On October 09, 2013, GE introduces 14 new industrial Internet products (see the table below) that will further enhance its offering under Predix platform. With this, the company now offers a total of 24 products under Predix platform.
Predix offers solutions (referred as the industrial Internet products) that provide a standard and secure way to connect machines, related big data and people. In simple words, Predix is an integrated platform that combines the power of big data analysis, high speed networking, secure cloud computing, and machine to machine communication to enable global industries to achieve outcomes such as lesser unplanned downtime, more productivity, preventive maintenance, lower fuel costs and low emissions. The basic vision behind Predix is to make machines remotely connected (for monitoring) and artificially intelligent, so that they can create, analyze and use the big data to become more efficient and productive.
Complexity, collaborations and integration:
Predix is an integrated platform that combines the power of big data analysis, high speed networking, secure cloud computing, and machine to machine communication. Cloud computing, big data analysis, machine to machine communication, high speed and secure networking all are complex and dynamic technologies. As said by the chairman and CEO of GE:
"Industrial data is not only big, it's the most critical and complex type of big data. Our greatest challenge and opportunity is to manage and analyze this data in a highly secure way to deliver better outcomes for customers and society."
Predix requires multiple types of expertise that can only come from collaborations. So, GE is developing and deploying this platform though partnerships with the companies like: AT&T (NYSE:T), Cisco (NASDAQ:CSCO), Intel (NASDAQ:INTC), Amazon Web Services (NASDAQ:AMZN) and Pivotal. All these companies are expert in their respective fields and are developing the cutting-edge technologies that enable the various aspects of Predix platform. For example, AT&T provides its leading, secure and high-speed wireless network capabilities to enable remote monitoring. Cisco, which recently introduced its high-speed "Internet of things" system, enables intelligent networking, advanced analytics and quick data transfer between machines.
Application, effectiveness and sustainability:
These solutions found application in all sorts of industries like: Aviation, Oil & Gas, Transportation, Healthcare and Energy. The effectiveness of these solutions is evident from the customer testimonies:
"For St. Luke's Medical Center, which is using GE software to manage and analyze patient and equipment data, this means a 51 minute reduction in bed turnaround time and reduced patient wait times. Gol Airlines is using software to better track, analyze and adapt its flight routes and fuel consumption and predicts it will see $90 million in savings over the next five years."
"For the first ten products launched in the last year, revenues are $290 million year-to-date, with orders of $400 million. GE will leverage our high-margin $160 billion services backlog to develop more technologies, grow our dollars of revenue per installed base 3-5 percent annually, and increase software sales by more than 15 percent annually."
The commercial success of any technology is the prime factor behind the long-term sustainability of the technology. The above customer testimonies show how effective and useful these solutions are. Predix is a perfect example of how the integrated power of new-age technologies is helping the industries and why the future belongs to these technologies.
The next wave of growth for GE is expected to come through Predix as the company is testing these solutions for many more industries and machines e.g. wind mills. GE sees significant growth possibilities for Predix as it wants to leverage its high margin $160 billion service backlog to further develop and commercialize these technologies. As said by the chairman and CEO of GE:
"We are developing more predictive solutions and equipping our products with sensors that constantly measure performance so our customers see major productivity gains and minimize no unplanned downtime. Observing, predicting and changing this performance is how the Industrial Internet will help airlines, railroads and power plants operate at peak efficiency."
I am of the view that the growing number of services under the Predix platform will act as a major growth catalyst for the company as well as, to some extent, for its collaborating partners (Cisco, Intel, etc.), due to the reasons like:
- Growth in big data market:
According to IBM: "Each day we create 2.5 quintillion bytes of data generated by a variety of sources -- from climate information, to posts on social media sites, and from purchase transaction records to healthcare medical images."
This data holds a lot of unique information that can help industries to improve efficiency, productivity, safety, environment protection and many more things. Due to this unique information that can be derived from this data more and more companies are looking to collect and analyze this data. This rising trend among the companies will lead to proliferation of big data and data analytic industry.
Research firm IDC predicts that big data market will grow revenue at 31.7 percent a year to hit the $23.8 billion mark in 2016. Big data analytic industry also holds a multi-billion dollar potential. Moreover, the machine data is the fastest growing data segment.
- Limited competition:
Predix is an integrated platform developed from highly complex technologies, which also involves technologies that are in their initial stages of development with limited availability. These things are expected to act as a huge entry barrier for the emerging competitors.
- More orders/business:
Due to the benefits of the solutions and its limited availability, the company is expected to get more orders, which will lead to more business.
- High margins:
These solutions are expected to yield high margins for the company as they will generate service revenues, which normally yield high margins.
The key factor behind the success of Predix will be the fact that the company is not developing this platform all alone. It is collaborating with the other companies who are leaders in their respective fields and spend billions of dollars to develop the cutting edge the technologies that are required for the successful deployment of the platform.
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This article reflects the personal views of the author about the company and one must consult its financial adviser before making any decision.