When GE (s ge) touts the Industrial Internet, in reality what the industrial giant really means is that it is becoming more data-centric and building a future that helps data create better experiences for the customers of its diverse businesses — consumer appliances, jet engines, turbines, and more. In this world, the network — you know, the actual internet as you and I would know it — is of minor importance.

The “internet is just the facilitation part,” said Jeff Immelt, the charming and affable chief executive of the company whose engines power the planes above and generate the power that helps us remain glued to our Twitter feeds. Immelt, in a one-on-one conversation earlier this week, said that his company has been building sensors into its products and collecting data for some time, but now what they want to do is take the emerging data streams and turn them into data-driven productivity tools. “It is about turning it into crucial and useful information,” he said.

The GE event this week (which we covered here), along with Immelt’s comments, depict a general 20,000-foot view of the problem a company as large as GE faces. It is awfully hard for a company that has spent the past decade or so in denial of the internet to suddenly develop internet DNA. Just look at Walmart, which despite spending hundreds of millions of dollars and a full decade trying to embrace the Internet, has failed to stop the Amazon juggernaut.

Immelt acknowledged that it is a challenge and perhaps that is one of the reasons why the company is coming to Silicon Valley. In our chat, Immelt said that the company has been working on its idea of the Industrial Internet for sometime, but they have come to California for what he describes as “a little sanity check.” When it comes to jet engines, “we can build and engineer those in Cincinnati or in New York,” but when it comes to data, “we wanted to be part of Silicon Valley” and learn a lot about being open, new protocols and being part of the data-centric movement.

“You give up on software analytics as a company at your own peril and we have to invest in it,” said Immelt. Data is the key to GE’s future, for as more of its products use sensors and create data feeds, the company will create infrastructure to make the machines more intelligent. In order to do so, they have created the GE cloud, a combination of private and public clouds.

“That cloud can and will expand in time,” he said. “The value of the company shifts from assets to the network and it is one reality of the future.”

Speaking of reality: When I asked him if he was worried about the near monopolistic control of the networks between a handful of entities, and lack of competitive mechanism in the market place, especially in the US, he was quick to add that if the network itself becomes a bottleneck, then GE wouldn’t shy away from “playing a role.” I (for one) wouldn’t have any problem with one mega-billion dollar company making phone companies and other bandwidth providers a little nervous.

What about the legislative and regulatory challenges that emerge from data rich and always connected devices? Immelt acknowledged that this too is is a challenge and perhaps the customers are best to deal with those decisions, he argued.

Valley Talk

When I asked him, why GE is here in Silicon Valley, Immelt said that it is the recognition that “neither we can nor we want to do everything ourselves” and instead want to work with rest of the technology ecosystem. Will GE start buying software companies in Silicon Valley? After all, Immelt had venture capitalist Marc Andreessen on stage, and Andreessen would love to sell him some big data companies and pocket those GE dollars.

“We are better off acquiring people than companies,” Immelt said. He believes that because his company makes healthcare and energy products, they should be attractive to folks who want to work on those problems. The company is going to be doing what he calls “some corporate venturing” and will be involved in “incubation” efforts in the near future. “We will be looking to take equity stakes,” he added. GE has a similar model for its healthcare investments as well.

Immelt said that GE is paying attention to new technological movements such as 3D printers and new kinds of modeling software, and how those technologies are impacting the production and creation of products. He doesn’t think it is too crazy of an idea for GE to work with small teams to develop innovative products — especially consumer appliances — and plug them into their supply chain.

Immelt said that the emergence of so much data basically means that the product supply chains as we think of them today need to be rethought. “It is my belief that in the future most consumer products will have a distributed supply chain,” he said. Data is what is going to define the product experience, and as a result, a small team in Dallas can design a refrigerator that is optimized for local environments and then have it manufactured in a manner that is optimal for a smaller subsection of the overall market. (This is part of the hyper-personalization movement we have often talked about.)  It is already happening at a smaller scale, and since it has an impact on GE’s consumer appliances business, GE is paying attention to it.

The biggest challenge, Immelt said is finding those data experts who can find insights into massive amounts of data.  “We have a lot of people in software — for instance a thousand people work on software for MR Scanners — but what we don’t have is the system architects who sit at a higher level and use data to craft experiences,” Immelt said.  What do they say – recognizing a problem is the first step!