The competitive landscape in industrial and home appliances is no longer just about hardware market share, but who controls the way they connect to one another and to the internet of things (IoT).
This is an interesting aspect of US giant GE’s decision to sell its home products division, GE Appliances, to Electrolux of Sweden for $3.3bn. The transaction is the latest in GE’s process of divesting all its businesses except those in heavy industry sectors such as transportation and power generators. And Electrolux’s largest ever acquisition will give it far greater US presence and increase its market share, in product categories like washing machines and vacuum cleaners, against rivals like Whirlpool.
Along with these shifts in share, both companies are making big IoT plays, sending a signal to other companies in the value chain – mobile operators, chipmakers and so on – that these are vertical businesses, and vertical giants aim to write the rules for connected devices.
GE has its Industrial Internet Initiative, which aims to turn an inhouse connectivity framework for its own products into a de facto standard for the whole segment. It has powerful partners, including Intel, IBM, Cisco, AT&T and EMC Pivotal.
Meanwhile, Electrolux has been making noises about driving standards for how home appliances communicate and how the data they produce is analyzed and used. It needs to steal a march on some Asian home equipment makers, such as LG, which moved more quickly into the connected home platform. Electrolux recently joined the Qualcomm-led AllSeen Alliance, which also includes GE’s FirstBuild microfactory on its roster.