Last week, General Electric ended several months of speculation and discussion about what it plans to do with GE Digital by announcing that it plans to turn the business unit into a single industrial Internet of Things company.
In addition to that news, the Boston-based company announced that it has also reached an agreement to sell a major portion of the stake, approximately 90%, of the company’s field service management software, ServiceMax, which was also part of GE Digital to Silver Lake. The sale will help the company focus almost entirely on the industrial IoT space.
Financial terms of the deal, which is expected to be finalized and closed in the first quarter of 2019, were not disclosed to the public.
These changes are part of a major restructuring effort for GE as it faces severe pressure from stakeholders who are pushing the company executives to reduce its huge amounts of debt. The future of GE will likely see the sale of two Internet of Things focused business units as well as a spinoff of the company’s railroad and healthcare divisions.
The new IIOT focused company is intended to be an independently run GE-owned business unit with a completely new identity, company structure, and brand assets, according to a news piece on GE’s corporate website. The new company is also expected to have its own Board of Directors.
GE Digital’s CEO since 2015, Bill Ruh, is also expected to be stepping down from his position at the end of this month to pursue other opportunities. In light of this, the company will conduct a search externally and internally to find the new CEO who will lead the independent company.
The new industrial Internet of Things business will focus on providing software for industries that focus on “power, renewables, aviation, oil and gas, food and beverage, chemicals, consumer packaged goods and mining,” according to the news release. Innovations in the Internet of Things (IoT) industry and the subsection of industrial Internet of Things (IIoT) will only continue to improve and make new demands of products and systems both upstream and downstream in many ways. The new business unit will combine both GE’s IIoT solutions and its digital and grid software solutions and create what is already a $1.2 billion revenue company.
If handled correctly, GE could potentially make significantly more money than this. According to a piece published to VXChnge.com, “Industrial IoT devices are expected to add $14 trillion to the global economy by 2030.” Additionally, “Many companies will invest $15 trillion in IoT between 2017 and 2025.” This alone offers a lot of possible opportunities for GE and other IoT focused companies.
GE’s Chairman and CEO H. Lawrence Culp, Jr., said in a statement on the company’s corporate website, “As an early leader in IIoT, GE has built a strong business with its industrial customers thanks to deep domain knowledge and software expertise. As an independently operated company, our digital business will be best positioned to advance our strategy to focus on our core verticals to deliver greater value for our customers and generate new value for shareholders.”