Advantech: evolution of

its IoT ecosystem

strategy
PRESENTED BY:
GROUP C5
 CASE OVERVIEW
KC Liu established Advantech in 1983.
With a total asset value of $ 10 billion, the corporation is one of the

largest manufacturers in the traditional industrial computer industry.

It develops into the sectors of smart solutions related to the Internet of

Things ("IoT") to enhance efficiency and diversify revenue sources, and

characterizes its vision as "Enabling an Intelligent Planet"

With an increase in the number of IoT devices, the worldwide IoT

market has been increasing in recent years.

 CASE OVERVIEW
Advantech focuses on R&D efforts with certain R&D centers across

the world, as well as M&A options that will help the company's current

IoT advancements.
KC Liu has successfully integrated innovation in management

concepts as Advantech's current operational philosophy, including Jim

Collins' Hedgehog concept and Kazuo Imamori's Amoeba Management

model.
However, Advantech has a number of flaws that need to be addressed,

including a lack of platform provider services, low brand awareness,

and an undiversified revenue stream.

 OBJECTIVES
KC Liu, as a founder, has implemented various management principles,

including the hedgehog concept, Amoeba management, and IMAX

management.
KC Liu also begins the co-creation model, which works up with

traditional industry businesses to build new IoT technologies in smart

cities, smart retailing, smart transportation, and other areas, with a

long-term vision.
The notion is that if Advantech maintains its co-creation strategy, new

economic prospects will emerge in the IoT era.

 EVIDENCE SUPPORTING THE OBJECTIVES
Integration of the IoT ecosystem into network infrastructures has

become a top priority for many enterprises across industries.

In addition, smart houses with automatic lighting or entertainment

systems have recently become more popular.

As a result, IoT has had an impact on every industry today, assisting

businesses with automation techniques and operational cost

optimization.
Advantech must use the co-creation model to gain competitive

advantages by investigating new business prospects in other industries

such as healthcare, transportation, and smart home.

Advantech’s Hedgehog Concept
 STRENGTHS WEAKNESSES

Advantech is a leading company in traditional Platform providers capture about 50% of the total

industrial PCs with an estimated market share of value in terms of the IoT value chain, but Advantech

34% in 2017 (Advantech, 2019). does not have many services compared to other big

names such as Amazon, Microsoft, or Google

Advantech focuses on R&D activities, which (Advantech, 2019).

accounted for 8.2% of total revenue in 2018 with
R&D centers in Taiwan, China, Germany, and the Advantech's revenue stream does not diversify since

United States (Advantech, 2019). 87% of its total sales are from its core business in

industrial computers and embedded boards

Advantech is active to look for M&A opportunities (Advantech, 2019).

to accelerate the development of IoT ecosystems
such as acquiring B+B SmartWorx in 2016, investing The current rule in Advantech's co-creation model,

which teams up with one company in one industry,

in Kostec, healthcare monitor provider, and

might hinder the long-term plans to scale up its IoT

Winmate Communication Inc in 2017 (Advantech,

services in different industries such as healthcare,

2019).
transportation, and smart cities.
Advantech effectively controls environmental
Since Advantech is a B2B business, people do not have

pollution that helps to maintain its reputation such

much information about its brand on the internet like

as zero penalties from the government, eco-

Microsoft or Google.
friendly product
 Opportunities Threats

By 2019, 25% of businesses are using IoT

According to the IHS report, the traditional industrial
technologies. The total number of IoT-
PC market only generates single-digit growth

connected devices worldwide is expected to be

annually with a 4% CAGR in the 2013-2022 period due

increased to 43 billion by 2023 (Frederik et al.,

to the growth of loT ecosystems (Advantech, 2019).
2019).
Many big companies build strategic alliances to

accelerate the growth of IoT ecosystems such as the

The global IoT market is predicted to grow

partnership of Alibaba and Siemens on MindSphere

from $917 billion in 2020 to $1,994 billion in

launching, which plays a key role in the

2028 at a CAGR of 10.2% (Business Wire, 2020).
industrial cloud platform (Computer World,

Manufacturing is the largest industry from the

Coronavirus pandemic affects global supply chains

perspective of IoT spending (I-Scoop, n.d.). with many lockdown factories across

IoT has become a major priority for many

industries (World Economic Forum, 2020). Traditional

companies across industries to integrate IoT

motherboard makers are taking the low-end

ecosystems into the network infrastructures

embedded market share
(Gyarmathy, 2020).

 Recommendations
The company should diversify its revenue stream by expanding its business to the

B2C model.
The New B2C model will give the company opportunities to promote its brand

through marketing activities so that the products can reach the end-users.
Advantech should develop a product in control and connectivity for short-term

plans.

The company can take advantage of its current resources with some relevant

services such as smart street lighting control, industrial wireless, gateway, and

wireless sensing solutions.

To enter this new market, Advantech has to invest in R&D and hold many co-

creation sessions with potential customers.

Advantech can introduce the new product and get feedback after the customer

testing process.
IMPLEMENTATION PLAN

 Conclusion
Advantech has great potential to accelerate in the IoT

industry.
Advantech should expand its business in the Smart Home

sector with a B2C business model.

By investing in R&D, hosting co-creation sessions with

potential customers, and running marketing campaigns,

Advantech will have more opportunities in this new industry.

THANK YOU
MANISH KAUSHIK(21PGDM123)
RUPALI PAL(21PGDM127)
RAKSHIT BHATIA(21PGDM128)
SHREYAS TEWARI(21PGDM135)
SUPREETI GHOSH(21PGDM141)
VISHAL SANKRIT(21PGDM147)