The thought of GE as a software company is a hard one to stomach. One would think that a corporation whose core industries include Oil & Gas, Power & Water, Transportation, and Energy Management would be an appetizer for software as it continues to eat the world. As it turns out, this may still be true, but GE itself is at the reins of controlling how that happens.
Precious little was known about GE’s plans for building out their software development capabilities ahead of this year’s GE Minds & Machines event in San Francisco’s Fort Mason. We knew they had poached top talent from Cisco – Bill Ruh – to head the effort we now know as GE Digital. We knew they were focusing on what they call the Industrial Internet of Things. We thought we knew that it would be hard to imagine GE as a software company. Well, it’s a lot easier now.
According to details released by CEO Jeff Immelt at this year’s Mind & Machines conference,
- GE is on track to hit $15B in revenues from its software division by 2020
- GE’s customers will achieve $1B in productivity savings
- 100k+ developers will be building on Predix
They’re driving this business in two ways:
(1) by investing heavily in what they’re calling an operating system for the Industrial Internet of Things – Predix –
(2) enabling their partners to write applications on top of Predix, and monetize them via revenue sharing agreements.
Of course, claims are just that – claims. It’s a whole different story to execute. This is where GE surprised me. They’ve taken a page out of Amazon’s strategy book and have been dogfooding the Predix platform internally for the past several years – building all of their own IoT solutions on top of the platform to create an internal feedback loop on the product and work out the issues ahead of a public launch. What this has allowed them to do is to launch a well-baked platform with paying users on it at launch. In fact, they are saying that Predix will already be a $6B business by the end of this year.
With their announcement of Predix.io – they are opening that well-tested platform to third parties so that anyone can build IoT solutions on top of the platform, charge money for them, and participate in revenue sharing with GE. And, oh yeah, it’s all built on Cloud Foundry’s Open Source software, and they are hoping to have all of the microservices they have written for their industrial use cases remain open source.
GE as a software company, making $6B in revenue, on open source software.
It remains to be seen if any of this will work, but GE paints a pretty picture, and they’ve done it through massive investments – $5B-worth. If this works, it may become a mandatory case to study on innovation strategy and revenue transformation.
– Sandro, Product Strategist
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