IBM Pours $3B Into New IoT Business Unit

By Darryl K. Taft  |  Posted 2015-03-30 Print this article Print
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“This is an important development for IBM and the success of the Internet of Things industry,” said Vernon Turner, senior vice president and head of the IoT team at IDC. “With this announcement, IBM is giving IoT a legitimate sponsor similar to the need for an anchor store in a luxury mall. IBM had been slower to the IoT market compared to the likes of Cisco and GE, but in this case, we feel that IBM has identified correctly the area where much of the IoT business value can be created – at the IoT Platform layer. However, IBM’s success will be marked by the number of ecosystem partners it can recruit to build the hundreds of thousands of IoT applications for the billions -- 29 billion -- of connected devices.”

IBM said it will activate consultants from IBM Digital Operations Consulting Services, which already has helped thousands of companies achieve real business outcomes and pursue entirely new IoT-enabled business models fueled by mobility, cloud and analytical insight.

“The $3 billion investment that IBM is planning over the next four years is a hefty sum that indicates the company's seriousness,” said Charles King, principal analyst at Pund-IT. “A lot of other vendors have talked up IoT but none made a commitment of the size and scope of IBM's.”

King noted that the tie-ins between IoT and other IBM solutions are intriguing, especially those related to cloud, developers, Bluemix and the company’s partner ecosystem. That last point -- partners -- is especially important since by its nature, IoT will escape the grasp of any single vendor, he said.

“IBM's focus on IT infrastructure makes it a natural leader in this space, but the company literally can't be everywhere at once,” King said. “As a result, I believe that some of the most important and innovative developments around IoT are likely to arise through partnerships, so it's worth keeping an eye on what IBM does here.”

IBM officials said the company’s IoT capabilities are illustrated in a new global strategic alliance, announced today, with The Weather Company through WSI, its global B2B division. WSI’s forecasting system ingests and processes data from thousands of sources, resulting in approximately 2.2 billion unique forecast points worldwide, and averages more than 10 billion forecasts a day on active weather days. The IoT and cloud computing allow for collection of data from more than 100,000 weather sensors and aircraft, millions of smartphones, buildings and even moving vehicles. The two companies will help industries use their understanding of weather to shape business outcomes and take action systemically to optimize those parts of their businesses.

“IBM is doing a good job of communicating the potential scope and importance of IoT,” King said. “The three business use cases cited in their announcement -- insurance, retail and utilities -- are easy to grasp and demonstrate the significant financial and business benefits IoT can offer. In the past year or two, many or most IoT discussions have tended to be pretty lofty and strategic. In contrast, IBM's announcement aims to bring IoT back down to earth and shows how its planned solutions can make real differences in common business scenarios.”

Meanwhile, in conjunction with the formation of the new unit within its analytics business, IBM also announced the appointment of Pat Toole as general manager of Internet of Things and Chris O'Connor as general manager of Offerings for Internet of Things at IBM.

"By recruiting resources from its Smarter Planet divisions, IBM has pulled itself back into a legitimate contender as someone who understands the complexity of a highly- connected IP-based environment," Turner told eWEEK.



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