Industrial Internet: The “Apple” Dream of Manufacturing Giants

　　On July 7, U.S.-based General Electric (GE) partnered with China Telecom to integrate its industrial‑internet platform, Predix—akin to an operating system for industrial equipment—with China Telecom’s comprehensive information services. As a result, the U.S. industrial internet will now expand into China’s cloud storage, telemedicine, smart manufacturing, and cloud computing sectors.

　　A few days later, the China Industrial Internet Association was established in New York, marking a major breakthrough in international cooperation between the Chinese and U.S. industrial and information‑communication sectors—following the launch of the China–Germany dialogue on Industry 4.0.

　　According to reports, GE has launched 12 industrial‑internet pilot projects in China and is working to implement more than 40 big‑data analytics applications. The industrial internet—often hailed as the hallmark of the third industrial wave—is now actively engaging with and shaping the progress of the “Internet Plus” initiative across China’s industrial sector.

　　Before the large-scale adoption of the Industrial Internet in China’s industrial sector, it is essential to thoroughly examine its origins, its intended objectives, its underlying rationale, and whether it might entail any adverse side effects.

　　Industrial Internet

　　Reinventing “Made in America”

　　Following the 2008 financial crisis, the U.S. government’s most significant realization was the critical importance of the real economy to national economic health, recognizing industry as the cornerstone of national competitiveness. In response, it launched a series of national initiatives, including the “Reinventing American Manufacturing Framework,” the “Advanced Manufacturing Partnership,” and the “National Strategic Plan for Advanced Manufacturing,” all aimed at advancing its national strategy of “reindustrialization.”

　　In 2012, GE, the leading U.S. manufacturer, pioneered the concept of the “Industrial Internet,” leveraging interconnected machines and equipment along with advanced analytics software to move beyond the traditional model centered on standalone intelligent devices. By integrating high-performance hardware, low-cost sensors, the internet, and big-data collection and analysis technologies, GE significantly boosts the efficiency of existing industries while fostering the emergence of new ones.

　　This idea has a long history. As early as 2005, when GE’s aircraft‑engine division was reorganized into GE Aviation, the company began shifting its business model. Originally, its operations were limited to manufacturing aircraft engines; today, by equipping aircraft with numerous sensors that continuously collect a wide range of flight‑related data, and leveraging big‑data analytics, GE provides airlines with end‑to‑end solutions for maintenance management, capability assurance, operational optimization, and financial planning. It also offers services such as safety‑control systems and flight‑performance forecasting, gradually transforming itself into a full‑fledged software company.

　　Take Alitalia as an example: GE has installed hundreds of sensors on each of its aircraft, enabling real-time collection of data such as engine performance, temperature, and fuel consumption. By leveraging GE’s software to analyze this vast volume of information, the airline can precisely determine optimal operating procedures. Thanks to this approach alone, Alitalia’s 145 aircraft saved $15 million in fuel costs over the course of a year. Moreover, these data allow for early prediction of potential engine failures, facilitating proactive preventive maintenance and helping to avoid flight delays, increased costs, and even more serious safety incidents caused by mechanical malfunctions.

　　Through this deep integration of IT technologies and equipment, GE has gradually transitioned from an equipment manufacturer to a smart‑services provider, with its business model evolving from standalone equipment sales to that of an intelligent systems supplier offering a seamless triad of smart devices, advanced analytics, and intelligent decision‑making.

　　Experts generally agree that the value of the industrial internet will be realized primarily in three ways: first, by enhancing equipment utilization efficiency, thereby reducing energy waste and contributing to GDP growth; second, by improving the efficiency of system and equipment maintenance and shortening maintenance cycles, which effectively boosts productivity; and third, by optimizing and streamlining operations, thus freeing up valuable human resources.

　　GE forecasts that if the Industrial Internet can boost productivity by 1% to 1.5% annually, it could raise average U.S. incomes by 25% to 40% over the next two decades. Moreover, if other regions of the world manage to achieve half of the U.S. productivity gains, the Industrial Internet could add $10 trillion to $15 trillion to global GDP during the same period.

　　To this end, GE established an Industrial Internet R&D center in Silicon Valley in 2011, and its R&D team has since grown to over a thousand employees. In 2013, GE announced that it would invest $1.5 billion over the next three years to develop the Industrial Internet. This April, GE revealed that it plans to spin off most of its $363 billion‑valued financial services business within the next two years, with the goal of having 90% of GE’s earnings come from high‑return industrial operations by 2018—up from 58% last year.

　　From this, we can see that the value of the Industrial Internet lies not only in helping original equipment manufacturers transition to smart manufacturing systems and service providers, but also in potentially giving rise to a new high‑end real‑economy business model with profit margins even higher than those of the financial sector.

　　Open Platform

　　Building an “Apple”-style smart manufacturing system

　　The United States is the birthplace of the Internet, and from the very outset, the Industrial Internet has borne a distinct digital imprint: openness. Compared with the traditional Internet, the Industrial Internet not only seeks to foster openness across ICT domains such as telecommunications networks, data storage, and transmission, but also aims to achieve openness and seamless integration between manufacturing technologies and IT systems.

