Watson – Really Just A Sidekick?
How IBM Watson is driving the adoption of IoT by enhancing accessibility
It’s splashed all over the headlines; peppered across press releases; whispered furtively by competitors…. it’s the Internet of Things.
While IoT is currently the title of a phenomenon, many enterprises are trying prematurely to turn it in to an industry by stuffing it in to their verticals in a rush to emerge as the “ecosystem winner”. The race is the most heated in the Industrial IoT space, where industrial titans are scrambling to lock their customers in to their cloud-based ecosystems with promises of predictive maintenance, guaranteed up-time and cost savings. They are taking on large and involved development projects with their customers to deliver IIoT-driven solutions within the industrial space. This is great, when IIoT exists as an extension of the existing industrial automation discipline, but it only serves to isolate industrial companies in their own silo.
Meanwhile, IBM is taking the opposite approach. IBM Watson is building an open platform on Bluemix that enables users to develop their own applications, with the option to make use of advanced APIs and an expansive educational toolkit. Rather than dedicating itself locking in a small number of specialized clientele for large and high-dollar-value applications, Watson aims to make the use of cloud-based computing broadly accessible, thus allowing users to define the value proposition of IoT for themselves through the DIY model. IBM also has a competitive advantage in Artificial Intelligence, which will become a much more substantial value-add component of the tech stack as IoT applications mature and require more advanced processing power and deep learning. Through offering Cognitive APIs, users can begin to appreciate the benefits of certain AI capabilities and will become accustomed to integrating such capabilities in to their tools.
The simple app-building toolkits target non-consumption by offering an introductory product to users who don’t know how to build apps. Developers benefit from the information-sharing development forums, and can make use of APIs such as natural language processing to expand the utility of their applications. These same tools can draw in smaller businesses that want to make use of analytics but with whom no one is willing to share the development cost. At the same time, IBM is leveraging its scale and institutional relationships to build out Smarter Planet, which offers much of the same analytics capabilities to industrial clients (currently the most profitable customers in the space) but in a supplier-agnostic format, and is currently developing IoT-driven solutions to city-wide problems for multiple municipal customers, which will bring IoT closer to people. As a whole, this play serves to educate IBM Watson on how IoT can benefit a broad and diverse set of users and companies, and can incorporate these insights in to the development of future offerings.
While IBM may not currently enjoy the revenue windfalls that IoT is currently producing for companies such as GE and Siemens, IBM Watson is drawing in individuals and small-scale users, bringing businesses and people closer together on one platform, gaining insight on what IoT means to very diverse sets of users, while developing larger-scale IoT applications that will benefit from this insight. In the long-run, I think that IBM will emerge as a Digital Winner in the IoT space.
It’s interesting that IBM decided to go the opposite way and make Watson an open platform. How does IBM Watson plan to monetize their ecosystem in the long run? I wonder if they might lose out in the long run without current monetization pathways to fund further research & development in their technology. They may not be able to sustain their technology advantage and technologies from other more endowed competitors may overtake them in the future?
They are making money through the PaaS and SaaS model, which I assume will grow over time as more users switch to cloud computing, They also have larger and more involved contracts through Smarter Planet (e.g. online monitoring of energy assets, designing Smarter City solutions), which is where I assume that most of their revenue is coming from within the space. I think the key is that by keeping their platform open here, they can draw more users in and harness network effects on the development platform which will benefit their Smarter Planet projects.