Hewlett Packard Enterprise, GE Team Up For Industrial IoT

In a major event yesterday, the two IT services giants, Hewlett Packard Enterprise Company (NYSE:HPE) and GE Digital, a unit of General Electric Company (NYSE:GE) , joined forces to develop products for Industrial Internet of Things (IoT).

The two companies entered into a strategic agreement to “unite cutting-edge Internet of Things (IoT) technologies from HPE with GE's industrial expertise and its Predix platform to bring digital know-how to the industry sector.”

GE Digital’s Predix is a cloud-based Platform-as-a-Service. The platform, which is built exclusively for industries, enables GE Digital and its partners to meet the speed, scale and security requirements of industrial data.

The recent agreement makes HPE a preferred storage and server infrastructure provider for GE Digital's Predix cloud technologies. However, the financial terms of the agreement were not disclosed.

Both companies view Industrial IoT as the next major market. Market research firm IC Insights’ predictions validate this belief. IC Insights had predicted that Industrial IoT implementations revenues would double to $12.4 billion in 2015 from $6.4 billion in 2012.

The companies said that they will target multiple industries, aerospace, oil and gas, manufacturing, automotive and energy to provide instantaneous data and insight. Using GE Digital’s expertise and HPE’s wide range of edge devices and end points, the two companies can deliver a whole new level of information for businesses that would otherwise have not been accessible.

Since HPE’s spilt from Hewlett-Packard Company (NYSE:HPQ) last year, it is leaving no stone unturned to expand its business. The company has done everything in the books, right from restructuring to acquisition, to divestment and alliances.

The company recently took a step toward restructuring its struggling IT services business. It announced the spin-off of the Enterprise Services segment, following which the segment will merge with Computer Sciences Corporation (NYSE:CSC) .

Prior to that, HPE acquired data protection software developer Trilead. Moreover, the company has sold its majority stake in Mphasis Limited, an IT services provider in Bangalore, India to The Blackstone Group (NYSE:BX) .

Moreover, HPE has also partnered with Dropbox. According to reports, the company has improved some of its computers to provide hardware infrastructure to help Dropbox build its own data centers and store customer data in its own amenities.

We expect the recent partnerships to contribute to the company’s overall growth.

However, macroeconomic challenges and tepid IT spending remain near-term concerns. Competition from International Business Machines (NYSE:IBM) and Oracle (NYSE:ORCL) further add to its woes.

Currently, Hewlett Packard Enterprise carries a Zacks Rank #3 (Hold).