

Will Mendix really continue to operate independently? IBM and SAP, its biggest ISV partners, certainly hope the answer is “Yes,” as do customers that have praised Mendix' support. Time will tell, but Mendix's management team will continue to lead the firm. Also, Siemens has a precedent in its Mentor Graphics group, a big CAD software provider that has maintained its brand identity and independent operations as part of Siemens.

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Article Prepared by Ollala Corp

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