Microsoft Corporation (MSFT) has announced that Azure Digital Twins is now generally available. This is an Internet of Things (IoT) platform, a value-added application from Microsoft's Azure cloud computing service that supports advanced modeling of complex environments. In a companion announcement, Microsoft and Johnson Controls International PLC (JCI) are collaborating "to digitally transform how buildings and spaces are conceived, built, and managed."  

  • Microsoft Azure Digital Twins is now generally available.
  • This is an IoT platform that supports the modeling of complex environments.
  • Microsoft and Johnson Controls are collaborating on smart buildings, with Azure Digital Twins being integrated with Johnson's OpenBlue.

Azure Digital Twins in Brief

Microsoft explains: "Today, organizations are showing a growing appetite for solutions that provide a deeper understanding of not just assets, but also the complex interactions across environments ... To really understand these intricate environments, companies are creating digital replicas of their physical world also known as digital twins."

Microsoft continues: "... modeling entire environments can be complicated. It involves bringing together the many elements that make up a digital twin to capture actionable insights. However, siloed data across these experiences makes it challenging to build digital twin solutions that bring those models to life, and doing so in a scalable, secure way is often time-consuming."

Meanwhile, per Microsoft: "Azure Digital Twins is an industry-first solution. It breaks down silos within intelligent environments by fusing data from previously disparate devices and business systems."

Collaboration With Johnson Controls

Microsoft states: "At the center of this collaboration is a holistic integration between [Johnson Controls'] platform, OpenBlue Digital Twin, and Azure Digital Twins. This partnership helps enable integrated building management, and the platform serves as the foundation for energy and space optimization, predictive maintenance, and remote operations."

Per Microsoft, Johnson Controls designed its OpenBlue Digital Twin platform with "smart buildings and spaces in mind, enabling and unifying all aspects of an intelligent building: security, employee experience, facilities management, sustainability, and more."

Johnson Controls says: "OpenBlue is a complete suite of connected solutions that delivers impactful sustainability, new occupant experiences, and respectful safety and security ... It also features a suite of tailored, AI-powered service solutions such as remote diagnostics, predictive maintenance, compliance monitoring, advanced risk assessments, and more."

Microsoft indicates that the integration of Johnson Controls' OpenBlue Digital Twin and Microsoft's Azure Digital Twins will "enable users to digitally manage physical spaces, maximize efficiency, support COVID-19 safety and pilot new solutions." Additionally, it "will support efficient and environmentally friendly design, construction and ongoing operation of buildings and spaces through modeling, analytics and digital control mechanisms."

Significance for Investors

According to a 2019 report from strategy consulting firm McKinsey & Company, the proportion of businesses using IoT technologies nearly doubled from 2014 to 2019, from 13% to 25%. Per the same report, information technology consulting firm Gartner, Inc. (IT) projects that nearly 43 billion devices worldwide will be IoT-connected by 2023, almost triple the number in 2018. Additionally, McKinsey cites a forecast from market intelligence firm International Data Corporation (IDC) that investments in IoT technology will increase by 13.6% per annum through 2022.

Market intelligence and advisory firm Mordor Intelligence projects that global IoT spending will rise from $690 billion in 2019 to $1.256 trillion in 2025, representing a compound annual growth rate (CAGR) of 10.53%. Spurring this growth are: "the development of wireless networking technologies, the emergence of advanced data analytics, a reduction in the cost of connected devices, [and] an increase in cloud platform adoption."

Against this background, Microsoft is positioning itself to be a major player in a rapidly growing market. Moreover, the collaboration with Johnson Controls, a leader in smart buildings technology, puts Azure Digital Twins in a highly visible segment of the IoT market, one which also offers key political positives, given governmental support worldwide for energy-saving green technologies as well as technologies that promise to control the spread of COVID-19.