This week, at Microsoft's Worldwide Partner Conference, Microsoft and GE announced a strategic alliance to bring GE's Predix IoT platform to Microsoft's Azure cloud. While the partnership is certainly relevant, it was interesting to see the immediate excitement in the news, including coverage by major media outlets and an exclusive CNBC interview with Microsoft CEO Satya Nadella and GE CEO Jeff Immelt. The stock prices of both companies rose slightly in response to the news.
From some viewpoints, the partnership between Microsoft and GE could be seen as strange if you consider that Microsoft's Azure IoT Suite is a direct competitor of GE’s Predix. However, this strategic alliance should be seen as two IoT software powerhouses making the necessary compromises to expand their relevance in the enterprise IoT market.
5 observations about the Microsoft-GE Partnership
The Microsoft-GE strategic alliance is another step toward garnering support for GE’s Predix platform on mainstream cloud infrastructures such as AWS and Azure. The partnership provides a mechanism for combining Predix’s industrial IoT capabilities and domain expertise with the sophisticated cloud infrastructure and the partner and developer communities of Microsoft’s Azure platform. Beyond the hype, there are some interesting points about the Microsoft-GE partnership that are worth discussing.
The GE-Microsoft strategic alliance is a major step toward making the Predix IoT platform available in mainstream platform-as-a-service (PaaS) offerings. A few weeks ago, GE announced a similar alliance with HP Enterprise (HPE) to distribute Predix as part of the Helion Stackato platform (I wrote about that partnership here). This type of partnership provides Predix with a new distribution channel and a large ecosystem of systems integrators and developers.
Predix needs a better infrastructure
The announcement of the partnership with Microsoft comes a few hours after the publication of a report from analyst firm Lux Research in which Predix was portrayed as “a fledgling startup [that] has underdeveloped technology and lags in market penetration compared to its marketing.” While I don’t agree with many of the points of the report, it remains clear that Predix’s underlying infrastructure is relatively unsophisticated compared with PaaS incumbents like Azure, AWS or IBM's Bluemix. As a result, running Predix in another PaaS infrastructure allows GE to alleviate some of those concerns and focus on innovating the IoT capabilities of the platform.
Stand-alone IoT platforms are having a hard time competing against mainstream IoT PaaS solutions
From the IoT market perspective, the GE-Microsoft partnership is another example of how stand-alone IoT platforms are having a difficult time competing against the IoT offerings provided by the cloud incumbents such as the Azure IoT Suite, AWS IoT or IBM's Watson IoT platform. While many of the IoT capabilities can be considered comparable between stand-alone IoT platforms and PaaS IoT services, the latter offer a broader number of infrastructure and platform services that enable the implementation of more robust IoT solutions.
Azure is more important than Azure IoT
An obvious question about the Microsoft-GE partnership centers on the implications for the Azure IoT Suite, which technically competes with GE Predix. The answer is very simple: Anything that increases the market penetration of the overall Azure platform is more important than any individual capability. From Microsoft’s perspective, the goal is to dominate the cloud market and not necessarily the IoT market.
Strong validation for the Cloud Foundry for IoT model
The strategic alliance between Microsoft and GE represents not only a strong validation for some of Predix’s core ideas, but also for promoting an open-source, multi-cloud IoT platform based on Cloud Foundry. In the past, we mentioned that Cloud Foundry could set a baseline for open-source IoT platforms and can become an essential element for the mainstream adoption of IoT technologies in the enterprise. The Microsoft-GE partnership is a major milestone in the evolution of IoT technologies powered by Cloud Foundry.
What does this mean for Microsoft?
From Microsoft's perspective, its strategic alliance with GE expands the IoT capabilities of the Azure cloud with a very sophisticated group of infrastructure and platform services provided by Predix. By enabling Predix in the Azure platform, Microsoft can expand the penetration of its cloud platform in industrial enterprise scenarios and also increase the credibility of its IoT offering. Additionally, Predix gives Microsoft a deeper level of domain expertise in industrial IoT solutions.
What does this mean for GE Digital?
As a result of GE's partnership with Microsoft, Predix will immediately benefit from access to one of the largest communities of enterprise software developers and systems integrators in the market. More importantly, technologies like Azure and Azure Stack will offer a very robust, global infrastructure to run Predix solutions. Additionally, new capabilities in Predix can be accelerated by the use of Azure native PaaS services.
Will AWS, Google or IBM be the next Predix partner?
First HPE, now Microsoft. Should we expect to see new Predix partnerships with other mainstream cloud platform providers? Amazon, Google and IBM are the obvious candidates. AWS seems to be a clear choice as it is in a similar position as Microsoft in terms of IoT market penetration. Google also seems like a good option because it currently doesn’t provide IoT capabilities as part of its cloud platform. IBM might be a harder sell, because it seems to be really invested in dominating the IoT market and has put significant investments toward enhancing the Watson IoT platform.
With IoT technology becoming a key element of most PaaS solutions, we should expect that the Microsoft-GE partnership will have ramifications throughout the ecosystem. Without a doubt, enterprise customers embarking in industrial IoT initiatives will be the immediate beneficiaries of this new partnership.
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