In this research note, we examine the Buildings business of Siemens, which operates within the Smart Infrastructure (SI) division, based on their Q4 press conference, Capital Markets Day presentations and building technology-related activities throughout 2021.
The SI portfolio addresses the complete value chain across buildings and electrification, increasingly growing together at the grid edge. Their smart building and electrification products, systems, solutions and services improve energy and resource efficiency, facilitate the transition towards renewables and decentralized power generation while ensuring a resilient and reliable power supply.
The Buildings business is the largest of 3 segments in the SI portfolio, offering:
- Integrated building management systems and software
- Heating, ventilation & air conditioning (HVAC) controls
- Fire Safety/Security products and systems
- Solutions and services, including energy and performance services.
The SI division reported €15 billion in revenues, year ending 30th September 2021. While Siemens does not report financials for its Buildings business, the buildings portfolio accounted for €6.7 billion or 47% of SI 2020 revenues with the remainder split between the other two segments, electrical products (26%) and electrification (27%). Memoori estimates that 2021 Buildings revenues amounted to around €6.9 billion.
The buildings business continued some M&A activity in October 2021, with the bolt-on acquisition of French startup Wattsense, a hardware and software company that offers a plug-and-play IoT management system for small and mid-size buildings, expanding Siemens’ building products portfolio. Their IoT solution enables the adoption of energy management practices in facilities with little or no building management system technology, meeting the needs of building professionals seeking efficiency and sustainability.
Siemens also announced in April 2021 that it was merging its two previously acquired subsidiaries, Comfy App and Enlighted into one entity, under the leadership of the current CEO of Enlighted. The rationale for the merger was the combined view of data and insights that each company could bring to workplace management.
Another indication of Siemens’ focus on the under-served small and medium-sized buildings market is its participation in the Series A funding round of 75F, the developer of an IoT-based building management system. 75F designs and manufactures an out-of-the-box, vertically integrated solution that the firm claims is more affordable and easier to deploy than anything on the market today.
Other next47 investments in the building technologies space in 2021 include leading a $40 million Series B funding round in Brilliant, a smart home system developer. A previous investment in Verkada, a video surveillance systems startup, could be one that Siemens is regretting, due to the damning IoT security breach in March 2021 and the continuing negative publicity around its doubtful business practices this year.
Partnerships and alliances continued to be a theme for the buildings business as it extended its ecosystems and networks with both startup companies and established players. A snapshot of some of the major collaborations are described below.
In June 2021, Siemens SI in Germany announced a strategic partnership with Meteoviva , a German energy management software supplier, which offers an AI-driven autonomous building management solution for energy-efficient operations. Meteoviva Climate provides optimally prepared data based on a building model, which is incorporated into the building management system.
In August 2021, Siemens SI in the US and Irisys, a provider of people counting and occupancy monitoring solutions, announced that the Irisys True Occupancy solution has joined the growing Siemens Connect Ecosystem The Siemens Ecosystem pulls together the tools, processes, training, and support necessary for third-party solution providers to create solutions that integrate with Siemens’ platforms, including its Building Management System Desigo CC, the APOGEE Automation System, and related platforms.
In a somewhat surprising alliance between Siemens Middle East and a Workplace Experience platform competitor to Siemens Comfy App, a strategic partnership with Smart Spaces, a UK startup offering a smart building operating system and app was announced in November 2021. The partnership will see the transformation of the University of Birmingham’s Dubai presence into the "world’s smartest educational campus" through the integration of Smart Spaces’ smart building platform.
As a major technology player in the buildings sector, Siemens SI will continue to focus on four core technologies – Cyber Security, Data analytics & AI, development of building operations Digital Twin as part of a new smart building software suite and Connectivity & Edge solutions.
Overall, Siemens Smart Infrastructure has committed to doubling its digital revenues from EUR 700 million today to EUR 1.5 billion by 2025, so we can expect to see an acceleration of digital transformation initiatives driven by the Buildings business for its core commercial and industrial customers.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.