Embracing the software-defined transformation

The transformation toward software-defined systems is fundamentally reshaping industries. This shift represents a trend where intelligent systems provide competitive advantages and differentiation.

Automotive

“The automotive industry's future belongs to companies that align their SDV strategies with operational reality, whether that's scaling through robotics or honest capability assessment.”

Maite Bezerra, Senior Principal Analyst, Software-Defined Vehicles (SDVs)

Software-native organizations that operate at consumer industry pace will continue to dominate software-defined vehicle innovation. However, while companies such as Xiaomi achieve profitability and others such as Xpeng and Rivian make progress toward positive EBITDA, scalability will remain a challenge in the near term. Consequently, they will increasingly leverage robotics, including humanoid robots, as natural extensions of their AI platforms, seeking to monetize their software capabilities beyond the automotive sector.

Simultaneously, incumbent OEMs face a critical decision point: continue costly attempts to replicate Tesla's software-first playbook, or pivot toward realistic SDV strategies aligned with their operational capabilities.

Those choosing the former will face mounting financial pressure and launch delays. Successful incumbents will either establish separate, fully independent greenfield operations or define contextually appropriate SDV maturity targets based on honest assessments of current capabilities, brand positioning, target customer segments, and competitive differentiation.

This research is taken from:

Digital Mobility Intelligence Service

Displays

“Software-defined displays and AI-enabled visual experiences are transforming screens from passive output devices into intelligent, adaptive interfaces.”

Jerry Kang, Practice Leader, Emerging Display Technologies

Software-defined capabilities now enable dynamic optimization, content-aware adjustments, and AI-powered visual processing, making displays integral to both AI input and output. As AI becomes ubiquitous, displays are following suit by becoming smarter and more adaptive.

Examples include automotive cockpit displays that adjust to lighting and driver focus, and smart signage that tailors content based on viewer analytics. Technologies like Mini LED and OLED, with zone-based and pixel-level control, allow software to optimize power usage, improve contrast, and extend panel lifespan through intelligent pixel management.

By 2026, smartphone displays will become more transformable to better integrate with AI applications, with OLED and flexible display technologies playing a key role. Manufacturers are working to balance enhanced picture performance with efficient power consumption, ensuring these advancements complement each other. Success requires display makers and OEMs to develop software competencies alongside traditional manufacturing expertise, creating ecosystems that deliver ongoing value through firmware updates and feature enhancements.

This research is taken from:

EV Charging

"The bidirectional connection of vehicle batteries to the power grid can stabilize local power grids, turning the EV from a simple load into a software-defined, mobile energy storage unit."

Stephanie Wu, Senior Analyst, EV Charging

The mass adoption of electric vehicles (EVs) is driving the convergence of automotive and energy sectors through vehicle-to-grid (V2G) technology. V2G requires sophisticated, software-defined energy management platforms that communicate bidirectionally with grid operators to manage charging and discharging based on real-time needs. This software layer transforms the EV battery into a dynamic, dispatchable grid asset for services like peak shaving and frequency regulation.

For automakers and charging providers, the competitive edge shifts from hardware features to the intelligence, interoperability, and monetization potential of their embedded energy management software.

This research is taken from:

EV Charging and Smart Grid Intelligence Service

Manufacturing Tech

“SDA and SDM are quietly reshaping manufacturing, driving software-led flexibility and resilience."

Anna Ahrens, Principal Analyst, Manufacturing Technology - Digital Factory

Software-defined automation (SDA) and virtual PLCs (vPLC) are emerging as foundational enablers of the software-defined manufacturing transformation, turning hardware-centric systems into flexible, intelligent, and remotely manageable production assets. These technologies exemplify the shift toward virtualized, software-led operations that enhance operational flexibility, scalability, and resilience.

The manufacturing industries face pressures to modernize to become agile and adaptive, using control virtualization primarily for testing, simulation, commissioning, and updates, but also integrating software-defined approach on orchestrating layer.

