General Electric has announced plans to set up a new software company focusing on the industrial Internet of Things (IoT).
In a statement released Thursday, the industrial powerhouse said the new organization will be wholly-owned, independently run business that will bring together the company’s digital initiatives including IIoT solutions.
These include the Predix platform, Asset Performance Management, Historian, Automation (HMI/SCADA), Manufacturing Execution Systems, Operations Performance Management, and the GE Power Digital and Grid Software Solutions businesses.
"As an independently operated company, our digital business will be best positioned to advance our strategy to focus on our core verticals to deliver greater value for our customers and generate new value for shareholders,” said GE Chairman and CEO H. Lawrence Culp Jr.
The new business is expected to provide software for asset-intensive industries such as power, renewables, aviation, oil and gas, food and beverage, chemicals, consumer packaged goods and mining industries.
GE's push into industrial IoT is understandable considering the huge potential of the global IoT market, which GSMA Intelligence estimates to be worth US$1.1 trillion in revenue by 2025.
By then, GSMA forecasts that there will be "more than 25 billion IoT connections, driven largely by growth in the industrial IoT market." It also anticipates the Asia-Pacific region "to become the largest global IoT region in terms of both connections and revenue."
GE Digital shakeup
In its statement on Thursday, GE likewise announced the sale of a majority stake in field service management software ServiceMax that it acquired in November 2016 for US$ 915 million to Silver Lake, a private equity firm focused on technology investments.
The financial terms of the deal were not disclosed, but the move is expected to allow GE to sharpen its focus on its IIoT portfolio.
ServiceMax was one of the three acquisitions made by GE Digital since it was founded as a subsidiary of GE in 2011. The other two acquisitions were software vendor Meridium and Israeli cloud-based analytics and automation solutions startup Nurego.
All three acquisitions were made to accelerate the company's push into IIoT. GE Digital is anticipated to grow into a US$15 billion business by 2020.
As part of the overhaul of its digital business announced Thursday, GE disclosed that GE Digital CEO Bill Ruh has decided to depart to pursue other opportunities. The company will now be conducting an internal and external search to identify the CEO for the new independent company.
Culp himself has just been appointed Chairman and CEO of GE in October 2018, succeeding John Flannery.
The turnover at the top came with the guidance of a weaker performance in the GE Power business and an anticipated shortfall in previously indicated guidance for free cash flow and EPS for 2018.
“GE remains a fundamentally strong company with great businesses and tremendous talent. It is a privilege to be asked to lead this iconic company,” Culp said in a statement after his appointment in October.