HITACHI: THE LUMADA I T PLATFORM - Analysys …€¦ · IoT platform market by promoting its...
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Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018
COMPANY PROFILE
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HITACHI: THE LUMADA IOT PLATFORM
Ahmed Ali
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018
Founded
Hitachi: 1910
Hitachi Data Systems: 1989
Hitachi Insight Group: 2016
Hitachi Vantara: 2017
Offices Headquarters: Tokyo, Japan
EmployeesConsolidated number of employees: 303 887 (March
2017)
Regional focus Global
Revenue USD84.8 billion (JPY9162 billion) (FY2016)
Selected IoT
customers
Caterpillar Marine, Curtin University, Daicel, Daikin,
Okuma, Penske
Selected IoT
Partnerships
Atos, BT, Capgemini, Cisco, DGI, DXC Technology, GE
Healthcare, HCL, IBM, Infosys, Intel, M1, Microsoft,
Oracle, SAP, Telus, T-Systems, Tata Consultancy Services,
Tech Mahindra, VMware, Wipro
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Figure 1: Hitachi company factsHitachi is a multinational corporation that contains groups of
companies operating across different industries and technologies
including consumer electronics, power systems and information
technology systems.
Hitachi’s first move into information technology was in 1989 when
it established Hitachi Data Systems (HDS) as a mainframe
company. In 1999, HDS expanded into the storage business.
Over the years, the company has built and strengthened its data
management and analytics capabilities through acquisitions such
as oXya, Pantascene and Pentaho, as well as internal
development. As of 2016, Hitachi has 2700 research and
development employees and its spend on R&D was equivalent to
3.5% of its revenue in FY2016.
The Hitachi Insight Group was established in May 2016 as the
group’s Internet of Things subsidiary with the Lumada IoT platform
as its core solution. The division is built on and supported by other
Hitachi platform solutions such as the Pentaho Big Data platform
and the Hitachi Content Platform (HCP).
Hitachi merged its platform businesses HDS, Hitachi Insight Group
and Pentaho to form Hitachi Vantara in September 2017, to offer
solutions and services for digital transformation including IoT, big
data, analytics and machine learning. The Japanese IoT market
remains under Hitachi’s management while its worldwide
business is managed by Hitachi Vantara.
Company summary
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018
Figure 3: Hitachi’s revenue by region, worldwide, FY 2016
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Hitachi has nine business segments; Social Infrastructure &
Industrial Systems (23% of revenue), Information &
Telecommunication Systems (20%), High Functional Materials &
Components (14%), Electronic Systems & Equipment (12%),
Automotive Systems (10%), Construction Machinery (7%), Smart
Life & Eco-friendly Systems (6%), Others (6%) and Financial
Services (2%).
In FY2016, ending in March 2017, Hitachi’s revenue fell by 9% YoY
to USD84.8 billion because of the lower sales in the Information &
Telecommunications Systems, High Functional Materials &
Components, Smart Life & Eco-friendly Systems and Financial
Services. Also, there was a significant 48% revenue drop in the
Others segment due to the restructuring of some units such as
Hitachi Transport System. The company’s revenues and profit
declined by 2% since 2013 (Figure 2).
Hitachi’s local market of Japan is the company’s biggest,
generating 52% of FY16 revenue. Almost 10% of the total revenue
came from China. Including the rest of the Asia-Pacific market,
Hitachi’s generated 72% of its revenue in the region.
North America and Europe sales made 12% and 11% of the total
revenue, respectively. With 2% YoY increase in revenue, Europe
was the only region that showed growth. This is because of the
increased sales in the Electronic Systems & Equipment segment
and the Social Infrastructure and Industrial Systems segment
which relates to the growth in the railway business in the region.
