IBM is taking another step to expand its Watson AI business and build its presence in areas like IoT: today the company announced that its acquisition of the Weather Company — the giant weather media and data group — has now officially closed.
IBM is not disclosing the value of the deal: it was originally reported to be in the region of $2 billion, but sources close to IBM tell us this was inaccurate. (For context, the Weather Company was previously acquired in 2008 for $3.5 billion by a consortium that included Bain, Blackstone and NBC Universal.)
As part of the deal, IBM is making some changes: First, the Weather Company’s cloud platform will now run on IBM’s Cloud data centers (recall that it once was a big client of AWS). That platform will now power all of IBM’s wider push into data services and Watson’s Internet of Things business. This will bring a massively bigger amount of data into the mix, covering what IBM describes as billions of IoT sensors.
IBM will also use its weight to scale the Weather Company’s business: the company plans to expand weather.com into five more markets including China, India and Brazil “immediately”, as well as integrate it into IBM’s 45 global cloud centers.
IBM is also making an executive change: David Kenny, who had been the CEO of the Weather Company, will take on a newly-created role at IBM running the company’s wider Watson platform business.
The IBM acquisition will include most — but not all — of the Weather Company’s assets: its B2B, mobile and cloud properties; weather.com; Weather Underground; The Weather Company brand; and WSI, which houses all the company’s data science and enterprise services will all fold into Big Blue.
The Weather Channel — perhaps the Weather Company’s most mainstream product — is not included. But as part of the sale, under a long-term contract, it will license weather data forecasts and analytics now owned by IBM.
IBM and the Weather Company had already been working together as partners — IBM cut a deal in 2015 to tap into the Weather Company’s network of 100,000 weather sensors to ingest data for its machine-learning-based analytics services. The acquisition will now give IBM ownership of the company’s tech, and help it deliver more services around the weather vertical to current and existing IBM customers.
IBM also plans to build on the platform created by the Weather Company, expanding it to include other datasets.
One example he cited was in the area of connected cars — an area where we have heard IBM is looking to do more business down the road.
The same platform that might take in weather data can now also ingest data around other automotive details around speed, or mileage, or tire pressure and other diagnostics or wider traffic conditions, to feed back information to the car companies for future products, or to the drivers or cars themselves to drive better.
The Weather Company’s cloud data platform already had a track record before coming to IBM: it powers the fourth most-used mobile app daily in the U.S., IBM points out, and it handles 26 billion inquiries to its cloud-based services daily.
And while Internet of Things applications like this may be an obvious endpoint, they are not the only area that Kenny as the new platform head will oversee, or where Weather Company data will be used.
Kenny said that there are already at least 500 companies using Watson-based machine learning data, spanning applications in areas like healthcare, travel and retail services. The idea will be to create more intelligent analytics for these groups leveraging the Weather Co. datasets. (The proverbial Butterfly Effect made into an IT service, so to speak.)
IBM more generally has making a big push to bring the company into the next generation of computing. In part, this is to help offset declines in more legacy IT services businesses. Its Global Technology Services and Global Business Services, as well as its software division, all declined in the last quarter, while cloud, mobile and analytics services all grew.
These newer areas are still much smaller than the legacy business, however, and IBM has seen 15 straight quarters of revenue decline. So it’s a slow, ongoing process of transformation, as CEO Ginny Rometty might say.
Kenny is not ruling out more acquisitions down the line. “My goal is to make Watson a robust platform and a leader in cognitive computing. Where there are places where you can go faster of course we will look at acquisitions but I would say this is about building a platform, it’s not a roll up or anything like that.”
Other execs on the Watson team include Harriet Green, head of Watson IoT, Education and Commerce, and Deborah DiSanzo, who leads Watson Health. Michael Rhodin, who launched the Watson business and drove the formation of Watson Health and Watson IoT, will now lead Watson business development where he’ll identify the next Watson verticals and “related acquisition strategy.” The Weather Company, meanwhile, will be led by Cameron Clayton, who was most recently its president, product and technology.
