Microsoft (MSFT, Financial) and General Electric (GE, Financial) announced a new partnership on July 11 that will help both companies expand their cloud offerings. The partnership will be focused around the Internet of Things (IoT) which has been growing exponentially in the technology sector.
General Electric’s Predix is a leading industrial software platform for collecting and analyzing data through Internet of Things connections. With its first release in 2015, the software platform is one of the industrial market’s leading programs analyzing industrial data. The Predix platform is primarily used by industrial companies for performance and analytics of industrial machines.
With the Microsoft and GE partnership, the Predix software system and capabilities will be integrated with Azure beginning in the second quarter of 2017. By connecting Predix with Azure in the cloud, industrial companies will be able to use industrial IoT data in more versatile ways. This connection for industrial companies infinitely expands the capabilities for improving business processes and industrial machine management.
According to GE CEO Jeff Immelt, “Connecting industrial machines to the Internet through the cloud is a huge step toward simplifying business processes and reimagining how work gets done."
This partnership will significantly help to improve cost structures in the industrial industry. For General Electric and Microsoft the deal will help increase demand for both Predix and Azure.
In Microsoft’s most recent quarter, its intelligent cloud business, which includes Azure, totaled $6.096 billion. For the most recent quarter, that revenue was up 3.3%. With Predix, Microsoft will be able to more broadly market its Azure platform to industrial companies. It will also enhance the offering for its current industrial clients. Overall, it is a significant step for Microsoft in growing not only its cloud capabilities but also its industrial cloud customers.
In General Electric’s most recent quarter, it reported industrial revenue of $25.869 billion which was an increase of 6% from the comparable quarter. As GE continues to streamline its business to more directly focus on its industrial strengths it is likely that investors will see more innovative Internet of Things technology from the company.
In a CNBC interview on Monday, Satya Nadella of Microsoft and Immelt discussed the new capabilities resulting from the strategic partnership and how it will affect the businesses of both companies.
Disclosure: I do not own any shares of GE or Microsoft.
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