Figure 2: Hitachi’s revenue and gross profit, worldwide, FY2013–FY2016
Company summary: financials
89.5 90.5 92.984.8
23.1 23.9 23.8 22.0
0
20
40
60
80
100
FY13 FY14 FY15 FY16
(US
D b
illio
n)
Revenue Gross Profit
Source: Hitachi
52%
20%
12%
11%
5%
Japan
Asia
North America
Europe
Other regions
Total revenue:
USD84.8 billion
Source: Hitachi
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018 4
Hitachi’s main IoT offering is the Lumada platform which offers
device management, application enablement and analytics
capabilities. The platform also integrates with other Hitachi’s
platforms and products such as the IoT Appliance and Pentaho
Data Platform which provides advanced analytics capabilities.
Hitachi operates in the IoT edge and fog computing space with its
IoT Appliance. Supported by Hitachi’s server business, the IoT
Appliance brings computing and storage resources to the
enterprise with a preloaded Lumada platform.
Hitachi utilises the platform in different ways to generate revenue.
First, the platform is the key enabler for its co-creation business
where Hitachi works with partners to develop end-to-end IoT
solutions. Second, the platform is licensed separately based on a
PaaS model. Third, Hitachi uses the platform internally within its
units.
The co-creation approach allows Hitachi to use a range of its
services portfolio and be involved in different stages of the IoT
project development including business consulting, proof of
concept execution, commercial rollout and service management.
In FY2016, the overall Lumada business generated around
USD8.3 billion (JPY900 billion) in revenue. The company is
expecting the revenue to grow by 8% by FY2018, reaching more
than USD9.3 billion (JPY1 trillion).
IoT business overview
SIM management, subscription management
Huawei PartnersKey
Hitachi IoT Appliance
Lumada
Lumada
Industrial Energy Smart cities Partners’ apps
Pentaho (Analytics)
Co
-cre
ati
on
ser
vice
s
Fog and edge
computing
Connectivity
management
Device & Data
management
Application
enablement
Applications
Clo
ud
Ed
ge
Analysys Mason’s IoT
platform stackHitachi’s IoT platform stack
Figure 4: Hitachi’s IoT Platform stack
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018 5
Hitachi is trying to increase IoT platform revenues and move
away from relying on the co-creation services
Hitachi’s main IoT revenue stream is coming from services related
to partner co-creation and system integration rather than from its
platform sales. At the moment, Hitachi is trying to compete in the
IoT platform market by promoting its operational technology (OT)
expertise and integration services as differentiators. Targeted
customers in such scenarios will be customers with limited-to-
none IoT deployment experience.
The company, however, is aiming to expand on its platform-as-a-
service (PaaS) delivery model. Hitachi is planning for Lumada core
sales to become the main growth driver for Lumada business in
the next two years.
To do so, Hitachi is leading a campaign to demonstrate the
capabilities of its platform by increasing the number of IoT use
cases and diversifying them through collaborating with partners
as well as using the platform internally. The Lumada’s 270-
member development team is continuously collecting insight from
the platform current deployments to improve future collaborations.
Based on 203 Lumada deployments in FY2016, Hitachi identified
four primary reasons for customers to use the platforms. These
are to boost sales, cost optimisation, risk mitigation and cost
visualisation. By listing these different business benefits, Hitachi
expects to accelerate the market recognition of the platform.
The adoption of the platform by Hitachi’s own units is an
important part of the company’s IoT strategy as a technology
provider.
First, internal operations support expanding the use case library
and feed back into the overall platform development efforts. Also,
by leveraging the platform internally, Hitachi will raise the
confidence in the platform’s capabilities in industrial applications,
given the extent of Hitachi’s own industrial operations.
Second, the platform will help transform Hitachi’s own products
and operational efficiency which are integral parts of its overall
business expansion strategy across verticals and regions.
In vertical markets, Hitachi is targeting growth in four main
domains which are utilities, urban environment, power and energy,
and healthcare, public and finance services. Lumada is a key
enabler for the company to extract additional revenue from these
sectors based on the customised solutions.
Regionally, Japan has been Hitachi’s strongest market However,
the company aims to leverage Lumada to expand its business
globally outside Japan, focusing on Europe and North America
regions. Hitachi anticipates 15% and 13% growth in these regions
respectively by FY2018. Overall, the company plans to increase its
international sales to account for 55% of its total sales in FY2018
compared to only 48% in FY2016.
