Two major US manufacturers are hoping that software solutions can not only bolster their business but help to reduce the turbulence caused by volatile market sentiment and gyrating share prices.
One is Cisco Systems, the California-based networking giant whose routers and switches enable edge users to access data centers in businesses around the globe. Last week, cloud computing giant Amazon Web Services was reported to be planning to offer similar hardware, replete with ready-made links, to the company’s market-leading cloud services, shaving $11 billion from Cisco’s market cap in a day.
Although the move has not been confirmed, the mooted move by the subsidiary of the US retailing behemoth to provide the same white-label networking hardware sourced from third-party suppliers that it uses in its own data centers also sent the shares of smaller manufacturers plummeting.
General Transformation
Industrial conglomerate General Electric has for several years touted the digital transformation taking place in its own operations as the foundation for empowering its customers. GE claims its digital framework will also play a supporting role in consolidating the company’s firm footing once it has completed the sometimes-rough ride back from its nadir during the 2008 global financial crisis.
However, market confidence was undermined last week when CEO John Flannery failed to confirm that GE’s investments in tech, talent and time, as part of a prolonged restructuring, would yield tangible bottom-line benefits. Such are the operational deficiencies on view that GE stock price has been halved since Flannery’s appointment last August.
As with Cisco, which has been taking steps into the cloud over the past decade, Boston-based GE is pinning hopes on platform provision that leverages the Internet of Things for productivity gains and innovation.
Connectivity Leads the Market
Predix, GE’s applications development platform, is designed for creating autonomous industrial systems. It applies machine learning to data gathered from the monitoring of connected machines to create and execute actions in real time in addition to running automated processes.
Devised by GE Digital, the software division that grew up around the company’s transformation, the same analytics capability powers the platform’s performance management functionality. It also helps GE and its customers make more efficient use of field service teams.
Cisco, too, hopes that harnessing data flows from connected devices will protect the market-leading position that it has enjoyed for most of its 34-year history. Its three-pronged approach is aimed at accommodating, rather than unifying, protocols for a predicted thousand-fold increase in the number of devices from the current 100 per human worker.
Accommodation as Defense
Accommodating emerging protocols is an approach that appears useful in fending off challenges from the likes of AWS, too. Working in partnership with Google Cloud, a subsidiary of Alphabet that also is seeking to be a player in enterprise service delivery, Cisco aims to facilitate seamless crossovers for applications housed in on-premises data centers.
Announced last October and given its formal launch by CEO Chuck Robbins at the Cisco Live customer conference last month in Florida, that offering is built around the Kubernetes container technology introduced by Google for public consumption in 2015.
It enables companies to adopt microservices in the cloud with the added advantage of continuous deployment of those virtual machines, sparing time and expense for upgrading and testing ahead of release.
Flexible and Scalable
In the decade prior to putting Kubernetes out for open-source development, internal users at Google created more than eight billion applications using the technology. Thanks to compatibility with Cisco’s networking software, those secure, scalable environments permit enterprise users to build, run and refine applications in the cloud with the same tools and development methods they use in-house.
Automated deployment assists agile teams of developers and business-line experts as they work to tailor technologies for specific use cases. And they can run workloads off-premises using Google’s dedicated container engine.
For Cisco, the move is evidence of a strategic shift away from the hardware on which its business is built as customers transition from captive data centers to cut costs. The same is true at GE, where cloud-based platform provision will be as much a part of the portfolio as the connected machines in core aviation, power and healthcare verticals.
How the market perceives those moves is another matter. Still, alongside the benefits of reducing the volatility of their share prices, executives at both companies see software as a springboard for growth.