By Don Clark
International Business Machines Corp. plans to invest $3 billion
over four years on a new business helping customers gather and
analyze the flood of data from sensor-equipped devices and
smartphones.
The computing giant is announcing the effort Tuesday along with
an alliance with the Weather Company, which owns the Weather
Channel and other information providers. The two companies plan
jointly to exploit data about weather conditions to help businesses
make better decisions.
IBM's move is the latest in a barrage of announcements by
companies aiming to exploit the so-called Internet of Things, a
catch-all term for computing and communications capability embedded
in a broad range of hardware in homes, offices, factories and
transportation networks.
Big Blue, which has struggled lately with slowing revenue growth
in older software and services businesses, has been pushing sales
of its Watson software and other programs that analyze business
data. Now it is competing to manage vast streams of data from
Internet-connected cars, machine tools, smart home appliances, jet
engines, and other sources.
The company said a centerpiece of its new business unit is a
collection of online software called IoT Foundation that runs on
IBM's existing cloud services and allows customers and partners to
create new applications and enhance existing ones with real-time
data and analysis.
The company faces competition from various angles, from large
companies such as General Electric Co., Microsoft Corp. and Cisco
Systems Inc. to startups like Ayla Networks Inc. and PTC Inc.
Challenges also are emerging from software companies that
specialize in particular industry sectors, such as manufacturing or
finance.
IBM is betting that correlating dissimilar kinds of data will
yield the highest value. "It's essential to federate information
from multiple sources," said Bob Picciano, IBM's senior vice
president of analytics.
IBM has already incorporated that philosophy in a deal announced
last year with Twitter Inc. The two companies are working jointly
to help businesses sift through and mine the stream of tweets from
customers, partners and others.
The arrangement with Weather Co. is another case in point. The
company, which is based in Atlanta and owned by a consortium made
up of Comcast Corp.'s NBCUniversal and private equity firms
Blackstone Group and Bain Capital, has properties that include
Weather.com, Weather Underground and Intellicast.com.
David Kenny, its chairman and CEO, said his company serves up
700,000 weather forecasts a second. It already sells data to a
range of customers in agriculture, transportation and other
industries that rely on weather.
But the opportunities have expanded, Mr. Kenny said, as weather
sensors installed in many more places have contributed to more
timely, localized forecasts. The added detail helps farmers predict
more precisely, for example, where hail could impact their fields,
Mr. Kenny said.
The Weather Company is turning to IBM, he said, because of its
software expertise and relationships with customers in many
industries. Under the alliance, the two companies plan to develop
applications that use weather data to help companies in fields like
insurance, energy, retail and logistics.
The goal is not just selling customers a license to data "but
selling them a weather-based solution," Mr. Kenny said.
His company also intends to shift more of its software
applications over time to run on IBM's cloud computing
operations.
IBM said it already has customers for IoT Foundation and related
offerings. They include engine maker Cummins Inc. and United
Technologies Corp.'s Pratt & Whitney unit, which use data
generated by their engines to help head off breakdowns, the company
said.
David Friedman, co-founder and CEO of Ayla Networks, which
offers a competing Internet of Things platform, said one challenge
will come from companies like Amazon.com Inc. and Google Inc. Those
companies provide cloud computing services that have put price
pressure on other providers, including the IBM SoftLayer services
associated with Big Blue's new Internet of Things business
unit.
But Mr. Friedman agrees with IBM's strategy of trying to deliver
a platform that supports multiple industries, and more generally
with its bet on what could become a big business. "If you are not
doing what they are doing," he said, "the world is going to look a
little painful for you in a few years."
Write to Don Clark at don.clark@wsj.com
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