GE is looking for a buyer for its San Ramon, California-based digital unit. According to the Wall Street Journal, citing sources familiar with the matter, the company has hired an investment bank to auction GE Digital’s assets.
The news is not a complete surprise. In April, GE CEO John Flannery said that digital was still a priority, but he slashed GE Digital’s budget and let go of many staff members.
GE Digital was the brainchild of former GE CEO Jeffrey Immelt who’s vision was to transform the industrial conglomerate into a software company. Immelt created GE Digital in 2015 and later predicted that it would hit $15 billion in software sales by 2020. He also estimated that half of that amount would come from providing IoT applications to other industries.
GE Digital is home to Predix, which was initially developed for GE’s own internal IoT operations. The company then decided to sell the platform to airlines and utilities to help them gather data and streamline their businesses. At the Mobile World Congress 2016 GE made a splash by demonstrating Predix’s capabilities.
Immelt also made a number of acquisitions in the IoT area to bolster the company’s IoT platform. In 2016 GE Digital purchased asset-tracking software firm Meridium for $495 million and ServiceMax, which makes computer models for logistics and workforce optimization, for $916 million.
At GE Digital’s Mind & Machines 2017 conference in October in San Francisco, the company painted a pretty rosy picture of Predix. GE Digital CEO Bill Ruh said that Predix had 1,000 customers and more than 960 ecosystem partners. He also said Predix-powered orders had grown more than 100 percent year-over-year and that the platform was operating in more than 85 countries.
But MachNation analyst Dima Tokar said that despite GE’s investments in Predix, the platform never gained a lot of traction. In particular, he said that the platform is not developer friendly and has outdated features. “The platform is not developer friendly, takes ten-times as long to complete normal tasks compared to best-in-class IoT platforms, and does not have a modern IT architecture,” Tokar said.
Who Will Buy Predix?
It’s unclear what companies might be interested in buying GE Digital’s assets. One possibility might be Bosch Software, which is a division of Bosch Group. Bosch and GE Digital formed a partnership in 2016 to make their IoT platforms interoperable. However, Bosch Software, like GE Digital, is in the midst of trying to morph from a stodgy corporation into a more innovative software firm. And the company just recently appointed a new CEO of the unit, Michael Bolle.