GE’s Software Future Starts With Selling Computer Hardware

GE Power workers check on a gas turbine at a factory in Greenville, S.C. GE is rolling out sensors, routers and servers to collect data from such industrial machinery.

General Electric Co.’s corporate vision is to reshape the industrial world and its core businesses with advanced software. But to get there, it needs to sell some basic computer hardware first.

The conglomerate is developing and testing networking gear—rugged sensor boxes and customized routers and servers—to harness the data spewed out by massive industrial machines at power plants and oil rigs. GE is building some devices itself and working with tech giants including Hewlett Packard Enterprise Co. and Cisco Systems Inc. on others.

Its newest hardware offerings address what communications experts call the last-mile problem: for those customers who accept that advanced sensors and cloud computing will make their machines more efficient, there is still a question about how to get data off these devices and into the cloud, computing environments with shared software and processing power.

“Not every customer is ready to rip out their control system infrastructure, but they still want to get some benefit by being connected to the cloud,” said Jim Walsh, CEO of GE’s Automation & Controls business unit. By supplying the hardware, GE is trying to make is easier “to get started in a very noninvasive way” with the company’s software.

GE’s digital push, including its Predix software platform for industrial customers, is expected to be a focus when executives gather on Wednesday for the company’s annual outlook meeting with investors and financial analysts. The maker of power plants and jet engines is stretching to reach its profit targets for the year amid sluggish global growth. GE shares have gained 2.3% this year, compared with a 10.4% advance in the S&P 500, through Monday.

The Predix box, slated to be available in the second quarter of 2017, could be used by customers that want to keep more of their computing on-site, such as a power plant operator leery of sending too much data to the cloud. GE said pricing will vary widely depending on the storage and capabilities of the machines, and on prices set by device manufacturers in some cases.

“Controls people usually get pretty nervous when you talk about linking to the cloud,” said Danielle Merfeld, a technology director at GE’s Global Research headquarters in Niskayuna, N.Y.

The hardware, and the apps it supports, will allow customers not only to better analyze the performance and health of their equipment, she said, but also to bring in external information—like weather trends and electric power costs—to make split-second decisions on how to operate more profitably.

GE says it has more than 100 Field Agent devices installed at locations, including at some of its own factories. The company also has five larger devices called industrial control servers in use, through pilot projects with customers.

Among those pilot tests is NRG Energy Inc.’s Hunterstown natural-gas power station in Gettysburg, Pa.

An NRG spokesman said the company has connected a GE control server to one of its power turbines in the plant, and is using data from the turbine, as well as pricing data pulled from the power markets, to “determine the optimum output for each unit at each particular hour.”

GE software is being installed on two of NRG’s other units in the Hunterstown plant. The NRG spokesman said it was too soon to determine how the system is working.

Steven Winoker, an equities analyst at Bernstein Research, said GE’s software effort is promising, but the effort has put a company in the unusual position of selling servers and sensors, not long after it pulled out of other commoditized markets such as home appliances.

The various Predix boxes are “an awkward solution” to getting data onto GE’s Predix platform, Mr. Winoker said, but one that won’t be necessary in the future—as GE sells its heavy-duty machinery with sensors, processors and Predix software already inside.

Rivals including Siemens AG also are developing software and the hardware needed to help industrial customers harness their data. GE partners like HPE say the rugged devices they are building to handle harsh industrial environments will one day be incorporated directly into the heavy machinery itself.

“We’re converging more and more capability into a box, but it’s still a box,” said Tom Bradicich, a vice president and general manager at HPE. “Our next grand challenge is to converge it into the thing—into the pump, the turbine, the conveyor belt, into the robotic arm.”

In the meantime, GE’s Mr. Walsh said the company is planning different sizes of hardware and multiple updates, and will market the equipment on a software model. “It’s much more of a life cycle,” he said, “as opposed to ‘Let’s go sell a box.’ ”

[Source:-Wall Street Journal]