5 things we learned from the HPE and GE IoT partnership

A few days ago, GE Digital and HPE announced a major partnership to expand their services and solutions for the industrial enterprise. The partnership is a major win for the GE Predix IoT platform, but it also has some interesting repercussions for the IoT market.

industrial iot

A few weeks ago during the Discovery conference, Hewlett Packard Enterprises (HPE) announced a partnership with GE Digital to expand their solutions for the industrial enterprise. The partnership centers around GE Digital’s Predix IoT platform. As part of the agreement, HPE will become the preferred storage and infrastructure provider for GE Digital’s Predix. Also, to enhance the service offerings around Predix, HPE will provide support for the design, implementation and rollout of the Predix platform through its services and infrastructure offerings. GE Digital will also leverage HPE technology for much of its virtual infrastructure as well as some OEM offerings.

Beyond the headlines, the partnership between GE Digital and HPE brings up a group of interesting facts about the industrial IoT market that I believe are worth discussing.

Predix’s credibility continues growing within the technology industry

The partnership with HPE is a very strong validation for the GE Predix platform. During the last few years, GE has invested heavily in digital technologies, including IoT. However, the enterprise software and open source communities have been somewhat skeptical about GE’s products. At its core, GE makes turbines and planes not software, right? We would be foolish to think that way. GE Digital is becoming a relevant player in areas like IoT that are going to be foundational to the next generation of enterprise software.

Industrial IoT is a big boys' game

The partnership between GE Digital and HPE is another example of how industrial IoT solutions remain a market dominated by incumbents. While there are many innovative startups in the enterprise IoT space, the mission critical nature of most industrial IoT solutions requires the resources and domain expertise of big enterprise companies like HPE or GE.  

As the market evolves and IoT technologies become more mainstream in the enterprise, we are likely to see the dominance of the big enterprise IoT solution providers begin to fade as the door opens for new players. For the time being, GE Predix has gained an important delivery ally in HPE, which will help to improve the professional services and solutions offering around the platform.

Validation of the Cloud Foundry for IoT model

Recently, I’ve been writing about how the Cloud Foundry for IoT model can become extremely relevant in the enterprise. The strategic alliance between GE Digital and HPE represents a very strong validation for this open source IoT PaaS model based on Cloud Foundry. More importantly, with this model GE Digital and HPE are likely to offer a solution that combines the sophisticated IoT capabilities of Predix with the infrastructure and services of the HPE Helion Stackato platform.

This agreement represents the first major adoption of GE Digital’s Predix by one of the top Cloud Foundry distributions in the market. Strategically, it is likely that GE Digital will continue establishing partnerships with other Cloud Foundry distributions to consolidate Predix as the default IoT services platform for Cloud Foundry.

HPE believes that partnering is better than building

There are always things that can you can read between the lines in these agreements. One of them is that HPE obviously believes partnering with Predix is a faster path to relevance in the IoT market than building a proprietary IoT offering. In a world in which most of the PaaS market leaders like Azure, AWS or Bluemix have already built strong IoT PaaS offerings, HPE needs a competitive value proposition for its Helion Stackato platform. Even for a company with the resources of HPE, building a proprietary IoT offering would have been a very difficult endeavor.

By adopting GE Digital’s Predix, HPE adds one of the most sophisticated IoT platforms to its Helion Stackato offering. Additionally, GE Predix will offer HPE a window to include the Helion Stackato platform in some of the most relevant industrial IoT deployments in the world.

GE Predix remains the biggest IoT platform in the market in terms of revenue

The alliance with HPE is likely to have a positive impact on GE Predix revenues, which already seem to be far ahead of everyone else in the space. Late last year, GE announced that Predix was expected to generate $5 billion in revenues and $6 billion in bookings for the year. GE also forecasted that Predix’s revenues should grow to $15 billion by 2020. That level of growth is certainly impressive for a platform operating in a nascent space like enterprise IoT.

To put GE’s Predix revenue numbers in perspective, we can compare it with the market leader PaaS companies. In 2016, AWS is expected to generate close to $10 billion in revenue, from which the contributions of the AWS IoT Hub are a very small fraction. Microsoft doesn’t break out Azure’s revenue as a separate business but the entire Intelligent Cloud offering is expected to surpass the $10 billion run rate this year. Similar to AWS, the revenues associated with the Azure IoT Suite are very small.

Is Pivotal next?

The partnership between HPE and GE Digital is a major step towards making Predix the main IoT platform services offering for Cloud Foundry. Expanding GE Digital’s Predix offering into other major Cloud Foundry distributions seems to be a logical step. Without a doubt, Pivotal Cloud Foundry (PCF) remains the market leader in the private PaaS space, but, to this day, PCF doesn’t include a solution for IoT applications.

Similar to HPE, Pivotal combines a very strong private PaaS offering with a deep solution delivery expertise using the Pivotal Labs arm. Adding GE Predix will significantly expand the PCF value proposition into the IoT market. Complementing this, a partnership with Pivotal will expand Predix with a large number of enterprise platform services already included in PCF. In the meantime, we'd better get accustomed to seeing Predix become more relevant in the Cloud Foundry community.

Copyright © 2016 IDG Communications, Inc.

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