Investing in profitable growth.

We have consistently enhanced our capability to drive organic growth. We have positioned GE to capitalize on the available “tailwind” in a world with uneven growth.

We have broad technical leadership. Our competitive advantage in technology is based on robust investment, an innovative team and our ability to create a low-cost position. In 2010, we will spend about 5% of our industrial revenue on R&D. We have filed 20,000 patents this decade. We have nearly 40,000 engineers and scientists around the world.

We have developed more than 150 core technologies that create leadership across our company. We share technologies and innovation across multiple platforms to create technological scale. We benchmark each of these against our competition and lead in many.

Our focus is on introducing more new products at more price points. We are driving management practices to capture new opportunities, called “reverse innovation.” Essentially, this takes a low-cost, emerging-market business model and translates it to the developed world. To this end, we have developed a full line of high-margin, low-cost healthcare devices, designed in China and India, and now marketed successfully in the developed world.

We are extending our technology through partnerships. Intel and GE are partnering to offer new innovation in home healthcare. We partnered with the Aviation Industry Corporation of China (AVIC) to form a joint venture in avionics. GE, in partnership with Eli Lilly and Company, is working to develop an approach to molecular pathology that could aid custom treatment decisions for many forms of cancers. GE and Google have partnered to bring smart grid technology into the home. Partnering allows us to introduce more products faster.

We are expanding our service businesses. Today, we have $35 billion in product service revenue, with a $129 billion backlog. Services represent one-third of our revenue and nearly three-quarters of our industrial earnings. Our product service earnings grew even in the recession. High-margin services will continue to grow naturally because of our expanding backlog and installed base.

Our competitive advantage in services is a deep understanding of our customers’ productivity based on how they use our products. For instance, a 3% reduction in fuel consumption across GE and our partners’ aircraft-engine installed base would save our airline customers $2 billion annually.

The next “untapped” market in services is to improve customers’ operations by automating their workflow through software and asset management. We are developing leadership in new markets like smart grid, electronic medical records, movement planning for locomotives, advanced aviation information systems and productivity solutions.

We lead in growth markets. Today we have a $38 billion business in growth markets, which include resource- and people-rich regions, like the Middle East, Latin America, China and India. This represents about 40% of our industrial revenue. These markets are investing trillions of dollars in infrastructure and favor a multi-business company that can bring solutions. This allows us to form a “company-to-country” approach in countries where government and business work together to solve infrastructure needs.

We are accelerating localization of capability in order to lower costs and leverage talent. In 2010, we will open six service shops in emerging markets, build our fifth global research center, in Brazil, and add thousands of sales and service reps in these regions.

Investors should view GE as a great way to participate in emerging-market growth. Our share in emerging markets is comparable to the United States; our margins and service penetration are similar to the developed world. And we are committed to a cost position that can compete globally, sometimes by positioning with local players.

Pre-crisis, we had targeted an organic revenue growth goal of 2 to 3 times GDP. In 2010, I expect our organic growth to be slightly positive. Over the near term, our position in services, emerging markets, technology and global solutions should propel GE to organic revenue growth in excess of the GDP.

Creating market solutions to tough societal problems.

We have continued to drive two infrastructure growth initiatives, ecomagination and healthymagination. In so doing, we have made great progress on the stubborn problems of energy efficiency and affordable healthcare. GE always takes a “systems approach” to problem solving, applying innovative solutions to customer and societal needs.

We’ve been an innovator in clean energy. In 2005, we launched ecomagination, which is all about producing innovative technologies that save customers money and create jobs. It has worked at GE. Our revenue from ecomagination products has grown from $5 billion to $18 billion in 2009. We have set new goals for growth and for environmental impact.

Technology is the key to a clean energy future. Last year, we made substantial investments to commercialize smart grid solutions, sodium and lithium battery technology, offshore wind, smart appliances and multi-fuel gas turbines. We remain committed to introducing a new generation of nuclear reactors and clean coal technology. These innovations will facilitate energy security and job creation.

Similarly, we believe there is a huge opportunity in affordable healthcare. Healthymagination was conceived to grow our Healthcare business by providing better healthcare to more people at lower cost, mainly by helping doctors.

We are investing $6 billion to introduce new technologies that address healthcare cost, quality and access. They range from a handheld ultrasound, which could one day become as indispensable in remote areas as a physician’s stethoscope, to high-tech imaging modalities — like magnetic resonance — at revolutionary price points.

We’ve built strong bonds with hundreds of community hospital systems like Ochsner, in New Orleans, and Virtua Health, in New Jersey. Over the last decade, we’ve gone beyond supplying them diagnostic imaging equipment. We work just as hard on quality, leadership and productivity solutions. We’ve helped make Ochsner and Virtua two of the highest-quality and most cost-efficient health systems in the country.

Providing solutions requires technical breadth, customer value and societal trust. GE brings this to clean energy and affordable healthcare, places where governments must invest. This will provide sustainable and profitable growth to investors.