There is more to the Internet of Things (IoT) than FitBits and smartphone-controlled thermostats. While consumer goods are some of the IoT’s most visible applications, they’re just one part of the vast and game-changing phenomenon that could soon encompass 200 billion connected devices and add trillions of dollars to the economy. The global market for the “Internet of Things” is expected to grow to $7.1 trillion in 2020, up from $1.9 trillion in 2013.
In fact, experts estimate that the IoT will resonate strongly in the “invisible” industrial sector, capturing and analyzing data generated by drilling rigs, jet engines, locomotives and other heavy-duty machines. This network is called the Industrial Internet and it’s already helping companies shave costs and boost performance.
“The Evolution may look old-fashioned, it is in many respects a hurtling computer. Its array of sensors and data-collecting devices complements its bulky mass with a sleek, digital agility that will grow only more impressive and more significant with time. It is also a rolling electronic laboratory, a locomotive’s insides contain 6.7 miles of wiring and 250 sensors that put out 9 million data points every hour.
In the coming years, the number of sensors and data points will climb precipitously. In this fusion of old and new, this melding of heavy and light, you can see that the Evolution resembles its maker, General Electric, a company that manufactures huge things for huge customers and yet is reinventing itself–and, in the process, the very economics of heavy industry–by embracing a new kind of sophistication.
Two years ago, at a San Francisco conference billed as “Minds and Machines,” GE CEO Jeff Immelt took the stage to explain the company’s behemoths like the Evolution. The catchphrase he used that day, the “Industrial Internet,” has by now become commonplace in technology circles, even though it has been barely realized in terms of impact.
At times, the Industrial Internet has been lumped alongside the so-called Internet of Things, which usually describes the effort to bestow networked connectivity on, say, your home lighting or thermostat. Yet GE’s industrial effort is more ambitious than that. Immelt’s point in his speech was that GE could no longer just build big machines like locomotives and jet engines and gas turbine power plants–“big iron,” as it’s known within the company. It now had to create a kind of intelligence within the machines, which would collect and parse their data. As he saw it, the marriage of big-data analysis and industrial engineering promised a nearly unimaginable range of improvements. A new GEnx jet engine with a multitude of sensors could spin off an awesome amount of information. GE would in turn help predict, say, when a crucial engine part required repairs. GE would use data from machines like the Evolution to optimize performance to undreamed-of levels.
In trying to build smarter machines, the company is also vying to create a new industrial age that produces broad, rippling gains for the entire global economy.
GE’s Industrial Internet may seem like a single, comprehensive approach to infrastructure technology. But in truth, the Industrial Internet is made from a dizzying number of components–software as well as hardware–that will be rolled out over the course of the next decade.
“The goal is not just to take data I have today, but to go back and look at the data we have already and see if it shows we could have predicted a historical failure,” Stokes says. His team would look at the broken-down locomotive and comb through its data banks to try to discern a pattern. “We want to turn that into an algorithm that helps us predict the future,” Stokes explains. “We want to say: These three conditions, in this sequence, mean there’s a 90% chance this failure will happen.”
Machines that talk, machines that react, machines that constantly update their status–it sounds a bit like a social network… of machines.
GE, at any rate, doesn’t make its pile of money merely from selling big machines. It makes as much, or sometimes more, from servicing those machines via customer contracts, now worth some $180 billion in all, that can stretch for 20 years or more following a sale.
“The first wave was: It breaks, we fix it,” Comstock says, talking about how things worked in the 1960s and 1970s. The second wave, developed in the 1980s and 1990s, were service agreements that assured customers that a GE–built jet engine or turbine would achieve a certain level of performance and would have regularly scheduled maintenance based on GE’s experience with the wear and tear of its parts.
An approaching third wave, enabled by data and analytics, does something new. It strikes an agreement between GE and a customer for a certain kind of outcome, rather than a certain kind of functionality. It’s not only about measuring whether a jet engine is working up to its specifications, or about repairing it on time, but whether it’s delivering, say, the agreed-upon amount of peak operational time. “We’re getting to the point of selling thrust, not engines,” says Brad Surak, a software manager for the company. “Or we’re selling locomotion, not locomotives.
If another company–a Silicon Valley startup, say–figures out how to do the analytics on GE’s industrial equipment first, the industrial giant might see the lifeblood of its service business threatened. A quest to make intelligent machines.
The digital revolution we’ve witnessed in the consumer arena is at last ready to invade new territory. “I believe in this stuff more than you can imagine,” he says, “because I think all machines are going to get smart. They’re going to talk. The technology is there, but we have to get it to work in an industrial way.” What he means is that an Industrial Internet can pose a more stringent set of requirements than the consumer one. Ruh likes to say that if your cell phone drops a call, you get annoyed, but if your power goes down, you get angry, or fearful–or people in hospitals die. Therefore, reliability–a zero tolerance for platform failures–is essential in the software he builds. So too is cybersecurity.
At the launch of the Industrial Internet in 2012, he recalls that Andreessen had just written a hotly debated article for The Wall Street Journal about how software would “eat” the world. Andreessen wrote, “My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.”
The coming progression of smart technologies will lay the groundwork for a second great industrial age–a more distant future where intelligent machines can be upgraded into what the company calls “brilliant” machines. These devices wouldn’t just let you know they were going to break down. They would actually repair themselves.