IBM today officially bought a big chunk of the Weather Company’s digital assets. Terms of the deal weren’t disclosed, but a report on Tuesday before the deal closed suggested IBM will paid $US2 billion or more.
The big question is “why?”
IBM has invested a lot into its Watson cloud service — a version of Big Blue’s super-smart, Jeopardy-playing computer that developers can simply and easily drop into their apps, no artificial intelligence expertise required.
This service gives developers a way to let their apps answer spoken or typed questions from users the same way that the first version of Watson answered questions from Alex Trebek. Apps like Apple’s Siri took this idea and ran with it, but it’s hard for independent developers to do on their own.
But the thing with Watson is that it’s only as smart as the data that goes into it. Which is where IBM’s partnership with Twitter, announced about a year ago, comes in.
It’s also where this Weather Company data fits in.
“Proprietary or exclusive offerings such as Watson or the Twitter and Weather Company partnerships offer IBM the ability to upsell customers to higher margin, more difficult to replicate externally services,” writes Redmonk analyst Stephen O’Grady in a blog post written earlier this week, before this deal was finalised.
In other words, the company hopes that having exclusive access to piles of weather data, all crunchable and searchable by the IBM Watson cloud service, is something that the competition can’t match.
This comes at a crucial time for IBM, as it places its hopes for the future on the cloud, even as demand for Amazon Web Services eats away at IBM’s server business.
But this focus on IBM Watson presents its own challenges, largely because its brand of so-called “cognitive computing” is not easily explained in an elevator pitch to the finicky enterprise buyers who are IBM’s main customers.
“Not least because unlike cloud, IBM is trying to push that rock up a hill by itself,” writes O’Grady.
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