Jeff Immelt, CEO of GE. Photo courtesy of GE. .
Let's finally end the debate over whether we are in a "tech bubble."
There has been talk of a bubble going back to 2011 and it continues to rage today.
I believe that this is shortsighted and rooted in the belief that at some point the tech industry must undergo the same unfortunate "burst" as in 2000.
This line of thinking ignores the immense value that digital technologies have already created in the consumer world: the "app economy" alone is worth an estimated $300 billion.
More importantly, it neglects the value digital technologies will create in the industrial world over the next decade – an estimated $8.6 trillion in productivity gains, more than two times the future value of the consumer Internet market. The next big wave of innovation won't be new on-demand services or video streaming.
The next big wave of innovation won't be new on-demand services or video streaming.
It's time to apply the same energy to solving big challenges in healthcare, infrastructure, power and transportation.
We need to provide sustainable energy to the more than one billion people who have no access to electricity, deliver better and more cost-effective healthcare to aging populations, and lift hundreds of millions of people around the world out of poverty.
We've now arrived at a place where solutions are within reach.
The industrial app economy is just getting started. Today it stands where the consumer app economy was ten years ago. But industry today has a problem. We've averaged four percent productivity gains from 1990 to 2010, but that's dropped to just one percent from 2011 to 2015.
The trouble is that we've been focusing on IT and connectivity, which drives just five percent of value. The real value can be found in Operations Technology (OT), which will drive 95 percent of the value and the next age of productivity. It is industry's turn now.
Every industry and company that is not bringing software to the core of their business will be disrupted. Today, science is not as powerful as the combination of science and software. IT architecture is not as powerful as architecture and software.
This is where the physical and digital worlds meet.
The machines that build, power, cure, and move our world are becoming more powerful and brilliant with software. We can now create a "digital twin" for every engine, every turbine, every MR scanner. Through data modeling of physical assets, these machines can be continually tuned, continually upgraded and made more valuable in a scalable and adaptable way.
This is where the physical and digital worlds meet.
The combination of software and machines, from airplane engines to power plants to wind turbines, has laid the foundation for a new wave of innovation – and the economic and environmental impact of industry and software cannot be understated.
There will be approximately 20,000 developers building solutions on Predix, the cloud-based platform for the Industrial Internet, in the next year.
Jeff Immelt, CEO of GE. Photo courtesy of GE. .
Within a decade, the Industrial Internet will be worth more than twice the consumer Internet, and a new breed of digital industrial companies will deliver faster innovation and growth than industry has ever seen before.
I'll give you specific examples. Let's say you have a small team consisting of a developer, a designer, and a data scientist.
There are two ways to build apps and services for the Industrial Internet, depending on whether this is an internal team at an established company or an entrepreneurial group:
1) Bottom-up
Develop a unique, flexible service that furthers the value of machine data that can be a utilized by one or more industries. For example, this could be an iOS dashboard-style app that makes connections between machine performance and weather patterns, seasons, time of day, or any host of environmental factors. It would enable businesses to predict how critical machines will run based on forecasted weather data.
2) Top-down
Analyze real data sets from specific industries, businesses or machines to develop highly customized services that eliminate inefficiencies and boost productivity. For example, data tracking the fuel burn of thousands of locomotives may result in a new app that provides rail companies with real-time guidance on optimal speeds to travel on different levels of incline. Such an app could result in savings worth millions of dollars in fuel costs and reduced carbon output.
Jeff Immelt, CEO of GE. Photo courtesy of GE. .Our economists have calculated that the Industrial Internet could add an estimated $15 trillion to global GDP by 2030. Whether that prediction comes true is in our hands. There is massive opportunity to help big industry move as fast as a start-up and bring machines into the Internet age.
The resulting gains in innovation and efficiency will yield true benefits to society. To do this, however, industry must move from a closed to open model. GE is creating an open standard and an open ecosystem together with partners and customers. Invention has always been at the heart of change. We are in the midst of a digital industrial revolution that has promise for true progress.
I want to appeal to all those seeking to create something meaningful, solve big problems and change the world. The opportunity for the next great idea in industry is endless.
It's only bound by our imagination. Remember what Thomas Edison said: "there are no rules here; we are trying to accomplish something."
Jeff Immelt is the Chief Executive Officer of GE.
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