　　This is an R&D ecosystem that spans “two IT domains.” In March 2014, GE joined forces with IT giants such as IBM, Cisco, Intel, and AT&T to establish the Industrial Internet Consortium (IIC). Operating under an open membership model, the IIC aims to enable data sharing across devices from different manufacturers. This encompasses not only Internet protocols but also a wide range of metrics—such as data storage capacity in IT systems and parameters governing both interconnected and non‑interconnected devices. The goal is to dismantle technological barriers by developing common standards, harnessing the internet to modernize traditional industrial processes, and fostering greater integration between the physical and digital worlds. “It seeks to accelerate the development, deployment, and widespread adoption of connected machines and devices, advance intelligent analytics, and empower workers.” Today, the Industrial Internet Consortium has grown to 167 members.

　　This is an open system with ecological, rather than purely supply-chain, significance. In October 2014, GE announced that its Industrial Internet platform, Predix—akin to an operating system for industrial equipment—would be made available to companies worldwide, bringing the collaborative model between platform providers and application developers from the internet sector into industry. This approach ensures that users can rapidly develop custom industry-specific applications at scale. Such an industrial ecosystem, highly reminiscent of Apple’s in the smartphone space, will significantly accelerate the adoption and implementation of the Industrial Internet across diverse manufacturing subsectors.

　　This is a standardized collaborative organization that targets the global market. At present, Chinese enterprises and institutions—including China Telecom, Haier, Huawei, the China Academy of Information and Communications Technology, and the Shenyang Institute of Automation of the Chinese Academy of Sciences—have joined the IIC, enabling them to share cutting-edge technologies and resources in tandem with the global industrial Internet community.

　　We contend that companies like GE established the Industrial Internet Consortium with the aim of leveraging the United States’ strengths in information technology. By fostering deep integration with manufacturing, they seek to take the lead in shaping technical and industry standards, thereby securing a dominant position in global competition. To date, the industrial internet has not yet been elevated to the level of a national strategy in the U.S., a stark contrast to Germany’s nationwide effort to advance its Industry 4.0 initiative. Nevertheless, given that many U.S. firms within the consortium bear responsibility for the country’s “reindustrialization” agenda—and that one of their key technological pillars is the cyber‑physical systems (CPS) framework—numerous scholars treat the industrial internet as an industrial strategy on par with Industry 4.0.

　　The collaboration with China Telecom can be seen as the first step in extending an olive branch from the industrial internet to Chinese enterprises. But hold on—what can China gain by participating in this new industrial initiative aimed at revitalizing American manufacturing?

　　Let’s turn our attention back to the first ecosystem of intelligent manufacturing—the smartphone platform. Nokia, which once held the top global market share for 15 consecutive years and whose R&D spending at one point equaled five times that of Apple, ultimately faltered in its debut battle within the smartphone ecosystem, collapsing in 2013 and changing hands. This is a poignant tale of the first manufacturing giant unable to adapt to the age of intelligence. In this narrative, China has clearly played the role of observer, learner, and beneficiary. Soon after Apple, a new, more open‑minded platform—Android—emerged. Through collaboration with Apple, countless Chinese small and medium‑sized developers reaped billions of yuan in app‑revenue shares, nurturing a vast pool of software and hardware development teams that paved the way for today’s “Internet Plus” era. Meanwhile, leveraging partnerships with Android and driven by the relentless drive of Chinese handset manufacturers, companies like Huawei, ZTE, Xiaomi, and Coolpad have firmly established themselves among the global leaders in smartphone shipments.

　　The field of intelligent manufacturing is likely to see a competitive landscape similar to that of the smartphone industry. Germany’s Industry 4.0 and the U.S. Industrial Internet are poised to become the two most important global platforms for intelligent manufacturing in the years ahead. The author calls on China’s industrial and information‑communication sectors to place great emphasis on the historic opportunities these initiatives present, to move in tandem, and to join forces in pooling global innovation resources, thereby accelerating the intelligent transformation of China’s industrial economy. By contrast, the Sino‑German Industry 4.0 dialogue, being government‑led, has progressed at a rather slow pace and has yet to reach the stage where leading enterprises from both sides have joined each other’s industry‑collaboration bodies to jointly advance conceptual discussions and co‑define standards. Meanwhile, the Industrial Internet, with its focus on open, market‑driven cooperation among enterprises, has already taken a “late‑comer‑but‑first‑to‑arrive” position in its localization journey.

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　　Through an examination of GE’s transformation toward smart manufacturing via the Industrial Internet, we find that world‑class manufacturing giants have moved from device‑level intelligence to system‑level intelligence, and from leveraging automation and information technology alone to drive smart development to achieving deep integration between ICT and equipment to unlock new levels of intelligence. This has given rise to a suite of novel industrial‑intelligence services, including device connectivity, data collection, big‑data analytics, and intelligent decision‑making. Although GE has championed and established the Industrial Internet Consortium and was among the first to open its Predix platform, a major manufacturer with a relatively homogeneous business model—primarily concentrated in sectors such as aerospace, energy, and healthcare—is not necessarily poised to evolve into a unified industrial‑application‑platform controller akin to Apple. The fragmentation across industry subsectors and the complexity of manufacturing technologies will render the platform‑based competition in smart manufacturing—and the broader geopolitical dynamics at play—increasingly intricate and hard to predict.

　　As America’s manufacturing giants boldly abandon their once‑lucrative financial divisions and plunge headlong into the wave of smart manufacturing, this intelligent transformation is undeniably a new industrial tide poised to reshape the global landscape. Meanwhile, we observe that China’s listed companies have raised vast sums of capital by leveraging numerous buzzwords—yet the vast majority of these funds have flowed into real estate, finance, and especially the stock market. The stark contrast between these two trends should serve as a wake-up call. (Hu Hu, Zhu Duoxian)