BOSTON – GE (NYSE:GE) today announced plans to establish a new, independent company focused on building a comprehensive Industrial Internet of Things (IIoT) software portfolio.
The company will start with $1.2 billion in annual software revenue and an existing global industrial customer base. The company is intended to be a GE wholly-owned, independently run business with a new brand and identity, its own equity structure, and its own Board of Directors. The proposed new organization aims to bring together GE Digital’s industry-leading IIoT solutions including 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.
Additionally, GE announced an agreement to sell a majority stake in ServiceMax, a leading provider of field service management software, to Silver Lake, a leading private equity firm focused on technology investments. With these actions, GE will sharpen the focus of its IIoT portfolio to position the new business for future growth. The transaction is expected to close in Q1 2019, subject to customary closing conditions and regulatory approvals.
“As an early leader in IIoT, GE has built a strong business with its industrial customers thanks to deep domain knowledge and software expertise,” said GE Chairman and CEO H. Lawrence Culp, Jr. “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.”
The IIoT is a nascent market but is expected to have significant growth. According to Gartner: “Innovations such as smart, connected products, the industrial Internet of Things (IoT), ‘digital twins,’ advanced analytics and artificial intelligence will be key to productivity improvement and new IT demand in this sector through 2022. The proliferation of digital products and subsystems to enable the IoT in downstream industries and generate revenue from smart products over their entire life cycle will be the most promising (and complex) driver for new IT spending growth through 2022.”*
GE’s independent software business moves into the market with a strong position, building on the company’s experience and success developing solutions to drive the outcomes that matter most for asset-intensive industries.
GE’s new IIoT business would provide software for these asset intensive industries with a focus on the power, renewables, aviation, oil and gas, food and beverage, chemicals, consumer packaged goods and mining industries. These industries build on GE’s foundation and expertise as a leading MES provider for nearly 20 years. With an already thriving business in these areas, the new digital organization is positioned to accelerate GE’s ability to deliver IIoT solutions that meet the needs of these industrial customers, addressing the most impactful aspects of the asset lifecycle.
GE Digital CEO, Bill Ruh, has decided to depart GE to pursue other opportunities. The company intends to conduct an internal and external search to identify the CEO for this new independent company. Further details on GE’s new IIoT software company will be announced in Q1 2019. This plan is subject to customary regulatory approvals, including information and consultation with employee representatives where required.
*Source: Forecast: Enterprise IT Spending for the Manufacturing and Natural Resources Market, Worldwide, 2016-2022, 3Q18 Update
CONTACTS
GE Investor Contacts:
Todd Ernst, 617.443.3400
todd.b.ernst@ge.com
GE Media Contact:
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amy.sarosiek@ge.com
