General Electric’s digital business unit became one of the world’s largest software companies by offering an internet of things platform for industrial operations.
GE Digital’s Predix software platform enabled machines in factories to send data through the sensors attached to them to the associated computer interfaces.
GE claims to be the first company to have done this, and it has made huge amounts of money doing so.
Things were going so well, with some $4 billion revenues a year for GE Digital, that the company was planning to build its own data centres to deal with an ever-increasing amount of data flowing from industrial machinery.
The industrial sector is still a significantly under-connected sector, with networks still being built and data still being lost from machines that are entirely mechanical with no data-collecting sensors attached to them.
So it seemed to make sense that GE Digital wanted to create its own data centre infrastructure to capitalise on the growth of the IIoT.
However, the company has now changed its mind about building its own data centres, and has decided to tap into the existing infrastructures of tech giants such as Microsoft and Amazon.
Amazon’s platform is called AWS, and Microsoft’s is called Azure. These are well known cloud platforms even outside the tech industry.
Predix may have attained such a status, of being known and used outside the industrial sector, but it seems that it’s simply more cost-effective for GE Digital to use AWS and Azure instead of building its own cloud platform.
So, instead of Predix becoming a software being hosted on its own infrastructure, it will remain largely a software platform.
Speaking to Fortune magazine, GE Digital’s chief digital officer, Bill Ruh, said: “We pivoted.”
The reason for this, elaborated GE Power’s Ganesh Bell, was that providing computing infrastructure is a “race to the bottom”, and not very profitable.
The higher revenues are in the software side. “There is massive value in providing purpose-built software,” said Bell.
Moreover, GE CEO John Flannery says the company will narrow its target market to its traditional customer bases.
Writing on LinkedIn, Flannery says these will include energy, oil and gas, aviation, healthcare, rail, and mining.
“Customers and investors want to understand where the company is headed, and the GE team is looking for clarity,” Flannery says, adding: “We are doubling down on what we know works.”