At Realize Live Europe, we sat down with Siemens Digital Industries CEO Tony Hemmelgarn to get his views on how the Siemens platform is evolving; the integration of AI in product development software and what this means for your software, and how he sees the CAD market playing out over the next few years<\/p>\n
DEVELOP3D \/\/ How has the integration of Altair into the Siemens platform gone since the acquisition<\/a>?<\/p>\n Tony Hemmelgarn: Then we have some pull-through effect between customers looking at Teamcenter, for example, today that maybe weren\u2019t using it so much on the Altair side, or like I said, existing PLM customers that suddenly now are looking at what we\u2019re doing with SimSolid. I think that\u2019s all good. I think we\u2019re well into the integration<\/a>, we\u2019re meeting all the targets and everything we said we would do so far.<\/p>\n \/\/ The big message at Realize Live has been about the strengths of using the full Siemens pipeline, from design through to manufacture. How well is that going to connect with software and tools outside the Xcelerator Platform?<\/p>\n Since I\u2019ve been involved with this, we\u2019ve been open \u2013 we manage all kinds of data with Teamcenter<\/a>. Are there certain things we can\u2019t do with third-party products in place? Yes, because of either one of two reasons: they don\u2019t have the capability like we do, or they\u2019re not open enough to be able to do that right. And so what we say is we\u2019re open, we\u2019ll do all these things now.<\/p>\n Do we have a better integration between our own products? Of course we do. So the customer has to evaluate whether that benefit is enough for them. And we\u2019ve got a long history of that happening.<\/p>\n I doubt any of our competition says they\u2019re closed, but come on, it\u2019s a pretty simple thing to see the way some of them work and how they treat their customers, what they do with forcing them to say, \u2018if you\u2019re going to use my CAD tool you\u2019ve got to use my data management tool\u2019, right? We don\u2019t do that, and so we will stay open, and it\u2019s up to the customer to determine if there\u2019s enough value in integration for them to use the rest of our portfolio.<\/p>\n But it\u2019s very rare to find a customer to use 100 per cent everything from us. They\u2019re going to either have homegrown things, or maybe some third-party application that we have to integrate to, and that\u2019s been our approach for the last 25 years, if not longer.<\/p>\n \/\/ How do you view then the overall design and engineering software landscape, especially with the increasing use of AI<\/a> \u2013 when CAD and AI have previously struggled to work together?<\/p>\n We\u2019re showing that it can, but look, I would argue there\u2019s already been a lot of free CAD tools and other things out there. There are free kernels that you can use. Is that really what the world needs? No.<\/p>\n The value is not in another modeler, the value is in how we can link that LLM to the CAD tools that are there, right? And then the question is, are you open enough to be able to do that? Do you have enough APIs, and so forth. And luckily, we\u2019ve developed NX<\/a> from the beginning to be able to do that. So, Designcenter<\/a> has all of these APIs.<\/p>\n We have demos today where we show a rocket modelled in NX. We linked it up to Claude, and we asked \u2018Can you tell me everything you know from this rocket?\u2019. All it had was geometry and relationships between the geometry, and based on that it was able to calculate oxidation rate, payload capacity, all these types of things.<\/p>\n We didn\u2019t have that in our model, we had the geometry, the relationships, the design, everything else. It linked it to its general knowledge about rockets, was able to figure that out. And then we said, okay, change the payload capacity, increase it by 50%. The model automatically updates based on that.<\/p>\n Can you trust all of that? Maybe, maybe not. But the point is, the value wasn\u2019t in another CAD tool. The value was in how closely we were able to link a very, very good existing CAD tool to an LLM model to be able to drive it and do things with it, right. And so, that\u2019s what we see as being AI driven.<\/p>\n \/\/ Is today\u2019s move towards embracing AI the biggest shift the industry has faced?<\/p>\n With customers, every single meeting goes to AI pretty quickly because of the internal pressure they have as well.<\/p>\n There\u2019s a lot of noise out there. Everybody says, \u2018Well, let\u2019s go look at Palantir and see what it can do\u2019. And then I\u2019m hearing from a lot of customers that have gotten into this, they realise, \u201cWhoa, wait a minute, this is costing me a fortune! I have to go to Palantir every time? I\u2019m locked in cement, I can\u2019t go anywhere else!\u201d And then we give them an alternative.<\/p>\n There\u2019s other things you can do that bring value right away. I\u2019m not saying Palantir doesn\u2019t have value, it\u2019s just I don\u2019t know how much value it is fanning and handling in engineering and manufacturing where you need you need deterministic answers and not probabilistic answers of what\u2019s going on.<\/p>\n I think we\u2019re starting to see a little bit of an awakening in customers to say, \u2018yeah, we\u2019ve heard the hype, whatever, now let\u2019s get back to practical use cases\u2019, and I\u2019ve heard that a lot at this event. What they like about what we\u2019re presenting is we\u2019re not giving them this song and dance story, we\u2019re showing real applications working today.<\/p>\n \/\/ What is AI going to change in how users use Siemens software?