Industrial IoT Superstars GE, Siemens Are Butting Heads In Manufacturing Market

GE and Siemens are battling each other with vastly different software strategies in a high-stakes land grab as factories quickly move their operations onto cloud-based Internet of Things platforms.

As more manufacturing customers look to collect and analyze operational technology data, GE and Siemens are going in opposite directions with their respective Predix and MIndSphere cloud platforms, solution providers told CRN.

GE has tried to get to the forefront of the industrial market through platform openness and partnerships. The company's Predix cloud is based on a multitenant ’gated community’ model, meaning that customers belong to the industrial ecosystem.

[Related: 5 Ways GE Digital Is Advancing Industrial IoT Opportunities For Partners]

Siemens, meanwhile, is approaching IoT from a different direction and focusing sharply on product design and factory automation with a significant investment in product life-cycle management software.

The company's MindSphere platform is explicitly designed to connect assets at industrial plants in an automated production environment. The German company's comprehensive data hosting platform also offers data-based services such as machine tool analytics and energy analytics.

"GE and Siemens are both going after the industrial market with different approaches with their operating systems," said James Gillespie, CEO of Gray Matter Systems, a Pittsburgh, Pa.-based solution provider specializing in operational technology. "GE has its own applications, and now there's a whole community of developers and solution providers who are coming together around these apps."

Gillespie says there is a democratization of the technology taking hold in the manufacturing market. "The cloud technology itself is really becoming more affordable, dependable and reachable, and it's these IIoT [Industrial Internet of Things] operating systems forming. It's not just about the vendors and what they do, it’s the community around the operating system."

Gillespie, whose company partners with GE Digital, said that the manufacturing firm offers an array of modules, including Brilliant Manufacturing, an automation module, and an asset performance management module for oil and gas – helping partners easily build up services and value-add around various IIoT applications.

One operational technology solution provider executive, who partners with both GE and Siemens, said that GE Digital is building up its case for the industrial market with Predix, but Siemens' specialization in automation also makes it an appealing platform for customers.

"GE is dominating in the U.S. right now, but Siemens is clearly making the effort [in this market]," said the executive, who wished to remain anonymous. "Factory automation is probably the strongest part of Siemens' business … they're making big investments there."

New Investments In IIoT

The industrial space is a lucrative area in the Internet of Things market. According to market research firm IDC, manufacturing operations was the IoT use case that saw the largest investment, $102.5 billion, in 2016.

Tony Balistrieri, vice president of enterprise sales at Zones, an Auburn, Wash.-based solution provider, said he is seeing industrial clients upgrade from on-premise to cloud platforms but he expects "mass acceleration" toward the end of the year.

"There's definitely growth in the IoT space as many customers are looking for tools in the cloud to manage anywhere and anytime," he said. "All of our clients are looking to manage at the cloud level. Their ability to get a device and manage and monitor it from anywhere is a natural application for the cloud."

While Boston-based GE – a $123 billion diversified conglomerate -- already has scoped out a large portion of the North American IIoT market, Siemens – weighing in at $87 billion -- has been funneling investments beyond its German headquarters through a 30 percent increase in research and development spending in the U.S. since fiscal 2014, according to the company.

GE, for its part, estimates that it will generate nearly $5 billion in revenue from software and related services in the IIoT market in the coming year. The company brought in $4 billion in 2016 from Predix and software orders. Meanwhile, Siemens has about $5.49 billion in revenue from software and services.

Jagannath Rao, head of data driven services at Siemens Digital Factory, told CRN that the company plans to better entrench itself in the U.S. through building out its North American channel from its existing partnerships, including with Accenture and Atos.

"Our goal is simple – to scale up and get as many customers connected as possible … through building out our go-to-market channels, through system integrators and distributors," he told CRN.

GE, meanwhile, hopes to connect its manufactured products – from gas turbines to jet engines and light bulbs – through its Predix platform.

"Make no mistake, we want to continue to be the leader in the Industrial Internet of Things," said Aaron Darcy, chief marketing officer at GE Digital. "You'll continue to see a lot more innovations on our Predix platform, you'll continue see us start to innovate a lot more through our applications and work with our ecosystem to bring other applications to our customers."

"What's fascinating about GE is that because we're such a large industrial company with such a large internal information technology organization, we've almost got this constant pipeline of new innovations built by industrials for industrials that are available on our Predix platform," he said.

Over the past year, GE and Siemens have acquired U.S. tech companies as they look to broaden their reach in the connected manufacturing space.

In November, GE purchased ServiceMax – a cloud-based field services management provider, for $915 million, bringing in the company's array of consulting, integration and IoT partners like NTT Data and ABSI. Siemens in the same month said it was purchasing industrial software provider Mentor Graphics in a $4.5 billion deal -- taking in the company's operational technology-focused consulting partners like Caliber Interconnect Solutions and Mindtree Consulting.

Looking forward, competition in the industrial space will only tighten, especially as other operational technology vendors such as Schneider Electric and Rockwell Automation begin building up their own strategies targeting niche areas of the manufacturing space.

Channel Plays

Siemens and GE are making significant channel investments as they look to snag market share in the industrial market.

GE Digital already has a broad channel ecosystem built up in the North American market "from day one," including large global systems integrators, hardware manufacturers and resellers.

The company's GE Digital Alliance program has four tiers – Certified, Select, Premier and Global Strategic – and provides partners with access to sales, marketing and technical resources from GE, as well as tools, training and enablement, online content and assets, Predix certifications, developer sandboxes, joint deal registration and incentives based on contribution level.

On the reseller end, GE has two initiatives around Industrial IoT – offering its Predix certifications to partners around its Predix platform, and leveraging both IT and operational technology partners.

"We're trying to reach both [IT and Industrial IoT partners], although most of our partners right now are on the operational technology side," said Darcy. "What differentiates our partners in Industrial IoT is that unique understanding of how a power plant operates. A lot of our resellers have that operational technology know-how."

In 2016, GE built up its channel by enrolling and formalizing arrangements with partners, but as the company continues to ramp up its digital strategy, it will "start to mobilize that partner network," GE Digital Global Head of Channel and Alliances Guy Taylor told CRN.

Meanwhile, Siemens is still in the early stages of expanding its partner program in North America as part of its overall push into the market. As of 2016, the company had 62 North American partners in its four-tiered program.

Many of Siemens partners that have access to the company's collaboration software and data and information management tools are operational technology partners specializing in product life-cycle management solutions.

The company's program, made up of channel partners, consulting and systems integration partners, and software and technology partners, still has a ways to go before catching up to its worldwide program, which had approximately 800 partners as of 2016.

Both cloud platforms ultimately drive the professional services for both IT and operational technology partners, partners told CRN.

"For us, the professional services side is a big opportunity for us," said Zones' Balistrieri. "There may not be as much money on the sensors -- it all comes back to data, storage systems, visualization products. That end of it is the important part of the pull-through for us. … It drives our technology."