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IIoT/Manufacturing


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Industrial IoT business

GE Creates New Independently Managed IoT Business

With its stock valuation continuing to sag, the company is looking for short-term revenue growth. To that end, it is creating a new stand-alone IoT software business.
  • Written by Brian Buntz
  • 18th December 2018

The realignment would free GE Digital from having to supply IT services to GE’s industrial divisions, as a Forrester post on CDO Trends explains. In addition, the realignment allows the company to create formal reseller agreements to capture the value of GE products using GE Digital’s Predix software. In the past, the revenue from such products was listed under individual GE business segments.

Perhaps the company’s biggest challenge, however, is to persuade customers, and possibly would-be acquirers, that the new GE Digital organization can move beyond the structural hurdles that have plagued the company since early 2017. In that time frame, GE saw its stock fall from around $30 per share to around to $7 by mid-December 2018 and has had three chief executive officers — Jeff Immelt, who left in August 2017; John Flanery, who departed in October 2018 and H. Lawrence Culp Jr.

In the industrial IoT realm, the company now faces stiffening competition from firms such as PTC, Siemens, C3 IoT, Bosch, SAP, Microsoft and Amazon. Complicating matters further, interest in the company’s industrial software Predix has tapered off considerably this year according to Google Trends data. The company also cancelled its GE Digital–focused Minds + Machines event, which was planned for late October. Outgoing GE Digital CEO Bill Ruh had stated that Predix-based revenue was up 36 percent in the second quarter of 2018 versus the same quarter in 2017.

These facts arguably make it difficult to follow the advice in the “The Forrester Wave: Industrial IoT Software Platforms” from August, which stressed that “GE Digital must persuade the market that it’s in this for the long haul, with continued, repeated, and public commitment from the very top.”

While the company became a trailblazer in the industrial IoT, the company underestimated the difficulties in building a software-based business, according to a New York Times analysis citing multiple analysts.

As former CEO Jeff Immelt began to increasingly refashion GE as an industrial-focused conglomerate, in April 2017, the company discovered that its industrial units “were sending $1.6 billion more out the door in the first quarter than was coming in,” as the Wall Street Journal recently reported. 

The turmoil has bruised the company’s standing with investors and with the credit-rating agency S&P, which downgraded the company’s rating from A to BBB+. The company, which was founded in 1892 and became an iconic conglomerate in the 20th century, is also grappling with a federal accounting investigation, billions of dollars of debt and dwindling investor patience. Its stock valuation was higher 25 years ago than today. In June, Dow Jones delisted the company from its stock index after being included for 110 years.

In other GE Digital-related news, the company is suing IIoT rival Uptake for allegedly launching a “ruthless scheme to poach” employees and for improperly accessing trade secrets, according to the Chicago Tribune.

  • Page 1
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Tags: IIoT/Manufacturing News

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One comment

  1. Avatar Ron Harding 18th December 2018 @ 6:20 pm
    Reply

    this is great, but GE does not admit applicants who have been unemployed due to the economic recession(i call it the depression) of 2008. I was out for 3 years and for that reason they chose not to go forward with me. For that reason i will not purchase their products or services. I suggest that you all do the same! Indeed, i will be their competitor in unique products and services. who’s with me??

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