<\/p>\n I think the thing that it is not going to change is the core engineering physics and the things that are in our products. What will change is how you access it. Back to the rocket example that we have, you\u2019re going to have to pay for the usage for that [AI] tool to drive NX, right? There\u2019s going to be a like a token type concept to pay for that, right?<\/p>\n So maybe you don\u2019t sell a licence, but you sell tokens to be able to have that, so that the system is doing that work at night, while you\u2019re sleeping. And it uses the tools to do that, right? I see there\u2019s some transition that would happen there, and none of us know exactly what that looks like going forward.<\/p>\n \/\/ Will tokenisation remain a key factor?<\/p>\n There are the tokens you hear about from the large LLMs, and how they charge for their token usage. Ours is a little bit different. Ours is value-based token licensing<\/a>, which means today, if you have NX and you want to use some side product that we have, like Die Design, we might say, if you buy 100 tokens, you have three users that can use Die Design at any given time. If you need five users, you got to buy more tokens to be able to use that.<\/p>\n Our approach with the idea of an LLM driving CAD, like Designcenter, is we\u2019re going to charge for the flow of information through that. We\u2019ll do that through the same token approach. You might say, I want to buy 500 tokens to be able to support AI tools driving my CAD tool, and we consume some of those tokens to be able to do that. The value of that is you don\u2019t have unbridled consumption, right? Because that\u2019s what you\u2019re hearing today, some CIOs are saying, \u2018Holy shit, all of a sudden my team went and used all these tokens, and I\u2019ve got a $50 million bill that I didn\u2019t know was coming\u2019. You would buy the tokens in advance, so you know you\u2019re not going to go over,<\/p>\n So I think the model we use for tokens fits very well to what we would apply to AI consumption.<\/p>\n \/\/While today licences are your business model, do you see tokenisation taking over \u2013 because now your entry level product has had the roof taken off, and you can add in multiple functionalities, you\u2019re no longer working through Solid Edge until you get to the point where you then need to upgrade to NX?<\/p>\n Remember, we can do that, they can\u2019t, because Solid Edge and NX are the same kernel, and go up and down easily, back and forth. [Dassault Syst\u00e8mes] Solidworks and Catia, two different kernels. [PTC] Onshape to Creo? Two different kernels. What do you do? I\u2019m stuck, right? In fact, we can upgrade a person from Onshape or Solidworks easier to Designcenter than they can internally with their own products.<\/p>\n I guess what I\u2019m saying is, when we talk about what we see coming with AI, is will there be more licensing being bought to drive it through AI versus a licence to you as an individual? I don\u2019t know. I don\u2019t think anybody really knows.<\/p>\n The argument is some people might say, well, you might sell a lot less licences in the future because you don\u2019t need as many, because the [software\u2019s] working around the clock, so you\u2019re paying instead for tokens to be able to do that. We\u2019d still get revenue for that, and what that balance looks like, I don\u2019t know, but I would also argue that most customers are not talking to us about how they reduce licences, they\u2019re talking about how do they go faster, right?<\/p>\n So, back to the rocket example; if it builds that rocket, you\u2019re not just going to accept that rocket. Your engineers are going to want to interrogate that thing to make sure it\u2019s what they think it should be, so they still have a licence to go do that, it\u2019s just it did a lot of work for them before they got to that, so can they go a lot faster than what they\u2019re doing.<\/p>\n \/\/ How long do you think it\u2019ll be before companies are buying licences just for AI agents to use?<\/p>\n I can\u2019t give you a name, but we already have customers reaching out to train LLM models for their usage<\/p>\n \/\/ How do you see the CAD market playing out?<\/p>\n I can see the continuation of EDA and PLM<\/a> coming together more and more of that, because, like, I said yesterday, I mean, we started this, and people question it at first, and now it\u2019s like, oh yeah, yeah, we see all of this, and I think that\u2019s coming together more rapidly than we thought.<\/p>\n Some of the analysts tell us the next big thing is, how do you better integrate supply chain-type tools into this\u2026What we\u2019ve done with a Supplyframe \u2013 and the integration that we did with Xometry<\/a> and Volition \u2013 we\u2019re looking at how do we support this idea of supply chain interaction and the design process.<\/p>\n You\u2019re designing the part in real time, you\u2019re seeing cost of that part, that\u2019s quite interesting for a designer to be able to do, and this isn\u2019t a guess, this is real time what it\u2019s going to be costing you to produce.<\/p>\n With operations software\u2026 We see a lot going on there. The Pepsi example I gave \u2013 the simulation of the plant, viewing of the plant, but also what we\u2019re doing with an executable digital twin<\/a> driving the plant. Those are all things I think will build out over time.<\/p>\n \/\/ How about the Viz and XR elements of design?<\/p>\n
There\u2019s still integration work we\u2019re doing and other types of things, but from a sales and go-to-market point of view, the customers are quite excited. The SimSolid<\/a> and the PhysicsAI<\/a> capabilities that we have, those are two big key differentiators of what\u2019s happening in our space, so that\u2019s gone well.<\/p>\n