News Update: http://seekingalpha.com/news/2635435-general-electric-posts-strong-industrial-performance-ups-forecast
As I was half awake and somewhat listening to CNBC, GE’s earnings were being reported, with the company beating estimates in terms of profits as well as GE Capital being sold contributing to the boost pre-market. However, as they kept discussing the company, the analyst they brought on started to talk about the “predictive analytics” that GE provides for its clients, and how software is now the big thing at GE. Other industrial companies that apparently also have predict analytics being implemented include Rockwell and Honeywell.
Technology has always been the easy catalyst to use to become excited about companies. I was pretty young during the tech bubble in 2000, but I was aware that a lot of businesses were trying to reposition themselves so that they were on the cutting edge of technology. In these last few years, “cutting edge” is business intelligence, software that can take data a company (or an industry) generates, and suggest strategic moves, such as level of spending, sectors to focus on, etc. Any talk about any company being able to create predictive software implies either one of two things to me: 1) they have a crude software in place that takes historical data and regurgitates it to the customer (“Hey! In last March you ordered X amount. We think you should order X*1.05 this March.”), or 2) they’re trying to build something customized, cobbled together by other companies (i.e. see Fire OS for Amazon, it’s just an Android machine).
This might not just be talk, however. GE is probably in place to take advantage of analyzing a lot of data. On the industrial side: supply chain management software is fairly established technology these days, and GE will have proprietary data to put in the system. Consumer technology (like washing machines): the Internet of Things concept continues to grow, and it wouldn’t be surprising to see consumer products outfitted to send and receive data over the IoT.
Technology has always been a great way to make a big splash, but without proper understanding of what the offering intends to do and what it can do now (and also how), any talk about innovative software scares me rather than excites me.