Industrial giants General Electric and Siemens are mapping out distinctly different plans for the industrial sector’s digital transformation.

The two largest diversified industrial conglomerates in the world, GE and Siemens have each arrived at a pivotal stage in their development. Both are making the transition from being machine manufacturers to digital businesses, and in the process, breaking ground that companies across industries will be watching closely.

The American and German rivals beg comparison. Each earns some $100 billion in annual revenues. About 70% of their markets overlap, J.P. Morgan estimates. Yet there are fundamental differences in their structures and cultures which inform their diverging paths to industrial digitisation.

GE is known primarily for large, stand-alone products, such as jet engines and locomotives. It has a centralised structure with 11 divisions, and can move quickly. It is also influenced by America’s tech giants. Siemens is strongest in product design and automation. It has experience digitising industrial product lifecycles, which puts it slightly closer to being an IT firm. It is decentralised, and its executives tend to weigh options carefully, which points to a slower shift.

Citing estimates from the McKinsey Global Institute, The Economist notes that “linking the physical and the digital worlds via the ‘internet of things’ (IoT) could create up to $11trn in economic value annually by 2025…A third of that could be in manufacturing.”

GE’s aspirations are high: Chief Executive Jeff Immelt says his company plans to join the world’s top 10 software firms. He envisions sales of GE programs and services hitting the $15 billion mark as early as 2020. To accomplish its goals GE is reinventing itself. Siemens, on the other hand, is taking a more measured approach that builds on existing competences.

As global leaders in manufacturing and industrial goods, both companies have long used data, collecting information from cloud computing and algorithms and analysing it for insights. They differ in how they intend to use data moving forward.

GE has a data platform called Predix, which it is developing into a kind of ecosystem. The start-up software unit, merged with the company, interacts with all other GE businesses. Siemens’s primary focus is on software tailored to industry verticals, as opposed to a broad, cross-sector platform.

Given the differences between the two industry leaders, it is unlikely that a single platform will dominate the industrial internet. More likely there will be room for plenty of different services, concludes Andreas Willi of J.P. Morgan.

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