SoftBank to be 1st Licensee of GE's Predix Software Platform
Marking the first step to monetize its Predix software platform, General Electric Company (GE) chose Japanese telecom giant SoftBank Corp. (SFTBY) as the first licensee for its Predix software platform that connects industrial devices.
First unveiled in Oct 2013, the Predix software is basically designed to add intelligence to the Internet of Things (IoT) applications. It allows companies to connect their machines, data and people and run industrial-scale analytics. The software is installed in both the machines and the cloud, thus allowing the devices to connect and communicate.
Per the licensing agreement, SoftBank will leverage GE’s Predix software platform to develop targeted applications for industries like shipping and manufacturing. The partnership will create apps, which will empower companies to forecast failures in advance and optimize supply chains, product enhancement and distribution inventory.
While the details of GE’s revenue-sharing agreement with SoftBank were not disclosed, the deal will add to the $1 billion-plus Predictivity services revenue that GE was already expecting this year. GE sees immense potential in the IoT software business and announced that it is the fastest that a GE business has hit the $1 billion mark.
The move strengthens GE's foothold in the budding IoT concept, which aims to connect devices and systems with applications ranging from industrial gear and mobile devices to home appliances and cars. It also opens up an estimated $12 billion data analytics market in Japan and an over $200 billion opportunity globally for the industrial giant.
GE’s intense focus on the IoT market is evidenced by the flurry of partnerships it recently entered into with enterprise technology giants. Apart from SoftBank, Intel Corporation (INTC) and Cisco Systems, Inc. (CSCO) are gearing up to make "Predix Ready" devices, which will be equipped with open communication frameworks ranging from sensors and devices to cloud based services.
GE’s analysis platform will likely touch tens of millions of devices around the world. Cisco has already decided to deploy Predix software inside its networking products, beginning with a specialized computer router for harsh environments like oil fields. Intel has built a reference architecture that integrates Intel processors with the GE software. Verizon and Vodafone provide a broad range of wireless connectivity solutions, which are optimized for Industrial Internet solutions. GE also has an alliance with AT&T, Inc. (T), which connects its machines and assets through the AT&T global network and highly secure cloud.
The company's goal is to extend its prowess in connecting machines and applying big-data analysis beyond GE's world of industrial and aviation equipment, and it likely hopes to generate huge revenues from software and services in the future. That seems fairly reasonable considering that the potential market for the software is any business with a piece of equipment that it is trying to optimize.
General Electric currently has a Zacks Rank #3 (Hold), while SoftBank carries a Zacks Rank #2 (Buy).
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