IBM has announced that it is acquiring the digital and data assets of The Weather Company.
Ginni Rometty, IBM's CEO, previously called data "a new natural resource" and in reportedly paying more than $2 billion for The Weather Company, Rometty is making it clear that she believes this natural resource has significant value.
According to The Weather Company, it gathers billions of data points from sensors, smartphones,vehicles and airplane flights. In March, the company partnered with IBM to bring its data to the IBM Cloud and make it available to customers through IBM's analytics and cloud services. At the time, IBM noted that "weather is perhaps the single largest external swing factor in business performance – responsible for an annual economic impact of nearly half a trillion dollars in the U.S. alone." Reflecting the demand for that data, IBM says that the The Weather Company's cloud platform currently handles 26 billion requests per day.
By acquiring The Weather Company's data and technology assets, which include public-facing web and mobile properties that have 82 million unique monthly visitors, IBM will now be in a position to take full advantage of them.
IBM Bets the Watson Farm on Weather
IBM's Weather Company acquisition hinges on its ability to create value by applying the company's cognitive computing platform, Watson, to The Weather Company's data to create predictive weather analytics solutions.
"The Weather Company's extremely high-volume data platform, coupled with IBM's global cloud and the advanced cognitive computing capabilities of Watson, will be unsurpassed in the Internet of Things, providing our clients significant competitive advantage as they link their business and sensor data with weather and other pertinent information in real time," John Kelly, SVP of IBM Solutions Portfolio and Research, explained.
IBM believes there are significant opportunities to merge The Weather Company's treasure trove of data with Watson's capabilities to transform industries. For instance, it points to the possibility that airlines could save significant amounts of money "by tapping multiple real-time and historical data sources to optimize fuel consumption, reduce delays and airport congestion, and improve passenger safety during disruptive conditions." Noting that insurers lose over a billion dollars a year alone to claims related to hail, IBM has cited insurance as another industry with an obvious need for intelligence derived from weather data.
But Big Blue sees significant opportunity in entirely new applications as well. For example, it suggests that retailers could combine weather, transportation and social data to "finely tune and maintain availability of vital goods in times of need."
More Data-Focused Acquisitions Coming?
IBM has committed more than $3 billion to the internet of things, and has been steadily building out the capabilities of Watson internally and through acquisition. Earlier this year, it acquired deep learning platform AlchemyAPI and medical imaging company Merge Healthcare. In an effort to lure developers to Watson, it also pledged $100 million to support the development of cognitive computing applications.
While IBM will ostensibly continue to invest in building out Watson's capabilities, if Watson is ever to realize its potential, IBM will need data. The Weather Company acquisition is a billion-dollar example of that, and it might not be the last.
This could shape how the IoT market evolves. Right now, a growing number of companies are focused on building turnkey platforms that companies can use to power their own internets of things, but larger competitors like IBM, which not only have IoT platforms of their own but a means to monetize IoT data, could rain on their parade by purchasing the companies that generate the most and most attractive IoT data.