IBM Bets on New Watson Unit to Ignite Smart Machine Era Growth

Archived Published: 14 January 2014 ID: G00261760

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IBM is investing heavily to create a new industry built on its cognitive and analytical systems assets. Smart machines deliver substantial first-mover advantage and we recommend early action.

News Analysis


On 9 January 2014, IBM announced investments in research and development for its IBM Watson group, a new stand-alone unit focused on what Gartner calls smart machines. It announced new offerings — IBM Watson Discovery Advisor, IBM Watson Analytics and IBM Watson Explorer — as well as plans to:

  • Invest over $1 billion over the next few years

  • Dedicate more than 2,000 employees to bring Watson products and services to market

  • Syndicate $100 million of Watson-related IBM venture investments

  • Allocate one-third of overall IBM research efforts on Watson.


This is a strong leadership move backed by major investments that IBM expects will create new markets and industries. IBM is charting new territory that will take many years to fully mature, but smart machines have transformational potential (see "The Disruptive Era of Smart Machines Is Upon Us" and "Predicts 2014: The Emerging Smart Machine Era" ). For Gartner clients, the risk of investing too late in smart machines is likely greater than the risk of investing too soon. As with any undertaking of this magnitude, it’s premature to judge IBM's performance, but we are encouraged by its stream of offerings, its decision to expose APIs to cloud-based Watson services and its plans to build a broad and deep Watson ecosystem.

With IBM Watson Analytics, users can ask, for example, “What’s the relationship between IT investment and employment?” Various subsystems would seek out the best possible answers based on all available quantitative data (such as publicly available government statistics) and qualitative content (such as peer-reviewed economic research). Although questions remain as to how much information is sufficient to support this capability, the marriage between natural language understanding, contextual intelligence, machine learning, cloud-based services, advanced analytics and visualization capabilities is impressive.

IBM is returning to its roots by engaging customers in co-development and by investing to grow an ecosystem around Watson. It is reaching into a massive pool of user creativity to create simple-to-consume services that can mask the complexity involved in building smart machines. Enterprises of all kinds could benefit from the broad ecosystem that Gartner expects to form around Watson services. Competition will eventually emerge from firms such as Google, but that is likely years away. What remains to be seen is whether the business and technology development processes are simple and scalable enough to drive broad commercialization.


Prospective IBM customers and smart-machine adopters:

  • Answer two key questions:

    • Should your enterprise transform itself by going into the business of creating and selling Watson-based services built on your enterprise’s unique body of knowledge and expertise?

    • What Watson-based services should people in your enterprise use to increase their effectiveness? Where would it be the best approach for people to collaborate with smart machines?

  • Act now to initiate exploration, build expertise, assign resources and launch smart machine initiatives. This area is in the early state of evolution, but holds enough promise that early adopters should benefit more over time.

  • Include consulting, development, and implementation services, as smart machines will require substantial custom work and trial and error. We are a long way away from single solutions or "plug and play" panaceas.

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