The following article is part of our list of 2016 Game Changers. Look for full coverage of all 46 honorees on Friday.
General Electric chief executive Jeff Immelt sounded like a candidate on the stump last month when he took the stage at the State Room perched high above Boston’s financial district. He told the crowd of local power brokers exactly what they wanted to hear in a speech about GE’s decision to move its headquarters here.
The industrial Internet revolution is beginning, Immelt promised, and the city can be at the center of the action: “It’s your time to win. That’s why we’re here. We want to be a part of it.”
This is what we all know: Greater Boston’s place in the technology universe has long been overshadowed by California. Route 128 was once America’s Technology Highway. Now it’s just a stretch of Interstate 95.
GE pledges to give Boston 800 jobs, tens of millions of dollars in corporate donations, and more global prominence. But there’s something else: the potential to galvanize our Internet of Things industry cluster of businesses, to make us the leader in a still-emerging field that promises to connect machines big and small — in our homes, on our streets, in our factories — and transform them with the help of vast reams of data that can be crunched instantly.
“We’ve got the building blocks: the institutions, the research labs, the startups, and a couple larger players,” says Soumen Ganguly, a director at the Boston consultancy Altman Vilandrie & Co. “GE would be the stimulus that would drive it even further, faster. [Until now,] we haven’t had one large company that can drive an ecosystem around it.”
Immelt’s road to Boston wasn’t plotted overnight. It didn’t even start in June of last year, when he made public his team’s frustration with the political leadership in Connecticut and the related hunt for a new headquarters in another state. Instead, go back to 2011, when GE hired executive Bill Ruh away from Cisco Systems to assemble a squadron of software engineers who could design programs enabling big machines to become smarter, faster, and more efficient. The digital transformation Immelt imagined then is largely underway today.
Ruh runs GE’s digital business out of San Ramon, California, but will have an office here, too. This business revolves around software that GE uses to make the company’s machines — such as jet engines and wind turbines — more efficient and better connected. GE recently started selling the software to other industrial clients, and the company wants to nearly triple that business to $15 billion a year by 2020.
Now Ruh and his team want to build what they call a “digital foundry” at the company’s new headquarters, an East Coast version of their California computing center. Some hiring has already begun, since GE decided to base its new smart-lighting and energy startup known as Current here. And in 2014, GE also helped launch the Industrial Internet Consortium, a trade group based in Needham, a stone’s throw from Route 128.
As GE moved ahead with its transformation, two publicly traded Massachusetts companies made their own big bets on the industrial Internet. In Needham, engineering software firm PTC spent nearly $600 million over the past three years gobbling up companies working in the field. Meanwhile, LogMeIn of Boston also built up its Internet of Things business, known as Xively, to turn everything from trash cans to shower heads into “smart devices.”
LogMeIn’s headquarters is located just a couple of blocks from the spot where GE plans to build in South Boston. Walk a block in the other direction and you’ll find Digital Lumens, an LED supplier with 90 local employees growing so quickly it won’t be able to fit in its offices much longer. The company sells light systems that can be controlled remotely, with sensors that allow them to respond instantly to changes in their environment.
Then there are the smaller but promising local startups like Kuvee, which makes WiFi-enabled wine dispensers, or Tank Utility, which allows users to monitor propane tank levels with their phones. Many of these emerged from local incubators — such as Bolt in Boston and Greentown Labs in Somerville.
Executives at LogMeIn and Digital Lumens say they’re not very worried GE will steal away employees once it moves here, first into temporary digs in August and then into the new headquarters in 2018. The companies will trade workers. Some will come. Some will go. But overall, they say, the entire cluster will benefit from the arrival of GE, a magnet for talent with a global brand. “Given their size,” LogMeIn CEO Bill Wagner says, “I think it’s really going to position Boston as a nexus for connected products, and therefore, for the Internet of Things.”
No US city can claim to be the hub of the industrial Internet, the “Silicon Valley” for connected machines — at least not yet.
But maybe Immelt is right. Maybe it is our time to win again.Jon Chesto is a Globe staff writer. Send comments to email@example.com.