GE Announces GE Digital To Focus On The Industrial Internet And The IoT

  • GE announced the creation of GE Digital to bring together all of the digital capabilities from across the company into one organization.
  • GE intends to grow its software and analytics enterprise from $6B in 2015 to a top 10 software company by 2020.
  • The creation of GE Digital has been interpreted as a refocusing on the fast-growing Industrial Internet and IoT markets.
  • The move represents an adaptation that is likely to continue the solid performance of GE stock.
  • Credit Suisse added GE to its focus lists of best investment ideas.
GE Announces GE Digital To Focus On The Industrial Internet And The IoT

GE (NYSE:GE) announced the creation of GE Digital to bring together all of the digital capabilities from across the company into one organization. GE Digital will integrate GE’s Software Center, the expertise of GE’s global IT and commercial software teams, and the industrial security strength of Wurldtech, a GE company that's in the business of cyber attack protection.

“As GE transforms itself to become the world’s premier digital industrial company, this will provide GE’s customers with the best industrial solutions and the software needed to solve real world problems," said Jeffrey Immelt, Chairman and CEO of GE. “It will make GE a digital show site and grow our software and analytics enterprise from $6B in 2015 to a top 10 software company by 2020. With this alignment - backed by sustained investment - we will accelerate our efforts to build GE’s digital strength and win in the Industrial Internet. We are building the playbook for the new digital industrial world by harnessing our horizontal capabilities including Predix, software design, fulfillment and product management, while also executing critical outcomes for our customers. This is the strength of GE."

New Chief Digital Officer Bill Ruh, who joined GE from Cisco Systems in 2011 and played an important role in GE's software development, will lead a diverse set of projects that capture the nimbleness of a start-up, while harnessing GE's powerful industrial intelligence to deliver better outcomes for customers. GE also announced key leadership changes that, together with the creation of GE digital, might signal a shift in the company's focus.

The announcement also seems to have buoyed the stock, which has jumped higher, after tracking the S&P 500 fairly closely over the last month.
GE stock price chart

GE stock price chart by amigobulls.com

Forbes interprets the move as a response to the IBM (NYSE:IBM) announcement of two new business units that will apply the company’s considerable strengths in Big Data, advanced analytics and cognitive computing to the education market and the Internet of Things (IOT) - the coming network of billions of connected, inter-operating devices. The Forbes article notes that GE’s move towards a more coherent digital and IOT strategy has been building for years. In 2013 GE announced a major investment in Pivotal, a developer of custom applications for data and analytics based on cloud computing technology.

The Pivotal press release mentioned GE’s focus on the Industrial Internet. “It’s no secret that the cloud and Big Data are driving dramatic business transformation enabling an Industrial Internet." said Ruh. "At the heart of it is that machines can be intelligent, connected and that we can use software to analyze the information coming out of them. To support this next frontier requires an architectural shift in how our services are built and delivered."

GE, a company with a long and distinguished history beginning in the 19th century with Thomas Edison himself, was founded as a company that sold electric appliances. Then, the company diversified its business into utilities, transportation, healthcare, and finance. With this move, it appears that GE wants to go back to its industrial roots.

GE isn't usually considered as a one of the disruptive tech companies that are changing the world, but this move indicates that GE wants to focus on high-growth, world-changing sectors like the Industrial Internet, smart machines, Big Data, cloud computing, and the IoT. The new emphasis on the Industrial Internet represents an adaptation that is likely to continue the solid performance of GE stock - and perhaps push it sky high. The Street reports that Credit Suisse added GE to both its Global Focus List and US Focus List of best investment ideas.

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