Successful implementation demands infrastructure readiness, workforce training, and system redesign. Initial capital expenditure is significant, but benefits accrue over time. End-market demand is emerging rather than mass-scale, highlighting the need for strategic, system-level decision-making and education on total cost-of-ownership advantages.

vPLC and SDA solutions are complementary, not replacement technologies in the near term. This hybrid approach allows manufacturers to incrementally embrace software-defined control, reducing risk while building resilience and operational intelligence across the production ecosystem.

This research is taken from:

Digital Factory Intelligence Service

Physical Security

"Physical security is transforming from hardware-centric surveillance and access systems into software-defined platforms where AI-powered video analytics, cloud-based access management, and integrated security operations centers create intelligent, proactive security ecosystems”

Bryan Montany, Principal Analyst, Physical Security

This evolution fundamentally expands stakeholder involvement beyond dedicated security personnel to encompass human resources, facility management, IT departments, and business administrators.

Access control software has become a critical occupancy tracking tool. The integration with occupancy sensors and building management systems creates comprehensive platforms that serve facility managers monitoring space utilization, HR departments managing employee access, and IT specialists ensuring system interoperability. Cloud-based software licenses represented 31.5% of access control revenue in 2024 and are projected to reach 42% by 2029.

Generative AI and agentic AI systems are fundamentally reshaping operations, enabling security operators to use natural language prompts for gathering logs, analyzing video clips, building contextual understanding from raw data, and receiving automated action suggestions within unified interfaces. Vision-language models trained on image-text pairs are transforming reactive security into proactive, data-driven decision-making platforms that deliver continuous capability enhancement through AI model improvements and ecosystem integrations.

This research is taken from:

Access Control Database – 2025 Analysis

Semiconductors

"As vehicle software platforms continue to transform in 2026, the industry faces a paradox: unprecedented opportunities for innovation coupled with the mounting complexity of integrating multiple intelligent systems into one seamless experience.”

Sang Oh, Principal Analyst, Automotive Semiconductors

In 2026, intelligent systems will play a crucial role in transforming vehicles into continuously evolving software platforms. Competitive advantage will be driven by the integration of advanced AI-powered services, robust cybersecurity and OTA capabilities, differentiated UI, and efficient hardware-software co-design. These trends will push automotive OEMs to collaborate with multiple advanced component suppliers, enabling heterogeneous platform solutions across diverse vehicle domains and functions.

At the same time, leading vendors such as NVIDIA will continue to deepen direct collaborations with OEMs and Tier-1s. System-on-chip providers will also expand partnerships with software, middleware, and cloud ecosystem.

The automotive industry will also continue to transition toward zonal vehicle architectures, which will open up new opportunities for a broader range of vendors. However, this shift will also introduce challenges. Integrating multiple processor platforms increases software complexity and requires advanced virtualization, domain partitioning, and careful management of latency and data throughput to ensure seamless system performance.

This research is taken from:

Smart Buildings

"The building automation industry is undergoing a revenue revolution, as the balance of power shifts from hardware-driven sales to software-defined value creation."

Lee Jia Ying, Senior Analyst, Smart Buildings

The industry's transition from equipment-heavy revenue models toward software-centric platforms marks one of the most consequential evolutions in its history. Omdia has observed leading building automation companies aggressively repositioning themselves as software-first organizations, moving away from traditional equipment sales toward subscription-based ecosystems that deliver ongoing performance optimization, energy insights, and predictive maintenance. This shift reflects their recognition that recurring revenue from digital services offers superior scalability and customer lifetime value.

This research is taken from:

While incumbents like Honeywell, Schneider Electric, Siemens, and Johnson Controls dominate hardware, they face mounting disruption from agile software startups leveraging AI, cloud analytics, and digital-twin architectures. These challengers exploit shorter development cycles and lighter capital requirements to innovate faster, unburdened by legacy manufacturing constraints.

This pivot represents more than technological evolution; it's a fundamental business model transformation that unlocks recurring revenue streams, deeper customer relationships, and the potential to redefine competitive advantage in the digital age.