GE Gave Up Building its Own Cloud

Reuters has a detailed article about a strategy shift in General Electric’s digital business. GE invested early and heavily into IoT. They want to connect every GE device with the cloud with their Industrial Cloud-Based Platform (PaaS) called Predix.

[GE] Engineers initially advised building data centers that would house the “Predix Cloud.” But after Amazon.com Inc and Microsoft Corp spent tens of billions of dollars on data centers for their cloud services, AWS and Azure, GE changed course.

However, GE could not compete with these investments and now rely on AWS and Azure instead of its own cloud services.

GE abandoned its go-it-alone cloud strategy a year ago. It now relies on AWS and expects to be using Azure by late October, four months behind schedule, the executives said.

This should be a warning to smaller companies who try to run their own cloud. It doesn’t seem to be well-invested money.

The Reuters article contains a second warning although a bit more hidden.

GE will now emphasize sales to existing customers in its energy, aviation and oil-and-gas businesses, and scale back efforts to sell to new customers in other sectors, three senior GE executives told Reuters.

Originally, GE followed a horizontal strategy, where it wanted to reach customers in all possible sectors. Now, GE changed to a vertical strategy, where it focuses on three core sectors. The lesson here is: What works well in one sector need not work well in another sector. Sectors are too different and require different solutions.

These two lessons also apply when you select a provider of cloud services. Be very careful if they offer you to host your cloud. This is simple if you only have a few dozens or hundreds of devices. It is a totally different story if you have thousands of devices – and growing quickly.

Also be careful, if they haven’t built a solution in your sector. If they have a good solution for fleet management, this doesn’t mean that they are good in processing the data coming from combined or forage harvesters. It is a totally different story.