Perspective: IIoT lies at heart of GE's acquisition strategy

By Lee Samaha, for The Motley Fool

Nov 30, 2016

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It's no secret that General Electric intends to take a leadership position within the Industrial Internet of Things (IIoT), but what's less discussed is how integral it all is to the company's acquisition strategy.

At GE's recent Minds + Machines event, CEO Jeff Immelt outlined expectations for $15 billion worth of digital orders by 2020 alongside $1 billion of additive manufacturing orders. (The latter is a manufacturing technology utilizing 3D modeling and printing.) For reference, the company's revenue over the last four quarters is around $124 billion.

The Alstom deal is certainly about industry consolidation, and creating cost synergies as a consequence. And it's about adding Alstom's steam power solutions to GE's gas power offerings in order to create a powerful combined-cycle solution. However, it's also about digitizing Alstom's existing installed base with GE's IIOT solutions. In a sense, GE is buying the opportunity to expand its IIOT business.

There are also significant cost synergies to be generated from the Baker Hughes deal: $1.4 billion by 2020. In addition, revenue synergies ($400 million by 2020) are expected through the integration of GE's oil and gas technology with Baker Hughes' service technology solutions: The plan is to create a fully integrated offering.

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