To IBM's credit, the IT giant continues to promote more and more use cases for Watson -- the company's artificial intelligence technology. The latest moves involve a Twitter relationship plus a deeper push into the energy vertical. Still, Wall Street is wondering how soon Watson can generate enough revenue to lift IBM's fortunes -- which have sagged over the past 2.5 years or so.
Let's start with two big positives.
First, IBM and Twitter this week announced a Big Data alliance. According to a joint blog post, "This relationship will enable IBM solutions -- like the famous computer Watson -- to access Twitter data as an input for multi-variable, pattern-dependent questions like “What do customers like best about my products?” or “Why are we growing quickly in Brazil?”"
IBM CEO Ginni Rometty worked personally with Twitter CEO Dick Costolo on the partnership, she said in a video shown today at an IBM event, according to Bloomberg. The companies also will develop services for the banking, consumer products and transportation industries, Bloomberg added.
Also this week, the second big Watson story involved Repsol SA -- Spain’s largest energy company. Repsol will spend about $15 million to $20 million developing at least two Watson applications in the next year; the applications will seek to make it cheaper and easier to find future caches of oil, Bloomberg noted. Roughly six to 10 employees from both companies will develop the energy-specific applications for Watson. It's the first time Watson has been tapped for the energy vertical, Bloomberg added.
Despite Watson's progress, IBM faces several challenges. In terms of the big picture, IBM's revenues have been flat or dropped over the past 10 quarters. Rometty recently abandoned the company's 2015 profit goals, conceding that IBM wouldn't be able to meet the lofty targets set by her predecessor, Sam Palmisano.
Critics allege that IBM didn't diversify rapidly enough beyond hardware, software and services toward mobile and cloud computing. Recent acquisitions like last year's SoftLayer buyout have significantly boosted IBM's cloud business, but not enough to fully offset weakness in IBM's core business.
Meanwhile, IBM hasn't said how much revenue Watson generates each quarter. As of October 20134, Watson had delivered less than $100 million in total, accumulated revenues, according to The Wall Street Journal. At the time, Rometty predicted Watson would generate $10 billion in annual revenue within 10 years -- by 2024 or so. Amid IBM's more recent revenue challenges, the company has stopped making bold statements about future Watson revenue.
That aside, it's good to hear about real wins like the Twitter partnership and the Repsol SA customer engagement.
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