GE Power Systems to Buy
Smallworld for $210 Million
by Adena Schutzberg, from GIS
Monitor, August 18, 2000
In a move that
startled some industry observers, GE Power Systems announced that it will buy UK-based
Smallworld for a sum of $210 million. This amount dwarfs the last significant
sale of a utility focused GIS company when Autodesk bought Vision*
from MCI Systemhouse for $26 million last year. Once a stock market
favorite, Smallworld had seen it share price dip from a post IPO high of $35 in
1998 to as low as $5. Initial talk of new products, expanding into new markets
and an expensive marketing effort gave way to layoffs and restructuring.
Rumors of acquisition circulated with each downturn. Smallworld stock recovered
somewhat, but its share price tended to stay close to its initial $12
This time, Smallworld may
have been ripe for purchase. They'd just announced a good quarter, acquired
key tools (from Convergent), forged strong partnerships (Stoner Associates) and
acquired the Spatial IT unit of Navigant consulting (formerly GeoData).
Smallworld held not only a more complete set of tools, but also more brainpower
than ever before in its history. In addition, Smallworld has been well
received by users. Its object oriented model and exclusive work in the
utilities market drew much acclaim and interest from gas and electric utilities.
Its ability to manage long transactions -- changes to the existing
model that are made over hours, weeks or months � was best in class.
One has to wonder how
Smallworld will fare as part of GE, a company better known for consumer products
and jet engines. Can GE integrate Smallworld into its multiple
offerings? To its credit, GE is not with some prowess in software, producing much
in the way of plant monitoring, optimization and custom power generation
software. Interestingly, they also produce a product called MAPS, used
to assess power demand. GE provides all sorts of services to test,
service and install its hardware. And finally, there are professional services
consulting services, including a software group.
Many of GE Power System's
clients are exactly the type that have purchased or may purchase a
Smallworld system. Still, large
multidisciplinary companies do not have a good record with GIS, especially GIS
development. IBM's foray in to GIS (GFIS) was short lived. GDS, EDS, and
ultimately Convergent Group spun out GDS. Even Autodesk, who knows a great deal
about software, has had its fits and starts with GIS.
competitors include ESRI's (and partner Miner and Miner) ArcFM, Autodesk's Vision*,
Intergraph's FRAMME and others. Each of these companies, however,
supplies a much broader base than utility-focussed Smallworld. That said, each
one certainly strengthened its utility product line when Smallworld
entered the market. And, to their credit, when Smallworld tried to move into
traditional GIS arenas, such as local government, its competitors held the
newcomer at bay.
Finally, it appears that GE
Power Systems does not support telecommunications. It will be interesting to
see what becomes of this part of the business. Smallworld had gained some
renown, especially with a big contract at British Telecom in April, and the
release of a series of telco products in the late 1990s.
For more information:
Official Smallworld Press
Smallworldwide Soars on GE
Buyout, CBS MarketWatch
GE to Acquire Smallworld,
GE Power Systems Announces
Offer to Acquire Smallworldwide plc, Geocomm.com
Smallworld Reports Record
GE Power Systems Home Page