GE's CEO sees more partnerships ahead for digital business

SAN FRANCISCO (Reuters) – General Electric Co (GE.N) will use more alliances to build its digital-industrial business in coming years, Chief Executive Officer John Flannery said on Wednesday, suggesting the industrial conglomerate will curb spending in that area.

Microsoft Chief Executive Satya Nadella and General Electric Chief Executive John Flannery speak at General Electric Company’s Minds + Machines conference in San Francisco, California, U.S., October 25, 2017. REUTERS/Alwyn Scott

GE is investing about $ 2.1 billion in GE Digital this year, and executives had said that amount would fall in 2018.

Flannery on Wednesday made his first direct remarks about the digital strategy since he became CEO on Aug. 1. He has begun slashing costs in other areas, including reducing staff, grounding corporate jets and axing the “Maserati benefit” of corporate cars for about 600 senior executives.

Flannery is due to unveil new financial targets on Nov. 13 and is under heavy pressure to turn GE around after the company’s third-quarter earnings and cash flow badly missed targets. GE stock is down 32 percent so far this year, while the S&P 500 index is up 14 percent,

GE’s digital strategy is built around a cloud-based software platform, known as Predix, that connects factories, power plants and other industrial equipment to computers that improve performance and predict outages.

But Predix’s limited capabilities and performance problems have caused GE to lose out to competitors such as Siemens AG (SIEGn.DE) and startups such as Uptake and C3IOT.

Flannery said on Wednesday that GE will focus on selling Predix in its own businesses: energy, oil-and-gas, aviation, healthcare, transportation and mining, as Reuters reported in August.

In other markets, “We’re going to be more selective … and do it largely through partners,” Flannery said at GE’s annual Minds + Machines conference.

FILE PHOTO: The ticker and logo for General Electric Co. is displayed on a screen at the post where it is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. on June 30, 2016. REUTERS/Brendan McDermid/File Photo

Gary Mintchell, chief executive of The Manufacturing Connection, an industrial-internet-focused research and consulting company, said GE’s strategy of using partners reflects the company’s realization that “they can’t build their own ecosystem.”

GE said it was expanding its partnership with Microsoft Corp (MSFT.O), to provide access to Microsoft applications on Predix. The specifics largely duplicated what the companies said when they first announced the deal in July 2016.

GE said Predix will be available on Azure in North America on Nov. 30, months later than the original target of the second quarter. Predix will still be available on Amazon.com Inc’s (AMZN.O) Amazon Web Services cloud platform, GE said.

GE Digital’s chief executive, Bill Ruh, on Wednesday noted a partnership with Hewlett Packard Enterprise Co (HPE.N). GE also is linking Predix with Apple Inc’s (AAPL.O) IOS operating system for iPhones and iPads.

Patrick Franklin, vice president in charge of Predix, said there was still room to improve Predix after the company held a two-month time-out this year to fix bugs, but the platform was showing near-100 percent stability.

“We are paying careful attention to quality,” he said, referring to the delay in deploying Predix on Azure.

GE executives said the company is focusing on developing apps for Predix to boost sales. GE plans to bundle applications for equipment monitoring and service technicians, both of which it bought last year.

GE said orders for Predix were rising sharply. Some customers at the event echoed that view. U.S. utility Exelon Corp (EXC.N), for instance, said it is rolling out Predix to its nuclear, gas, wind and other power plants after a two-year pilot of the system showed it worked as advertised, said Brian Hoff, director of corporate strategy and innovation at Exelon.

“If it didn’t hit its targets, we wouldn’t be moving forward,” Hoff said.

Reporting by Alwyn Scott; Editing by Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

Tech

Apple's iPhone 8 launch in Sydney sees bleak turnout

SYDNEY (Reuters) – Apple Inc’s (AAPL.O) iPhone 8 launch in Sydney, one of the first cities to access the product in Australia, saw a bleak turnout as fans held out for the soon-to-be-released premium iPhone X.

Hundreds of people usually gather at Apple’s Sydney city store with queues winding down the town’s main street, George Street, when there is a new product release. On Friday, there were fewer than 30 people lining up before the store opened, according to a Reuters witness.

Mazen Kourouche, the first in queue after lining up 11 days outside the store so that he could buy and review the product on YouTube, said there were modest refinements.

“(It) is pretty similar to the iPhone 7 but it shoots 4k 60 frames per second and it’s got a new glass back instead of the metal which is apparently more durable,” he told Reuters. “There aren’t too many new features to this one.”

Poor reviews of the iPhone 8, which comes 10 years after Apple released the first version of the revolutionary phone, drove down shares of the company to near two-month lows of $ 152.75 on Thursday, as investors worried pre-orders for the device had come in well below previous launches.

The iPhone 8 will only cater to those who want a new version but do not want to pay a hefty $ 999 for the iPhone X, said iTWire.com’s technology editor Alex Zaharov-Reutt, who did not line up for the launch.

“Yes there is a new iPhone coming in a couple of months and plenty of people would want that,” he said.

The iPhone X is a glass and stainless steel device with an edge-to-edge display that Chief Executive Tim Cook has called “the biggest leap forward since the original iPhone”.

Reporting by Paulina Duran, Jill Gralow and James Redmayne in SYDNEY; Editing by Himani Sarkar

Our Standards:The Thomson Reuters Trust Principles.

Tech

Eric Schmidt sees a huge future for machine learning

The man who helped build Google from a search engine into one of the biggest and most influential companies in the world has predicted the emergence of a new computing architecture based on crowd-sourced data and machine learning.

Speaking at Google’s GCP Next cloud computing conference in San Francisco, Alphabet Chairman Eric Schmidt said the combination of crowd-sourced data and machine learning will be the basis of “every successful huge IPO” in five years.

He said the adoption of machine learning will allow companies to mine crowd-sourced data, which already provides a mass of information not previously available to companies, and improve on it.

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