GE Takes Leadership In Internet Of Things, Offers Long-Term Growth

GE is a “digital industrial company.”

You might have seen the ads on TV – “What’s the matter with Owen?” and “Sarah: Building Machines that can talk.” General Electric (NYSE: GE) is undergoing a major “bet-the-company” transformation. GE now calls itself the “Digital Industrial Company” and is making big bets on software-defined machines, also known as the Internet of Things (IoT). GE is betting IoT would offer considerable productivity gains, cost efficiencies, and new revenue opportunities across all its business units. According to Morgan Stanley, industrial companies will be among the first to adopt IoT technologies. GE is already leaps and bounds ahead of every other industrial and software company. In other words, GE has become the biggest force in this critical “trillion-dollar” market, My Update System.

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Re-organization at GE

GE has completely reorganized itself with the IoT-driven digital strategy at the organization’s core. Exhibit 1: Bill Ruh – GE’s Chief Digital Officer (Source: GE 2015 Annual Report) GE kicked off things by first hiring and appointing Bill Ruh as its Chief Digital Officer and opening a massive software development center in San Ramon, CA. The center at San Ramon has almost overnight grown to over 1,200 employees. Exhibit 2: GE Digital’s Headquarters, Bishop Ranch Business Park, San Ramon, CA. Source: San Francisco Business Times

GE’s IoT Goals

GE has stated the following goals for its digital business in 2016:

• Connecting 200,000 machines
  • Via installed base, digitizing engineering, commercial, sourcing, and services functions.
• Growing the Predix platform (more on Predix below) to 20,000 developers and 50 partners
  • GE is well on its way to hitting or surpassing this goal of 20,000 developers. As of July 2016, GE had nearly 12,000 developers working on Predix. It claims that, on average, 500 developers have signed up for Prix each week.
  • For example, TCS has over 500 engineers trained on Predix and is working on an innovative solution to manufacture gas turbines efficiently.
• Driving customer outcomes through over 100 innovative industrial internet apps

GE sees three vast areas where IoT offers value, and these areas go its application development:

• Real-time asset optimization
• Improved analytics and diagnostics
• Preventive maintenance

In a recent investor presentation, GE Aviation gave Emirates Airlines an example of 12 additional days of utilization based on monitoring provided by Predix. Exhibit 3: GE Aviation Benefits from Prix Platform (Source: GE Investor Presentation – Q2 2016).

GE Store

Borrowing an idea from Apple’s (NASDAQ: AAPL) app store, GE has created a “GE Store” store to transfer and trade ideas between various business units. GE has set goals for each business unit to contribute digital solutions to the GE Store. When other business units use the key from the store for customer applications, the business unit that contributed that solution shares in the revenue. GE Store is a way to set clear, accountable goals for all its business units. The various teams understand that digital is central to everything that they do.