NEW YORK (TheStreet) -- As General Electric (GE) - Get Report rolls out more industrial software products, partners such as Intel (INTC) - Get Report, Cisco (CSCO) - Get Report and AT&T (T) - Get Report stand to benefit from contributions including cybersecurity measures that safeguard computers making real-time adjustments in operations from railroads to wind farms.
GE predicts revenue from its Predix platform, a complex system of data analytics that interprets how machines are performing through built-in sensors and modifies them for optimum results, will grow nearly five-fold to $5 billion this year. If the Fairfield, Conn.-based company reaches that target, the revenue would be more than 3% of the entire $149 billion the company generated last year.
The new product line will benefit almost all of GE's existing industrial customers, from airlines to oil drillers, the company says. Its success will turn on how easily buyers can integrate it, how effectively built-in sensors on a variety of devices can communicate with remote computers and how secure it can make systems that might even be able to access an airplane's control board.
"It's the next major wave and could be the most significant wave of all," Hank Skorny, Intel's vice president of network product services, said in a company video. "With predictions of 50 billion devices, it dwarfs PCs and it dwarfs mobile phones. This could be Intel's next big thing."
Intel's primary function in the partnership is creating an application programming interface, or API, that allows separate apps running on the Predix platform to work together more easily, according to a presentation at a recent Deutsche Bank conference. With a good API, developers from different firms can more efficiently design apps powered by the same software.
"What you get is a common language and framework that you can utilitze so all the machines are talking between one another and among one another using the same nomenclature," Chris Boody, an Intel vice president of network product services, said in a company video. "This is something that can be done in a real-time analytical basis and is also a flexible enough solution so that you can iterate and innovate on top of it as individual business needs change. "
Cisco's contribution will be "intelligent networking" between machines, which will focus on gathering and transmitting a coherent stream of data from smaller and varied processes within a large system such as a freight train.
AT&T is providing a private wireless service through its "machine-to-machine" communications system, or M2M, which will be pivotal to limiting access strictly to verified controllers, according to a 2013 statement on the partnership.
The advantage Predix offers to customers will be significant, GE says. Oil drillers may pick up an additional 6% in output with Predix software, digital wind farms could get a 20% productivity boost, or $100 million in value per 100-megawatt farm; and railways are estimated to pick up $200 million for each mile-per-hour in speed gain.
"The ability to combine knowledge of the assets, physics and analytics is a killer competitive advantage," GE CEO Jeffrey Immelt said at the May Electrical Products Group conference."We're basically paying for this investment with our own productivity savings," he added, estimating them at $300 to $500 million, "so as an investor you kind of get the growth for free."
Because of the power and risks inherent in industrial equipment, securing the infrastructure against hackers will be paramount in achieving GE's targeted growth.
"Certainly there is risk to anything that is exposed to the Internet," said Jason Nieh, a computer science professor with Columbia University. Still, there are accepted precedents for depending on the security of wireless controls, he said, noting the U.S. military's use of drones, or remotely operated aircraft that carry no crew.
As for protecting data, that's a focus across industries, according to Goldman Sachs, which recently conducted a survey of chief information security officers and found that almost 60% planned to boost spending in the area by at least 5%.
"Cyberwar and cybercrime are two of the defining geopolitical and business challenges of our time," Goldman analyst David Kostin said in a Friday note. "No government, firm, or person is immune from the risk."
Last year alone, there were 3,014 data breaches worldwide that exposed 1.1 billion records, Kostin said in the note. Of those, 83% were related to hacking and 14% to fraud. The U.S. accounted for half of both the breaches and the record exposures.