General Electric (GE) is looking for a buyer for its GE Digital business, following revenue losses. However, its chief executive has moved to distance the company from reports its broader digital strategy is on the chopping block too.
The Wall Street Journal said this week the company has retained the services of an investment bank to auction off certain parts of its digital division. GE moved to clarify its digital strategy remains crucial to its growth strategy, nevertheless.
John Flannery, chief executive of GE, commented: “I want to be clear. GE Digital will continue to grow its strong commercial business, focused on both GE and its industrial customers. We see strong long-term growth in our core industries. We also will leverage our partners to pursue the strong digital growth opportunities we are seeing beyond our core industries. The future is digital and GE will play a key role in it.”
Since taking over last fall, Flannery has been cutting costs and restructuring to prioritise business verticals to boost profitability. In November, the company consolidated GE Digital following layoffs with plans to cut costs around its Predix platform by $400 million throughout the year and boost its revenue over $1 billion.
Former chief executive Jeff Immelt, who left last summer, pushed a strategy to make GE a top 10 software company by 2020, a route which a lot of technology giants have been looking to take. The strategy looks altered, however.
GE has struggled in the past year, with the latest blow coming from JP Morgan, warning shareholders the company’s turnaround strategy would not lead to a higher stock price. The company has faced competition from the likes of IBM and Microsoft, but also smaller start-ups that have come in to disrupt the industrial sector.
News of the intended sale follows a high-profile tie-up with Microsoft, with the integration of Predix and Azure. Flannery commented: “As part of our efforts to become leaner and more nimble, we said we would explore a mix of technical, go-to-market and investment partnerships with GE Digital, such as the partnership with Microsoft,” said Flannery.
“There may be some noise in this shift, but it is completely consistent with our approach to how we are running the company: business units as the center of gravity controlling their growth plan, which includes digital strategies and using software to make operations more efficient.
“This operating system will ensure GE is closer to customers and our teams are even more integrated and therefore better able to adapt. Our commitment to digital and supporting our customers with digital applications remains our highest priority.”
Flannery added: “We remain bullish on the IIoT and continue to develop new applications for it. Today, many GE businesses, their customers and outside partners are benefiting from GE’s Predix software and machine-learning tools, using them to drive productivity and increase the efficiency of their operations.” – enterpriseiotinsights