Invenergy plans to deploy GE’s Predix based reliability management software on 13 GE turbines at six gas-operated thermal plants in the U.S. GE has had success selling Predix into the oil & gas market.
This week Reuters did a deep dive into problems with GE’s industrial IoT efforts. The company had taken a two-month “time out” to fix problems with its Predix software platform designed for the industrial IoT and has asked executives to cut costs. GE is also backing off selling the platform to all industries, and will instead focus on oil & gas, aviation and energy.
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Since launching its industrial IoT effort five years ago, GE has spent billions selling the internet of things to investors, analysts and customers. The idea of adding sensors to its equipment, analyzing the data captured from those sensors and using that to generate business insights wasn’t new, but GE made a huge effort to commercialize it.
GE is learning that the industrial IoT isn’t a problem that can be tackled as a horizontal platform play. Five years after it began, GE is learning lessons that almost every industrial IoT platform I’ve spoken with is also learning. The industrial IoT doesn’t scale horizontally. Nor can a platform provider compete at every layer.
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For example, Samsara, a startup that formed in 2015, aimed to build a wide-scale industrial IoT platform that started with generic sensors. It has since narrowed its focus to fleet monitoring and cold-chain assurance, which is how some of the earliest users of its product used it.
Helium is another company that had a similar vision. It makes sensors and sends data over a proprietary wireless network to a gateway or (originally) the Helium cloud. The original plan was that companies would buy the sensors and build out rules in the cloud. But that was too open-ended, and Helium now has decided to link data from its sensors to other provider’s clouds. It is also focusing on managing those sensors from a Dashboard setup.
In Samsara’s case, the company went from a broad focus to a few specific industries. In Helium’s case, it decided to stop building out a cloud where industrial customers could host their data so it could focus on management software and act as a connector between customers’ data and their cloud of choice.
GE’s decisions are similar.
A year ago it decided to stop building out its own cloud data centers and started signing partnerships so customers could run Predix in Amazon’s or Microsoft’s clouds. As part of the current refocusing, it appears to be narrowing its customer focus to industries where it already has customers using its equipment.
This makes sense. When I began covering the industrial and enterprise internet of things it quickly became clear that while IT could be generic, the data analytics elements and the real-world devices in the field that were being monitored would require specialized knowledge. What has happened is that at the computing (and even device management layer) larger cloud providers like Microsoft and Amazon are winning.
I think we’ll see connectivity also steer toward the big platforms, whether its cable providers offering LoRa networks, cellular companies, or a few of the specialized low power wide area network providers. The hardware will likely be dominated by bigger companies such as Intel, Dell, HPE and those with established IT credibility. We’ll also see industrial gateways from the likes of Advantech and Eurotech.
But it’s the many areas of specialization here the industrial IoT gets interesting. I think we’re going to see startups emerge around data analytics and AI such as Uptake, C3, SightMachine, Flutura, and Foghorn. Many of these will have specific areas of expertise such as C3 with energy and Flutura with oil and gas.
There’s also a role for specialization in building the overall IoT solution for companies. A hospital aiming to connect patient rooms needs a different set of knowledge around regulation and security than a company trying to create connected conference rooms needs. Today, those areas of specialization are ripe for startups.
Rick Bullota, who founded Thingworx which was sold to PTC, said that he anticipates a lot of M&A in the coming 12-24 months as more businesses embrace the insights and business transformation enabled by the industrial IoT. He also says that the buyers of industrial IoT products are coming more from the business side than the tech side, which means that the overall package of technology will become more important, rather than the individual pieces.
Get ready to hear more about end-to-end solutions.
Meanwhile, GE’s software and industrial IoT efforts are still impressive. While it planned on revenue of $15 billion by 2020, it is now scaling that down to $12 billion in part to clarify what is software versus connected hardware it sells to industrial clients. Back in 2015, GE’s Kate Johnson, then-CEO of Intelligent Platforms, told me GE reported $4 billion in software sales in 2014 and expected $7 billion in 2016. (Johnson left in July to work at Microsoft.)
So when it comes to the industrial IoT, the opportunity is big. It’s just taking a while to figure out how to attack the market. Step one is realizing that it’s silly to take on the big cloud and connectivity providers. Step two is quitting the platform dreams and focusing on a specific area of expertise.
This is the final episode of The Internet of Things Podcast, and to send us…
This article was originally published in my weekly IoT newsletter on Friday August 18, 2023.…
This article was originally published in my weekly IoT newsletter on Friday August 18, 2023.…
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