GE Digital's Future Up In The Air As Parent Sells Other IoT Assets

GE Digital's future remains up in the air as its parent company continues to sell off various businesses, including two Internet of Things-related deals made within the last two months.

General Electric, based in Boston, announced on Tuesday a deal to sell Current, its connected lighting division, to New York-based private equity firm American Industrial Partners. The move is part of the conglomerate's ongoing efforts to consolidate its holdings and narrow focus to its aviation, power and renewable energy businesses — which began under former GE CEO John Flannery and continues under new CEO Larry Culp, who was appointed in early October.

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Established in 2015, Current dubs itself an "intelligent energy management" provider that helps commercial buildings and industrial facilities become more efficient by combining LED lighting with digital networks, making Current fall under the broad umbrella of IoT.

Financial terms of the deal were not disclosed.

Current isn’t the first IoT-related sale made by GE. Last month, GE said it was selling its Intelligent Platforms business, an automation division that provides hardware and software solutions, to Emerson Electric. The deal was announced roughly two months after a news report stated that GE was looking to sell key parts of its digital division without saying which assets may be up for auction.

Is Culp Committed To GE Digital?

GE Digital, which recently announced new industrial IoT edge and private cloud offerings, remains a part of GE. But two employees, including a vice president, last week in an interview with CRN were unable to say whether Culp, GE's new CEO, is committed to the company's digital division.

"I wish I am in a position to actually answer this question. I'll be honest with you. I have not gotten the chance to meet Larry yet. I will let other folks answer that for you," Tony Antoun, senior vice president of edge engineering at GE Digital, said when asked about Culp's commitment to GE Digital.

In a follow-up email later that day, GE Digital spokesperson Amy Sarosiek said she was also unable to address the question.

"I am not the best person to address Larry’s perspective either—he hasn’t made any public statements yet. Happy to share it when he does," she said.

GE Digital Looking For 'Investment Partner'

In an interview with tech publication Data Center Knowledge published last week, GE Digital COO Joe Nichols said the division's product roadmap "remains completely intact" as "investments to continue to grow." An unnamed GE Digital spokesperson told the publication that the division has been looking for an "investment partner," echoing a statement provided to CRN in late July.

Spokespeople for GE and GE Digital did not respond to a request for comment Tuesday seeking an update on Culp's stance on GE Digital.

The new statements casting uncertainty about Culp’s view of the digital division come after GE Digital indefinitely postponed its eighth annual Minds and Machines conference for customers and partners weeks before it was set to run Oct. 30-31.

In his first earnings call as CEO in late October, Culp did not mention GE Digital, software or IoT and mostly focused on changes being made to GE's power business for the duration of his remarks. At one point, Culp admitted that he doesn't "have all the answers" yet about the conglomerate's future.

Partner Says Shake-Up Wouldn't Be Surprising

Barry Lynch, CEO of Factora, a Trois-Rivières, Quebec-based GE Digital partner and one of CRN's 2018 IoT Innovators, told CRN that it wouldn't be surprising if GE Digital split itself across GE's aviation, power and renewable energy businesses, which already benefit from GE Digital's products.

"Leveraging GE Digital tools as productivity tools makes a whole lot of sense to me," said Lynch, who previously worked for GE Digital. "It's going to improve the bottom line for them."

For any parts of GE Digital that don't add value to the parent company's core businesses, Lynch speculated that the company could end up selling those assets. Buyers could include large global partners or investment firms while competitors would likely be ruled out, he added.

"If it isn't really aligned with the core businesses that they're looking to grow," Lynch said, some parts of the business may need "a different company that continues growth and investment of those products."

Digital Sales Represent Small Fraction Of GE

Even as GE Digital's future remains uncertain, industrial IoT continues to be an important part of GE's brand, as evidenced by the company's investor relations page, which states that GE is "uniquely positioned" to lead in industrial IoT as a "digital industrial” company.

GE Digital was formed in 2015 under former GE CEO Jeff Immelt in his bid to turn the conglomerate into a top industrial software player. But under Immelt's successor, Flannery, GE Digital made job cuts and scaled back efforts as it pivoted focus from its Predix IoT platform to applications built in Predix.

While GE Digital was at the forefront of Immelt's digital transformation efforts, it only made up a tiny fraction of GE's revenue from last year: $4 billion out of $122.1 billion total. The digital division has said that it has 1,000 customers, with 100 percent year-over-year growth in annual revenue. But even Flannery, months before he was let go in October, seemed to view the digital division as an important part of the company in public remarks he made when GE announced its breakup plan.

"Digital and Additive are substantial opportunities across all 3 segments [aviation, power and renewables] that provide benefits to enhance growth and lower cost," Flannery said in the company's June 26 update, according to an official transcript.

Lynch said regardless of what GE Digital looks like in the future, he hopes the business will find the right resources to succeed.

"My view is whatever happens with GE Digital, however it's diversified or split up in the future, as long as they continue to invest in the platform, customers are going to be good," he said.