IBM is seek­ing more busi­ness uses for Wat­son’s ar­ti­fi­cial in­tel­li­gence

San Francisco Chronicle - - BUSINESS REPORT - THOMAS LEE

McDon­ald’s has Ron­ald. Ge­ico has the gecko. And Tar­get has Bulls­eye the dog.

The clos­est thing IBM has to a cor­po­rate mas­cot is Wat­son.

Most peo­ple re­mem­ber Wat­son as the “think­ing” su­per­com­puter that de­feated two hu­man cham­pi­ons on the trivia game show “Jeop­ardy” in 2011. (Deep Blue, its pre­de­ces­sor, was fa­mous for de­feat­ing world chess cham­pion Gary Kas­parov more than a decade ear­lier.)

Wat­son wasn’t ac­tu­ally a sin­gle com­puter but rather a col­lec­tion of tech­nolo­gies that worked to­gether to crunch data and solve prob­lems. In any case, Wat­son not only sym­bol­ized the po­ten­tial of ar­ti­fi­cial in­tel­li­gence but also

the re­search and de­vel­op­ment power of IBM, it­self a long­time sym­bol of Amer­i­can in­no­va­tion.

But IBM needs Wat­son to be more than a mar­ket­ing cu­rios­ity as Big Blue tries to stay rel­e­vant in the dig­i­tal age. The com­pany said that it will open an of­fice at 505 Howard St. in San Fran­cisco to ag­gres­sively sell Wat­son to po­ten­tial cus­tomers in in­dus­tries like health, fi­nance and re­tail. Whereas Wat­son was once an ex­per­i­men­tal show­piece, IBM wants to gen­er­ate real sales and profit from the tech­nol­ogy.

‘Vi­sion is real’

“Last year, we had a vi­sion of what (Wat­son) would be­come,” said Stephen Gold, chief mar­ket­ing of­fi­cer for IBM’s Wat­son Group. “To­day, the vi­sion is real.”

Like Hewlett-Packard, Or­a­cle and Dell, IBM has been try­ing to re­fash­ion it­self from a maker of hard­ware into a provider of cloud soft­ware and ser­vices. Last year, IBM re­ported sales de­creases in nearly all ma­jor busi­ness units, in­clud­ing a steep 23 per­cent de­cline in hard­ware.

Those num­bers don’t bode well, es­pe­cially at a com­pany that likes to brag about spend­ing $6 bil­lion a year on re­search and de­vel­op­ment.

But there is a bright spot: Rev­enue from busi­ness an­a­lyt­ics — find­ing in­sights by crunch­ing large amounts of data — jumped 7 per­cent last year to nearly $17 bil­lion. The ser­vice now makes up 18 per­cent (and grow­ing) of IBM’s to­tal rev­enue of $93 bil­lion.

It’s no won­der, then, that IBM has in­vested more than $26 bil­lion in big data and an­a­lyt­ics, in­clud­ing $17 bil­lion in re­lated ac­qui­si­tions, ac­cord­ing to doc­u­ments filed with the Se­cu­ri­ties and Ex­change Com­mis­sion. About one third of its R&D bud­get now goes to data, an­a­lyt­ics and cog­ni­tive com­put­ing that can think, rea­son and learn.

That’s why Wat­son — which can now help com­pa­nies do things like an­a­lyze im­ages from so­cial media and iden­tify trends and pat­terns — is so cru­cial to IBM’s trans­for­ma­tion. Last year, the com­pany es­tab­lished a unit to com­mer­cial­ize Wat­son and com­mit­ted $1 bil­lion to rolling out the tech­nol­ogy to the broader busi­ness world.

“Through Wat­son, IBM is ex­tend­ing an­a­lyt­ics to the end user, not just the data sci­en­tist,” the com­pany said in SEC fil­ings. “IBM’s goal is to give ev­ery busi­ness pro­fes­sional ac­cess to ad­vanced cog­ni­tive-pow­ered pre­dic­tive an­a­lyt­ics, cou­pled with new forms of data.”

Ven­ture in­vest­ment

But is Wat­son still rel­e­vant at a time when Sil­i­con Val­ley dom­i­nates the tech uni­verse?

To­day, com­pa­nies rang­ing from Google to Adobe are rapidly build­ing out their an­a­lyt­ics busi­nesses. From June 2014 to July 2015, ven­ture cap­i­tal­ists poured $6.4 bil­lion into big data star­tups, in­clud­ing $4 bil­lion for in­fra­struc­ture and ma­chine learn­ing, ac­cord­ing to Quid, a San Fran­cisco an­a­lyt­ics com­pany.

CB In­sights re­cently re­ported that in­vestors in­clud­ing Google and Khosla Ven­tures dumped $309 mil­lion into ar­ti­fi­cial in­tel­li­gence star­tups last year, a 300 per­cent in­crease from 2013.

In an ideal world, IBM would have found com­mer­cial uses for Wat­son af­ter its re­sound­ing vic­tory on “Jeop­ardy” four years ago, which at­tracted enor­mous at­ten­tion.

“It would have been great to flip on a switch af­ter ‘Jeop­ardy,’ ” Gold said, but the tech­nol­ogy wasn’t ready.

Since then, though, “Wat­son has re­ally turned a cor­ner.”

For ex­am­ple, Wat­son has greatly im­proved its tools to syn­the­size nat­u­ral-sound­ing speech from text. Be­cause the tech­nol­ogy lets de­vel­op­ers build prod­ucts and ap­pli­ca­tions that un­der­stand in­tent and mean­ing, it can find an­swers for users even when ques­tions are asked in vary­ing ways.

Since last year, more than 100 com­pa­nies that have worked with IBM on Wat­son have in­tro­duced cog­ni­tive-en­abled apps, prod­ucts and ser­vices into the mar­ket.

“I like to think we are em­pha­siz­ing our lead­er­ship and com­mit­ment to this space with our in­vest­ments,” in­clud­ing the new of­fice in San Fran­cisco, Gold said. “Sil­i­con Val­ley is piv­otal to the work we are do­ing.”

IBM needs Wat­son to be more than a mar­ket­ing cu­rios­ity as Big Blue tries to stay rel­e­vant in the dig­i­tal age.

Liz Hafalia / The Chron­i­cle

Tech­ni­cians pre­pare IBM’s San Fran­cisco cen­ter, where it will sell Wat­son tech­nol­ogy to health, fi­nance and re­tail cus­tomers.

Photos by Liz Hafalia / The Chron­i­cle

Work­ers get the new IBM Wat­son cen­ter ready for its open­ing in San Fran­cisco. The Howard Street site will mar­ket an­a­lyt­ics tech­nol­ogy.

Lauri Saft (left), IBM Wat­son vice pres­i­dent, and Wine4.Me CEO Amy Gross talk in the cen­ter.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.