GE Sets Sights on Silicon Valley by Targeting $5 Billion in 'Big Data' Sales Growth

NEW YORK (TheStreet) -- General Electric  (GE) is setting an ambitious growth target for its fledgling Silicon Valley business, an "Industrial Internet" that analyzes data from both equipment and workers to help large companies manage their bottom lines.

The software, based on GE's Predix cloud platform, gathers data from sensors and controls on industrial equipment, then organizes it to help businesses maximize productivity. The results can range from optimizing wind-turbine output to minimizing downtime and wheel failures for railroads.

Just today, GE introduced a digital wind-farm system that can boost production as much as 20% by linking its software with turbines. Operators will be able to adjust the machines in real time and monitor temperature, misalignments and vibration levels. Cost savings from the technology, if applied to all wind turbines, would add $100 million in value to every 100 mega-watt farm, the company estimated. 

"We took existing farms, used industrial data and big data" and provided 5% more annual production, Anne McEntree, head of GE's renewable energy unit, said in an interview. When GE realized how much it was able to achieve just by working out inefficiency in existing systems, executives began thinking, "what if we do this right at the outset?" she said.

The new system lets GE add another layer of service to its wind turbine sales, the company noted. Service and maintenance contracts, which lock in revenue over years-long periods, are a particularly lucrative portion of the manufacturing business, with GE valuing its service backlog at $193 billion at the end of the first quarter, up from $147 billion in 2011.

"Data and analytics are the future of our services business," said David Lurie, a spokesman for GE. Investing in that product line will help to boost earnings by increasing sales to customers who already buy GE products such as locomotives, jet engines and power turbines, he said.

Railroad companies, for instance, are employing a GE application called RailConnect 360 for feedback on the life of their wheels and fuel pumps. Hospitals can maximize labor productivity and monitor medication dosages with a single GE application. Mining companies can also tie their operations together, and diverse mining operations can be tied together in a single software program.

The technology accounted for more than $1 billion of GE's $108 billion in industrial revenue last year, according to the company's annual report. GE is forecasting additional sales of around $3 billion to $5 billion within the next few years.

The Predix platform is one piece of CEO Jeffrey Immelt's plan to boost sales from GE's sprawling industrial divisions as he sells off most of the lucrative finance business to focus on the company's manufacturing roots. About 73% of GE revenue came from industrial businesses last year. 

"The crystal ball of the future will be GE," said Nick Heymann, co-head of industrial infrastructure research at William Blair. The company's industrial-analysis technology is "projected to take in $4 billion by 2017, and $17 billion in less than 10 years," he said. "They are starting to get a total, holistic view of everything that is going to happen in their key end markets. "

If you liked this article you might like

How To Get a Promotion Using Legendary Former GE Head Jack Welch's Strategies

GE Nearing Deal to Sell Industrial Solutions Unit to Swiss-Based ABB

How to Fire People Like Former General Electric CEO Jack Welch

Tax Reform Is Coming and That Means Trump Stock Rally Is Ready to Kill It Again

'Trump Stock' Rally Is Back on Track