General Electric (GE) is stepping up its futuristic industrial efforts as the company positions itself for a big-time turnaround.
Shares have surged upward, opening up Thursday as a key upgrade coincides with the announcement of the forward-thinking endeavor in industrial internet of things software.
The new business, which will start with $1.2 billion in annual software revenue and an existing global industrial customer base, will be led by GE Digital CEO Bill Ruh and focus on the core verticals of the company including power, renewables, aviation, oil and gas, food and beverage, chemicals, consumer packaged goods and mining.
"As an early leader in IIoT, GE has built a strong business with its industrial customers thanks to deep domain knowledge and software expertise," GE Chairman and CEO Larry Culp said in a statement. "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."
The renewed investment accelerates the company's commitment to industrial internet of things technology, which has been a serious focus in recent years.
"The Industrial Internet of Things (IIoT) has great potential," the company noted in its inaugural Industrial Evolution Index report issued in October 2017. "Stakeholders are open to the opportunity, but need further resources to understand what it is, what it can enable and what's the best path to success."
Results from an Eclipse IoT survey indicate that Amazon AWS controls more than half of the developer market, Microsoft controls about one-third of the market, making it essentially a two horse race with Google chasing far behind.
GE by comparison has barely gotten out of the starting blocks.
In order to help it accelerate and catch up, at least in its industrial vertical wheelhouse, the company is offloading a majority stake in its cloud business ServiceMax to private equity shop Silver Lake.
The sale will allow the company to focus more firmly on the industries its core business addresses, according to a statement.
While financial terms of the deal were not disclosed, the company was bought by GE for $915 million two years ago. More details on the transaction are expected in the first quarter of 2019 after regulatory approvals are received.
GE will retain a 10% stake in the company as it still stands to gain slightly from continued success in the company it once committed nearly $1 billion.