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General Electric has seen the future of manufacturing and it involves competing with some very big technology companies.
G.E. is announcing on Wednesday a push into computer-based services, connecting sensors that are on machines to distant computing centers where data will be scanned for insights around things like performance, maintenance and supplies. The company plans to spend about $500 million annually building the business, according to the executive in charge.
“We think it will change the industrial world,” said William Ruh, the head of G.E.’s software business. “We’re talking about where an industrial company goes to get its applications.”
The move highlights how important the so-called Internet of Things, a term for matching sensors with cloud-computing systems, has become for some of the world’s biggest companies. G.E. expects revenue of $6 billion from software in 2015, a 50 percent increase in one year. Much of this is from a pattern-finding system called Predix.
While some of G.E.’s software revenue comes from moving existing practices into a new category, the company expects future profits will increasingly lie in servicing things like its jet engines, wind turbines and medical equipment.
G.E. calls its new service the Predix Cloud, and hopes it will be used by both customers and competitors, along with independent software developers. “We can take sensor data from anybody, though it’s optimized for our own products,” Mr. Ruh said.
The goal is to have a place where manufacturers can buy the software applications they need, something like the way consumers pick up a new game in the mobile app stores of Apple and Google.
Pitney Bowes has said it will use the system for its business in sending invoices and direct mail. Other customers will be announced, Mr. Ruh said.
While the company has undeniable insights into how the industrial world works, its efforts in computing pale in comparison with IBM, which is increasingly targeting fields like health care and industrial operations, long the domain of G.E.
IBM has hired experts from various industries to sharpen the algorithms of Watson — the IBM computer famous for winning on the television game show “Jeopardy!” — to meet the needs of, say, an oncologist or a supply chain manager.
“In the past we were a pure data-processing company, we didn’t want to own the data or build the software applications,” said John Kelly, who heads IBM’s Watson and analytics businesses. “We’ve crossed a line we wouldn’t cross before.”
Microsoft is also hoping to persuade companies to use its cloud computing, called Azure, for storing and searching industrial data. Even Google, which makes almost all of its money from categorizing web pages and putting ads on them, is positioning itself as a data-analysis company for business.
That raises the stakes for G.E. “It’s a whole new competition for them,” said Yefim Natis, a senior analyst with Gartner. “To run businesses in a modern way you have to be analytic and predictive. The two sides are coming at it from different directions.”
G.E. is running the Predix Cloud on a combination of G.E. computers, the vast computing resources of Amazon Web Services, and a few local providers, like China Telecom.
China, along with countries like Germany, is sensitive about moving its data offshore, or even holding information on computers in the United States.