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GE Power Systems to Buy Smallworld for $210 Millionby 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 IPO price. 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. Smallworld's main 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 Release http://www.smallworld-us.com/News/PressReleases/Release.asp?id=261
Smallworldwide Soars on GE Buyout, CBS MarketWatch http://cbs.marketwatch.com/archive/20000817/news/current/screamers.htx?source=blq/yhoo&dist=yhoo
GE to Acquire Smallworld, Directions Magazine http://www.directionsmag.com/news.asp?NewsID=55
GE Power Systems Announces Offer to Acquire Smallworldwide plc, Geocomm.com http://news.geocomm.com/dailynews/2000/aug/17/news10.html
Smallworld Reports Record Quarter http://finance.individual.com/display_news.asp?doc_id=BW20000816BW2633&page=news
GE Power Systems Home Page http://www.gepower.com/en_us/index.html
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