IoT strategic direction
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018 6
Figure 5: Hitachi’s key acquisitions and mergers, 2007–2015
Key acquisitions and mergers
Date Company Description
May 2015 oXya Founded in 1998 in France, oXya, provides cloud services and implementation solutions for users of SAP systems
including SAP HANA. oXya operates as a wholly owned subsidiary of Hitachi Vantara.
February 2015 Pantascene Founded in 2011 in the USA, Pantascene developed video and sensor interoperability solutions for security and public
safety applications. The technology is now part of Hitachi’s visualisation suite.
February 2015 Pentaho Founded in 2004 in the USA, Pentaho developed an open source big data integration and analytics platform. HDS
acquired Pentaho for an undisclosed amount as part of its move towards IoT. Pentaho is now the main analytics and big
data component in Hitachi Vantara.
August 2014 Sepaton Founded in 1999 in the USA, Sepaton offered hardware and software solutions and consulting services for enterprise
data protection, backup and recovery. The technology is now part of Hitachi Vantara’s Data Protection Solution.
September 2012 Cofio Founded in 2006 in the USA, Cofio offered solutions to unify and orchestrate data protection in the enterprise. The
technology is now part of Hitachi Vantara’s Data Protection Solution.
September 2011 BlueArc Founded in 1998 in the USA, BlueArc developed a unified storage solution for data-intensive applications. The solution
is now integrated into Hitachi Vantara’s Network Attached Storage (NAS) platform.
August 2010 Parascale Founded in 2005 in the USA, Parascale offered cloud storage solutions to ingest and store structured and
unstructured data at scale.
February 2007 Archivas Founded in 2003 in the USA, Archivas developed solutions that allow customers to manage and protect their online
content. The company was acquired for USD120 million and now is integrated into Hitachi Content Platform (HCP).
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018 7
Figure 6: Hitachi Lumada’s solution components
Product summary
Product Functions Description
IoT Platform • Device connectivity
• Data acquisition
• Data management
• Application enablement
• Edge analytics
• Analytics
• Machine learning
An open architecture platform that can be deployed on-premise, in the cloud or at the edge. Lumada provides
device management and connectivity capabilities like device on-boarding, device configuration, data
aggregation, protocol translation and information routing. Device data and metadata are exposed to the
applications, services and analytics engines through open APIs.
Through the studio component, the platform enables application development with a set of pre-built modules.
It allows developers to integrate with existing systems and applications. The platform analytics and rule
engines support advanced algorithms for machine learning.
Co-creation
Services
• Strategy analysis
• Proof of concept
• Planning, deployment
integration
• Production
• Service management
These services leverage Hitachi’s industry expertise to create tailored solutions for specific markets and
customers at different stages of IoT adoption. These include consulting and evaluation services,
collaboration on application and solution development, service deployment as well as service management.
Solution Cores • Industrial IoT
• Energy IoT
• Smart Cities
Pre-packaged solutions that provide sets of capabilities and support for certain verticals. Industrial IoT core
leverages analytics and machine learning to deliver smart manufacturing solutions such as Dynamic
Scheduling for production optimisation and Predictive Quality for predictive maintenance.
Energy IoT core utilises AI to solve financial, environmental and efficiency–related challenges in energy
sectors. It allows customers in the energy trading businesses (generation and distribution) to forecast prices,
predict demand and optimise production. It also provides solutions for customers on the receiving end to
reduce their energy consumption.
Smart cities focus on public safety and traffic management for public venues such as airports, hospitals,
transportation hubs and shopping malls through features like facial and object recognition, video integration
and streaming analytics. Related products and services include Hitachi visualisation suite, video management
platform and video analytics.
