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Speaking last fall from Studio 8H inside New York’s 30 Rockefeller Plaza — best known as the set of “Saturday Night Live” — GE Chairman and CEO Jeff Immelt told a crowd of investors and analysts how he was turning the 138-year-old business into the world’s largest digital-industrial company. He wasn’t joking. “We’re the only company that will have the machines, analytics and operating systems,” he said. “That’s how we’ll play the Industrial Internet.”
Immelt expanded on the theme in his annual letter to shareowners, which GE released today. He wrote that the Internet, which has had a massive impact on consumer productivity and commerce, is now transforming industry. “We are a company that invests in broad industrial transitions, and they don’t come much bigger than the full application of data and analytics to machines and systems,“ Immelt wrote. “Sensors on our products send constant streams of data, analyzed and translated into upgrades that drive productivity in industries where even the smallest incremental efficiency can mean very large gains.”
Immelt said that for GE alone, applications and analytics running off Predix, GE’s cloud-based platform for the Industrial Internet, will generate $500 million in productivity savings this year. The platform is now open to all developers. Immelt wrote that by the end of 2016, “we expect to have 200,000 assets under management, 100 GE applications and 20,000 developers” working with Predix. He said that GE revenue from apps and software stood at $5 billion and is growing at 20 percent annually.
One “killer” Predix app is the digital twin, a software model of a physical machine or a process that makes it possible to manage its “real world” sibling better. “GE is creating living digital profiles of [more than] 500,000 industrial machines in the field to provide new opportunities for customer growth and productivity,” he wrote. Immelt wrote that when GE applied it to the GE90, the world’s largest and most powerful jet engine, the digital twin increased fleet availability while saving tens of millions of dollars in unnecessary service overhauls.
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The digital power plant is one application of the digital twin. Image credit: GE Power
All GE businesses, from Healthcare to Oil & Gas, can use Predix. The range illustrates another key concept that Immelt calls the GE Store. “The Store allows GE to innovate at scale, investing more than our peers and spreading the innovation across more businesses,” he wrote. As a result, Immelt said, “over the last five years, our organic growth has averaged 5 percent, two times our industrial peer group. And, since 2011, our margins have grown from 14.8 percent to 17.0 percent.”
The digital transformation and the GE Store are both reflected in the spirit of the 2015 Annual Report, which opens with Immelt’s letter. The immersive document, rich with interactive graphics and released online today, allows users to explore GE Store case studies, technologies and business results. CEOs of all GE businesses contributed their own letters to shareowners, and GE will make them available one after another over the next week.
Immelt concluded his letter with an appeal to investors. “I am asking investors to join GE as we transform and execute,” he wrote. “We have delivered for you in the last five years. But we are still underowned by big investors. In this time of uncertainty, why not GE? We have great businesses, global scale and strong initiatives. We have a ton of cash that can protect you. And we will lead the Industrial Internet. We are the Digital Industrial. We have grit. … Join us as we create the next wave of growth.”