Industrial cloud platforms need to demonstrate value
GE is seeking buyers for GE Digital, which incorporates the company’s Industrial Internet of Things (IIoT) business, according to reports from The Wall Street Journal and others at the end of July 2018. Since John Flannery took over the position of CEO at GE, he has been devoted to corporate business restructuring, streamlining, and spinoffs of non-core businesses to increase cashflow.
Other reports said GE plans to sell the electric power conversion business (Converteam) acquired in 2011. Total assets spun off in the previous year neared $20 billion. Perhaps logic behind decisions include business results from the digital business in recent years, especially in light of forecasts.
GE cooperates with Microsoft
Predating the GE Digital announcement by just two weeks was the announced cooperative partnership of GE and Microsoft. GE Digital plans to standardize the Predix platform on Microsoft Azure, and integrate the Predix product portfolio with Azure local cloud technology, including Azure IoT, Azure Data and Azure Analytics. The partners will carry out joint sales focusing on end users in vertical industries.
Were the two announcements related? GE wishes to promote its digital business more effectively through cooperation in technology, capital, and other ways, while reducing pressure on capital and market sales. Through cooperation with information technology (IT) firms including Microsoft, GE provides potential space for the sale of GE Digital. When these businesses are sold, because of its cooperation with Microsoft, the strength of GE in the digital field would not be seriously impaired.
Cloud platforms: Three ways to learn
This strategic adjustment is worthy of reflection.
1. Large industrial cloud platforms like GE Predix need to convey customer value more effectively. At present, major applications based on an industrial cloud platform focus on equipment diagnosis, maintenance, and asset management. Before the concepts of industrial internet and industrial cloud become popular, the technologies and solutions for remote diagnosis and maintenance of key equipment were mature. Key equipment providers have developed cloud platforms, even if narrow in function. These platforms can solve problems customers need solved the most. Large cloud platform providers need to explore how to better demonstrate customer value.
2. Applications still play the dominant role in the industrial field. Industrial applications are diverse and differentiated and call for a strong accumulation of industry knowledge. In spite of the powerful system structure (and acknowledging certain specific customer applications), GE Predix is not necessarily better, more applicable, or more flexible than many small companies specializing in industrial analytics applications in the specialized fields. Even in North America, the GE Predix parent market, the platform has powerful competitive challenges, which is likely why performance is below expectations.
3. Market cultivation takes time. In China, most engineers in the operations technology (OT) department are aware of industrial internet, industrial cloud, and edge computing, but most doubt if these technologies can bring real value to work at the present stage. The market needs time for cultivation. Users and suppliers should have more patience and determination, with less radical implementation strategies.
KEYWORDS: Industrial cloud platform
GE seeks to sell its digital assets.
Cloud platform lessons: Explain the value, offer strong applications, be patient
Do major cloud platforms offer more value than other applications?