GE announces the launch of $1.2bn industrial IoT software business
GE has announced its plans to launch a new, independent company focused on building a comprehensive Industrial Internet of Things (IIoT) software portfolio. With an initial $1.2bn 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 organisation aims to bring together GE Digital’s industry-leading IIoT solutions such as its Predix platform, Asset Performance Management, Automation (HMI/SCADA), Manufacturing Execution Systems, Operations Performance Management, and the GE Power Digital and Grid Software Solutions businesses.
Additionally, the business has agreed to sell a majority stake in its field service management software, ServiceMax. Set to be acquired by private equity firm, Silver Lake, where GE will retain 10% equity ownership.
Since GE Digital acquired the company in 2016 for $915bn, ServiceMax has continued to invest in its technology and delivered growth that has outpaced the market over the past two years. Offering cloud software tools to improve the productivity of complex service and equipment-centric business operations for over 400 corporate customers across dozens of industries, ServiceMax will now gain the strategic focus to penetrate the $34bn global Field Service Management software market opportunity.
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The sale and acquisition will also enable GE will sharpen its focus on developing its IIoT portfolio and see it position the business for future growth. ServiceMax and GE Digital will seek to ensure ongoing collaboration to serve their joint customers, including GE’s industrial business units, and plan to continue to deeply integrate their technology offerings. The transaction is expected to close in Q1 2019, subject to customary closing conditions and regulatory approvals.
On top of this, GE Digital CEO, Bill Ruh, is set to depart GE to pursue other opportunities, leaving his position vacant until a new CEO for this new independent company is identified.
“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.”