GE said in its annual report that it is investing heavily in software and analytics with the aim to win in the "industrial Internet," which revolves around melding information technology with physical networks.
In its annual report, GE outlined a path that puts it on a collision course with IBM's smart planet strategy. The two behemoths are looking to connect everything from healthcare to transportation networks to infrastructure with technology.
GE CEO Jeffrey Immelt outlined the company's tech plans in an annual shareholder letter. He said:
We are making a major investment in software and analytics. We know that industrial companies need to be in the software business. We want to make the analytics around our products, real-time data, and operating solutions a GE core competency. We have built a Software and Analytical Center of Excellence in California, where we are adding a vast array of human talent to achieve our goals. We know that our services in the coming year depend on building smarter machines with the ability to extract and analyze data. We will be a leader in analytics. And that will make GE more valuable to our customers. This is the power of the Industrial Internet.
The reason why analytics are important in the infrastructure industry relates to what we call “The Power of 1%.” Across our customer base, improving asset performance by 1% can add $20 billion of customer profit annually. In our world, small changes mean big outcomes.
Specifically, GE touted its rail optimization systems, healthcare and aviation technologies.
Other key themes:
- GE's Immelt said that Africa is a big growth market for the company, which will continue to bet big in the region. Also note that IBM also pointed to Africa as a critical market.
- The company will insource more manufacturing.
- GE has spent 5 percent to 6 percent of revenue on R&D over the past decade. That ratio also rhymes with what IBM spends.