Us local time on December 13, General Electric (GE) announced that the company has reached an agreement to sell part of the GE Digital business, and the remaining business will be formed into a separate company. The move signals that GE is finally starting to fade Immelt's ambitions for a digital transformation of the company, and its software business is less ambitious than it used to be.
Us local time on December 13, General Electric (GE) announced that the company has reached an agreement to sell part of the GE Digital business, and the remaining business will be formed into a separate company. The move signals that GE is finally starting to fade Immelt's ambitions for a digital transformation of the company, and its software business is less ambitious than it used to be.
First financial reporter noted that GE said in a statement that private equity firm Silver Lake has agreed to acquire a majority stake in ServiceMax, which is owned by the General Digital division, but did not disclose the terms of the deal. ServiceMax develops software that helps businesses manage inventory and deploy service technicians. After the deal closes, GE will still own 10 percent of ServiceMax. Two years ago, GE, with its ambitions in the software market, bought ServiceMax for $915 million.
GE also said it will form a new company focused on industrial Internet of Things software. The new company will be fully owned by GE but will operate as a separate business. It has $1.2 billion in annual software sales, and GE has not yet made plans for an initial public offering of the new company.
Bill Ruh, General Digital's chief executive, said he would be leaving the company as part of the change. GE is currently searching for a chief executive officer for the newly formed company. GE shares rose 7.30 percent to close at $7.20 on Thursday, giving the company a market value of $62.6 billion. Through Wednesday's close, GE shares had fallen 62 percent this year.
Under the terms of the deal, GE has decided to run Predix as a separate legal entity by reinventing it as a new industrial Internet software company with an independent board. In its press release, GE cited Gartner's report that the industrial Internet is an emerging market with high growth potential. The reporter noted that GE said in the title of the press release, "GE Advances Digital Leadership with Launch of $1.2 Billion Industrial IoT Software" GE Advances Digital Leadership with Launch of $1.2 billion Industrial iot Software It can be seen that GE itself does not think that it is giving up a potential huge market - the industrial Internet, but is strengthening.
Regarding the Industrial Internet, new CEO Lawrence Culp can hardly hide his pride, he said, "As an early leader of the Industrial Internet, but also with GE's industry knowledge and software skills, we have built a strong business with our industrial customers." "As a stand-alone software company, our digital business will be better positioned to advance our strategy and allow us to focus on the needs of our customers in our core industries."
Through its extensive industrial experience, GE has grown its independent software business, particularly in asset-intensive industries. GE's past experience shows that the industrial Internet has great market potential in the fields of power, renewable energy, aviation, oil and gas, food and beverage, chemical and mining.
In fact, GE has been grappling with losses in its main power business and other problems that have forced the company to cut its dividend and split up. GE digital was a key part of GE's strategic vision under its previous chief executive, Jeff Immelt. Mr Immelt stepped down last year. GE previously built a software platform called Predix, which is designed to help customers such as utilities and airlines collect and analyze data to better manage their equipment.
However, Lin Xueping, head of Beijing Lianxun Power Consulting, once told reporters that "GE's industrial Internet business, although its concept and platform have been launched for five years, is mainly an internal, Internet-based remote maintenance of equipment." Now it seems that the lack of application ecology of GE's digital business is one of the biggest failures, which is directly leading to its poor sales.
"There are regional sales managers inside GE who say that the company's obsession with the Internet has made it impossible to sell Predix because of the pressure to measure it." Lin Xueping said.
General Digital was established as a separate unit in 2015, making it separate from GE Industries. At the time, Immelt named Ruhl, a former Cisco executive, to run the General digital division and said the goal was to make GE a top 10 software company in the world by 2020. General Digital acquired several companies in 2016, including machine analysis software company Meridium for $495 million and ServiceMax for $915 million.
