General Electric (GE) surged 2.36% today, breaking out to new highs on news of a new Industrial Internet initiative that has the potential to revolutionize the energy industry.
During this month's D: All Things Digital conference, General Electric CEO Jeff Immelt spoke about a new massive expansion of this concept called the Industrial Internet. Immelt's most frequent talking point was the potential cost savings that could be realized with this new concept, which would reduce waste and maximize the use of critical machines by using chips, sensors and other collected data.
GE is calling its project Predictivity. The project will be carried out in partnership with Accenture and a company called Pivotal, which is a spinoff of VMWare (VMW) and EMC Corp (EMC) that is run by former Microsoft and VMWare executive Paul Maritz. The massive analytics-driven project will require massive data storage, and GE is partnering with with Amazon Web Services on that front.
Machine data continues to be a big topic, with this type of data growing at a rapid pace due to various sensors and real-time analytics technologies. This new Industrial Internet will be extensively more complex than our consumer internet, as everything from our alarm clocks to our coffee machines will be talking to each other through the web in an ongoing dialogue of analytical data.
This marks the first time industrial companies will have a common architecture, combining intelligent machines, sensors and advanced analytics, said GE in a press release.
The Industrial Internet is predicted to become a major business within the next 10 years, with Wikibon releasing a report predicting spending in the business will reach $514 billion by 2020. The amount of raw data that will need analyzing and processing is expected to grow exponentially.
This isn't the first push GE has made into big data software, as the industry giant has recently invested over $100 million dollars in the aforementioned Pivotal, which is a Platform-as-a-service (PaaS) company. GE has also been actively working to expand its presence in tech-savvy Silicon Valley, opening up a new office called GE Ventures that has a commitment of $150 million annually from the parent company.
Pivotal CEO Maritz touched on the upcoming challenges the industry will face on creating a common platform by re-iterating, This needs to be bigger than any one of us. The Industrial Internet should be like the Internet, this is an ecosystem play.
GE's stock remains in a healthy uptrend that has been in place since the market bottomed in March 2009. From those lows to today's high, the stock price has more than quadrupled. After re-testing a key support level around $15 in September 2011, GE has formed an even tighter uptrend that is now worth watching. GE broke out to new highs on the daily chart today, and if investors start to digest the magnitude of today's move, we could see the macro uptrend accelerate.
*DISCLOSURES: No relevant positions