IBM bets that Watson can earn its keep - The Buffalo News

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IBM bets that Watson can earn its keep

IBM wants to build a large and profitable business from what has mostly been a triumph of computing bragging rights, so it is giving Watson $1 billion and a nice office.

Watson is IBM’s name for a combination of powerful data-processing capabilities and software that analyzes information from almanac entries, medical records, sales information and the like. It made a splash in February 2011 when it became the computer that beat humans on the television trivia show “Jeopardy!”

So far, however, Watson has not delivered a lot of revenue for IBM.

The company says a new division, the Watson Business Group, will have 2,500 employees, including programmers, researchers and experts in various industries. It will be located in New York City, and about $100 million of the group’s funding will be for venture investments related to Watson’s so-called data analysis and recommendation technology.

IBM, based in Armonk, appears to be betting that Watson was simply a little ahead of its time and that its kind of data analysis has a future on a par with computer hardware, software and services, IBM’s other major groups.

“We believe a major shift is under way” in the computing business, Virginia M. Rometty, IBM’s chief executive, said in remarks prepared for a formal announcement Thursday. “Watson does more than find the needle in the haystack. It understands the haystack. It understands context.”

Watson, she added, “learns from its own experiences and from our interactions with it – and as it does, it keeps getting smarter. Its judgments keep getting better.”

IBM has collaborated with Memorial Sloan-Kettering Cancer Center, the insurer WellPoint and the Cleveland Clinic Lerner College of Medicine of Case Western Reserve University on ways to teach and practice medicine. Commercially, companies like Nielsen and DBS Bank have worked with Watson. So far, however, revenue from all these efforts has been relatively slight.

Seeking to kick-start the business, IBM said in November that it would make Watson’s technology available via the Internet and would open parts of the system to outside developers looking to make businesses from so-called cognitive computing.

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