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018 8
Figure 7: Hitachi’s selected customers
Use cases
Customer Country Scope
Daicel Japan Daicel is a manufacturer of chemical products including cellulosic derivatives, organic chemicals, plastics and pyrotechnic
devices. The company experienced major recalls for its automotive airbag inflators, which caused Daicel to reconsider its
quality control system and look for ways to analyse the process and the formula data automatically to understand and then
prevent the root cause of the defects,
With Daicel, Hitachi developed an image analysis system that uses cameras to assess activities in the plant and connect
with other manufacturing execution management systems. The solution statistically compares real-time activities with
standard behaviour models that have been pre-defined. It allows the manufacturer to detect failures in the production lines
promptly and lower the risk of product recalls.
Penske USA Penske Corporation is a privately-held company offering diversified transportation services including truck leasing, retail
automotive, motorsports and logistics. The truck leasing division operates more than 240 000 vehicles across 1000
locations.
Penske wanted to develop a connected vehicle solution to improve their vehicles uptime and drivers’ safety. The company
also wanted to keep the customers updated about the status of their leased vehicles. Hitachi collaborated with Penske to
develop the solution combining their own expertise in the big data analytics and artificial intelligence through Lumada with
the customer’s expertise in the vehicles’ data and operations.
Curtin
University
Australia Curtin University covers 300 000 sqm of floor space and is one of the largest universities in Western Australia with more
than 60 000 students and 4000 staff members. The university wanted to deploy an IoT solution to manage its campus
operations and support building utilisation.
Through sensors distributed across the campus, the university will collect contextual data and trends about students and
staff behaviours such as study patterns and course attendance. These will also be supported by building insights such as
the building dynamics and the environmental health in the library. To enable this, Hitachi provided several components
including Pentaho analytics, video analytics and the visualisation solution.
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018
OPPORTUNITIES
THREATS
STRENGTHS
WEAKNESSES
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Analysis: strengths, weaknesses, opportunities and threats
▪ Through its parent company, Hitachi Vantara has easier access to the
wider Asia-Pacific market than other European and American platform
providers like GE and HPE.
▪ Hitachi has been selling platform solutions like Pentaho, HCP and the
Visualisation Suite and has established a customer base that Lumada
can expand into.
▪ Hitachi subsidiaries cover a wide range of verticals, products and
services which provide different channels to promote and sell Lumada.
▪ The industrial and manufacturing vertical is one of the most competitive
markets for IoT platforms. Hitachi is competing against established
vendors like GE Digital, PTC, Siemens and SAP, which are investing
heavily to assert their dominance in this space.
▪ Regional expansion will also be challenging for Hitachi as companies
such as PTC and SAP are well recognised in Europe and North America.
▪ Local dominance is not also guaranteed as companies such as NEC and
Mitsubishi Electric are also becoming active in Japan’s IoT platforms and
smart manufacturing markets.
▪ Hitachi’s experience in both OT and IT translates into strong capabilities
in device and data management, visualisation and real-time alerts.
▪ Hitachi is very active in branding itself as an IoT platform and solution
provider and is working to increase Lumada’s presence in the industry.
▪ The consulting, support and deployment services through the co-creation
offering can be an attractive proposition for companies starting their IoT
projects.
▪ Hitachi reveals limited information about its customers. The company
claims 203 use cases for Lumada but most of the involved customers
are not disclosed.
▪ The platform is not targeted at the wider application developer
community. Instead, customised applications are developed in
collaboration between Hitachi and its customers.
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018
Ahmed Ali (Senior analyst) is the lead analyst for Analysys Mason's IoT Platforms and Technology research programme. His research covers IoT
software, applications and solutions used by service providers to enable their IoT offerings. Prior to joining Analysys Mason, Ahmed worked as a
senior analyst at ABI Research for more than 3 years, where he was part of the next-generation mobile network research programme, covering
wireless and core mobile markets like small cells, in-building solutions, network virtualisation, unlicensed spectrum, and other 4G and 5G
technologies. Ahmed holds a master's degree in Electronics Communications and Computer Engineering from the University of Nottingham and
a bachelor's degree in Electrical Engineering from the University of Khartoum, Sudan.
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About the author
Hitachi: the Lumada IoT platform
© Analysys Mason Limited 2018
Analysys Mason’s consulting services and research portfolio
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Hitachi: the Lumada IoT platform
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MARCH 2018