GE, Siemens Vie to Reinvent Manufacturing by Harnessing the Cloud
Digital platforms let factories link data on inventories, maintenance, safety hazards
Updated March 5, 2017 11:04 a.m. ET
FRANKFURT—A battle of industrial titans is shaping up as the Android-versus-iOS of manufacturing.
At issue is who will create and dominate a realm of technology that promises both to become the backbone of industrial automation and provide mountains of data about everything from parts inventories to how products are wearing long after their purchase.
GE, Siemens and a constellation of other companies aim to reinvent manufacturing by letting firms of all sizes tap digital platforms linking each stage of the value chain—from design through production to maintenance.
The industrial IOT “is about connecting and using the data from end to end,” said GE Chief Digital Officer William Ruh.
Using a new generation of built-in sensors, companies are figuring out how to conduct digital conversations with their industrial equipment and with products such as robots, turbines, pumps and drones. The sensors let manufacturers collect data and send back instructions.
“People are still trying to learn how it benefits their business,” said Jenalea Howell, a research director at IHS Technology. “Folks are coming around to the idea, but it’s still fairly recent.”
The fast-growing market could be worth more than $150 billion in three years, according to research firm Markets & Markets. That could top the crowded consumer mobile-app market, with its flood of small transactions, according to some estimates. The industrial-app world involves fewer but more specialized big-ticket corporate investments.
“We’re going to see more value out of the industrial side sooner,” said Jim Lawton, Chief Executive of Rethink Robotics Inc., a U.S. startup that designs hardware and software for automating factory production.
Platforms’ success will depend on their openness to cooperation with rival brands and specialized applications, like on smartphones. Systems require many “co-petitors,” said Siemens Chief Technology Officer Roland Busch.
One is Microsoft Corp., which has deals with Siemens and GE to link with its Azure cloud platform. Others handle highly specific tasks inside mountains of industrial data.
“What’s the point of knowing a pump is going to break if you don’t know where the pump is?” said Nils Herzberg, head of global IOT strategy at German business-software provider SAP SE, whose software is compatible with multiple systems.
Siemens and GE are racing to add partners and win over industries from health care to power generation. GE’s Mr. Ruh said the company’s Predix platform has more than 300 partnerships.
SAP Already Has Cloud Niche
While General Electric Co. and Siemens AG vie for the lead in industrial internet-of-things cloud platforms, one winner already looks to be German business-software provider SAP SE.
The company’s HANA analytic cloud database—used by many companies to manage business processes like resource planning and supply-chain management—has emerged as an important building block for industrial firms wanting to link something like cost management to factory machines.
Siemens built MindSphere directly on top of HANA’s architecture and uses some aspects of SAP’s IOT platform, while GE and SAP are working on making HANA interoperable with Predix to benefit shared customers. Bosch has a similar collaboration with SAP.
“Nobody can do this on his own,” said Nils Herzberg, who heads SAP’s global strategy for IOT. “We all need to partner and depend on someone else’s capability.”
Siemens, which has officially announced six partnerships for its MindSphere platform, says almost 100 more are in the pipeline. Mr. Busch acknowledged Siemens’s platform is less open than rivals’ but said it soon “will be as open as any other.”
GE’s platform has an early edge because it is already more compatible with other clouds, experts say. Dozens of companies are already building applications on it. Some track spare-parts inventories, flagging low supplies, or automatically shut machinery if workers face danger.
App designers range from tech startups to industrial old-guard companies like Germany’s Robert Bosch GmbH.
“You can’t do it alone,” said Rainer Kallenbach, the head of Bosch Software Solutions. Bosch and GE recently agreed to make their cloud platforms and related software interoperable.
“All these various platforms are currently more or less islands” and must merge to “create continents,” he said.
While GE has led in platform openness, Siemens is ahead in the related field of factory automation, said Peter Reilly, an analyst at Jefferies LLC. Siemens has automated many of its own factories and it produces the robotic drives to automate others.
Siemens and GE have also been competing to broaden the appeal of their digital platforms by buying up software capabilities. Both companies last year announced acquisitions of U.S. tech companies.
Richard Soley, the head of the Industrial Internet Consortium, a U.S.-based organization that includes GE and Siemens, said the rivals are ahead of others in designing platforms and so “will own a lot of the market.” He said no overall winner is likely because industries and their requirements vary widely.
Mr. Lawton of Rethink Robotics predicted two or three major industrial IOT platforms will ultimately prevail out of a couple dozen being developed today.
“It’s a bit of a land grab at the moment,” he said.
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