GE CEO Immelt embraces software; VC Andreessen embraces hardware
By Sarah McBride
SAN FRANCISCO (Reuters) - General Electric (GE.N: Quote), famous for branded hardware from lightbulbs to turbines, is pushing hard into software, chief executive Jeffrey Immelt said at the Minds and Machines conference on Thursday.
"In an industrial company, avoid software at your own peril," Immelt said in a discussion with Marc Andreessen, the famously pro-software venture capitalist, and Chris Anderson, editor of Wired magazine.
Software and analytics have becoming increasingly important for many of GE's clients, Immelt said. A group of GE's radiology customers, for example, told him earlier this week that if given $10 million to invest, they would put it into analytical tools like post-processing algorithms; ten years ago, the answer would have been brain-imaging machinery, he said.
The same thinking applies to GE customers in areas such as energy. "The grid has tremendous opportunities for application of both software and analytics," he said.
In some areas, "a software company could disintermediate GE someday," Immelt said. "And we're better off being paranoid about that."
General Electric last year generated some $42 billion in revenue from services - a higher margin business that Immelt sees as key to growing the company's profit in a weak global economy. The new push into software is a bid to expand its service offering while also defending its position in big industrial markets such as electric turbines, jet engines and railroad locomotives.
On Wednesday, the company said it was planning a new push into services.
Andreessen suggested a good way for old-line companies to gain an edge in software is to invest in leading software start-ups. Continued...