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New “Industrial Internet” Report From GE Finds That Combination of Networks and Machines Could Add $10 to $15 Trillion to Global GDP

November 26, 2012

The Industrial Revolution radically changed the way we use energy and make things. The Internet Revolution altered how we communicate, consume information, and spend money. A combination of these two transformations, called the Industrial Internet, now links networks, data and machines. It promises to remake global industry, boost productivity, and launch an entirely new age of prosperity and robust growth.

“The world is on the threshold of a new era of innovation and change with the rise of the Industrial Internet,” according to a new report written by Peter C. Evans, GE’s director of global strategy and analytics, and Marco Annunziata, GE’s chief economist. “It is taking place through the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing and new levels of connectivity permitted by the Internet.”

Evans and Annunziata, who discussed the Industrial Internet on CNBC this morning, write that “the deeper meshing of the digital world with the world of machines holds the potential to bring about profound transformation to global industry, and in turn to many aspects of daily life, including the way many of us do our jobs.”

The opportunity is staggering. The authors found that in the U.S. alone the Industrial Internet could boost average incomes by 25 to 40 percent over the next 20 years and lift growth back to levels not seen since the late 1990s. If the rest of the world achieved half of the U.S. productivity gains, the Industrial Internet could add from $10 to $15 trillion to global GDP – the size of today’s U.S. economy – over the same period. “With better health outcomes at lower cost, substantial savings in fuel and energy, and better performing and longer-lived physical assets, the Industrial Internet will deliver new efficiency gains, accelerating productivity growth the way that the Industrial Revolution and the Internet Revolution did,” Evans and Annunziata write. “These innovations promise to bring greater speed and efficiency to industries as diverse as aviation, rail transportation, power generation, oil and gas development, and health care delivery. It holds the promise of stronger economic growth, better and more jobs and rising living standards, whether in the US or in China, in a megacity in Africa or in a rural area in Kazakhstan.”


A story published by the New York Times over the weekend echoed the report’s findings and said that according to analysts, “Internet-era technology is ready to sweep through the industrial economy much as the consumer Internet has transformed media, communications and advertising over the last decade.”

How? Consider the jet engine. A suite of intelligent sensors can separately monitor different parts of a jet engine, share the information across an entire airline fleet and apply data-driven machine-learning techniques to help personnel keep the engine working near peak performance. “Imagine the efficiencies in engine maintenance, fuel consumption, crew allocation, and scheduling when ‘intelligent aircraft’ can communicate with operators,” the report says. “Similar instrumentation opportunities exist in locomotives, in combined-cycle power plants, energy processing plants, industrial facilities and other critical assets.”


A 1 percent reduction in jet fuel use from the Industrial Internet could yield $30 billion in savings over 15 years. Likewise, a one percent efficiency improvement in the global gas-fired power plant fleet could yield a $66 billion savings in fuel consumption.

But the Industrial Internet has a broader impact still. The study says that the Industrial Internet can track and optimize treatment, patient flow, and equipment use in hospitals. The authors estimate a 1 percent efficiency gain could yield more than $63 billion in global health care savings.

The “marriage of machines and analytics” could find direct application in sectors that produce $32 trillion in economic activity right now. “As the global economy grows, the potential application of the Industrial Internet will expand as well,” the reports says. “By 2025 it could be applicable to $82 trillion of output or approximately one half of the global economy.”

The U.S. is leading the Industrial Internet revolution, but “increasingly deeper global integration and ever more rapid technology transfer” will help spread the benefits worldwide. “In fact, with emerging markets investing heavily in infrastructure, early and rapid adoption of Industrial Internet technologies could act as a powerful multiplier,” the authors write.

What are the ways to speed up the growth? Countries and companies must focus on innovation and invest in deploying the necessary sensors, improve cyber security, and educate a new class of “digital-mechanical” engineers. “It will take resources and effort, but the Industrial Internet can transform our industries and lives — pushing the boundaries of minds and machines,” the authors conclude.