This Ain't Your Father's GE

You probably don't think of General Electric (NYSE: GE  ) as a software company. But the industrial giant's many engines, control instruments, and integrated systems always need some code. And in the last few years, these separate parts have started talking to one another on a regular basis. So in 2011, when GE realized that it was licensing $2.5 billion worth of software the year before, the company set up an all-new department to handle what management calls the Industrial Internet.

All these sensors and systems generate rivers of data all the time. Managing it all is an exercise in big data, and even more so if you want to do something useful and not blatantly obvious with this rich information.

All of this is big business, so you can bet I jumped at the opportunity to interview Bill Ruh, GE's vice president of software.

Bill came in from Cisco Systems (Nasdaq: CSCO  ) , where he helped build the networker's Smart +Connected Cities project in areas like health care, transportation, and education.

Moving to GE hardly disconnected him from the Cisco project, of course. Any major tech company hooks into the efficiency-boosting potential of machines talking to other machines these days. GE's Industrial Internet team talks to Cisco's Connected Cities project, which explores how networking can improve our daily lives in unexpected ways, but that's just the beginning. Ruh also works with IBM's (NYSE: IBM  ) more software-and-service oriented Smarter Planet and Hewlett-Packard's (NYSE: HPQ  ) Central Nervous System -- envisioning a cloud of cheap and gnat-sized but very smart sensors monitoring anything and everything.

"Everybody has a different take on it," Ruh says, but "it reflects a broader trend that devices are all becoming more intelligent." GE's unique angle is to improve the productivity and efficiency of industrial systems, leaving consumer-oriented advances to the likes of IBM and Cisco.

Put it all together and you get the makings of a tech-based Utopia or Skynet, depending on your paranoia level. Ruh laughed off the Skynet idea, but conceded that we're building lots of intelligence in the cloud. "We'll see that happen, but I don't believe there's going to be one intelligence source on the Internet. It'll be fully distributed."

Comforting words. GE is pumping $1.5 billion into Ruh's department over the next couple of years, so it's good to know he's not spending it all on building robotic armies.

If you'd like to know more about "the new GE Way" and how the stodgy old industrial giant is adapting to a whole new era, check out this brand-new premium report. In it, the Fool's industrials editor, Isaac Pino, explains whether you should be a buyer of GE shares.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of International Business Machines and Cisco Systems. Motley Fool newsletter services have recommended creating a synthetic long position in International Business Machines. Our Foolish disclosure policy doesn't know where you can find Sarah Connor, Officer. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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