IBM's $3B IoT Bet Seeks to Monetize Weather Data
(Bloomberg) -- Retail companies often blame the weather for sluggish sales, whether it’s a heat wave or a cold front. IBM and the Weather Co. are trying to change that.
International Business Machines Corp. announced that it’s joining with Weather Co. to build tools that help companies in the retail, insurance and utilities industries anticipate and prepare for bad weather. IBM, based in Armonk, New York, said Tuesday in a statement that it will also gain the right to resell data collected from a swath of Web-connected devices.
IBM has been trying to lure customers to its analytics business with data from partners including Twitter Inc. IBM has faced three straight years of falling sales as demand wanes for legacy hardware and services and unprofitable units are divested.
“We are going to monetize this through analytics, no question,” Joel Cawley, general manager of information and insight services at IBM, said in an interview. He said the companies hadn’t decided on pricing.
Weather Co., operator of the Weather Channel, is jointly owned by NBCUniversal, Bain Capital Partners LLC and Blackstone Group LP. Mark Gildersleeve, president of WSI Corp., Weather Co.’s professional division, said companies need to better manage weather-related issues.
“Weather forecast skill has improved faster than general decision-making skill in businesses,” he said. Most businesses “don’t anticipate the weather and don’t understand the things you can do to take action ahead of time.”
Among retailers that have reported weather-related setbacks is Gap Inc., which blamed cold weather for sluggish sales in February 2014. Macy’s Inc., the largest U.S. department-store chain, and J.C. Penney Co. said warmer temperatures hurt sales in last year’s third quarter.
IBM announced Tuesday that it will also spend $3 billion over four years to create a division around its “Internet of Things” business. Chief Executive Officer Ginni Rometty is seeking to use the cloud to provide data and tools to clients and product developers working on devices that connect consumer goods like cars or appliances to the Web.