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IBM to Pump $3B Into IoT

Ray Le Maistre
4/1/2015
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IBM has thrown its hat into the IoT ring with a pledge to invest $3 billion during the next four years in a new business unit focused on the Internet of Things.

The IT services and systems giant, which has just reorganized its networking assets into a single division, is building a "cloud-based open platform" that companies can use to collect, store and analyze IoT data and is committing 2,000 consultants and systems integration staff to the unit. (See IBM Forms IoT Unit and Just Don't Say IBM Is 'Relaunching' Networking Business.)

The company says its involvement in multiple Smart Cities and Smarter Planet developments has given it a great deal of experience in the "practical applications of IoT," and that it is building on that experience to develop a cloud-based system that enables companies to make best use of their IoT data and upon which companies can develop connected devices and IoT-related applications."

IBM Corp. (NYSE: IBM) estimates that "90% of all data generated by devices such as smartphones, tablets, connected vehicles and appliances is never analyzed or acted on," and that "as much as 60% of this data begins to lose value within milliseconds of being generated."

The new unit will be headed by general manager Pat Toole. (Presumably he was the best Toole for the job.)


Want to know more about the Internet of Things? Check out our dedicated IoT content channel here on Light Reading.


Why this matters
Lots of companies, including communications service providers, are still trying to figure out what the IoT trend means for their businesses and operations and so will be seeking advice and help to figure out a strategy and exploit new opportunities, especially as concepts such as Industry 4.0 start to affect industrial and corporate processes.

By creating a dedicated unit, developing a focused cloud-based platform, leveraging its experience and bringing together various existing parts of its empire -- professional services, systems integration capabilities, analytics tools -- IBM is well placed to offer the practical help that companies in multiple verticals will need.

"IoT is clearly not just about technology or services -- it's about business focus and organization. IBM, in the same way as pioneering mobile operators in the space, is creating a dedicated team to address this emerging space. With focus comes traction and innovation, both in technology, solutions and business models," notes Heavy Reading senior analyst Steve Bell.

IBM's move also highlights once again the importance, and potential, of core technologies and skills: Analytics is increasingly underpinning almost every strategic move by vendors and service providers alike, while systems integration is set to become a major battleground as cloud, virtualization, IoT and the shift towards 5G make their presence felt in every corner of the communications sector. (See NFV's Looming Battle: Systems Integration.)

The IoT sector offers lots of opportunities for the major Service Provider Information Technology (SPIT) players to develop new business opportunities and become valuable partners to thousands of companies but to do so they need to develop a coherent plan and dedicate resources, which is what IBM at least claims to be doing (delivering the goods is another matter).

"IoT's biggest opportunity is in the enterprise/industrial space -- the industrial IoT or Industry 4.0 world -- which requires IT technology to communicate with Operations Technology (OT)," notes Heavy Reading's Bell. "The integration of this, with layered connectivity involving low power wireless, such as ZigBee and Bluetooth, and WiFi and cellular, will require some very skillful integration. IBM, with its IT relationships in both the enterprise and service provider markets, as well as its cloud services and analytics capabilities, is well positioned to act as a catalyst to the fragmented ecosystem of companies trying to service this space. The most important skill IBM's new unit will need is open partnering."

IBM, of course, isn't the only IT and systems integration giant to have identified the IoT sector as a major new business opportunity. (See HP Gives Carriers IoT Management Smarts, Aeris, Tech Mahindra Team to Jumpstart IoT, Accenture: Industrial Internet of Things and NEC: How will the Internet of Things be Strategic to the Enterprise.)

For more on this topic:

Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
4/6/2015 | 9:43:31 AM
Re: Is IBM on the ball or late to the game?
Michelle, 

 

IBM may be fashionably late, but it wouldn't surprise me if the earliest party-goers may have overpaid for admission. IoT will no doubt be large, but it may not get as large as fast as some companies think -- look at what happened at the dotcom boom and bust. Some came too early to the party and overpaid. 
Michelle
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Michelle,
User Rank: Light Sabre
4/5/2015 | 7:46:06 PM
Re: Is IBM on the ball or late to the game?
I think they're late compared to other companies already focused on this (SAS, SAP, and GE). It's still quite early for the market overall so they're really just fashionably late :)
danielcawrey
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danielcawrey,
User Rank: Light Sabre
4/1/2015 | 8:33:57 PM
Re: Is IBM on the ball or late to the game?
I think IBM's timing is very good. It may still be too early, but this push will influence IBM's major clients to start really thinking about what IoT is going to mean for the future of smart devices. 

It is a smart play, let's just hope IBM isn't too early to the game and it ends up overspending. 
DHagar
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DHagar,
User Rank: Light Sabre
4/1/2015 | 6:52:58 PM
Re: Is IBM on the ball or late to the game?
Ariella, exactly.  You may have many roads, but few highways are needed - if they fill that space they have a strong position.
Ariella
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Ariella,
User Rank: Light Sabre
4/1/2015 | 6:49:44 PM
Re: Is IBM on the ball or late to the game?
@DHagar getting on the ground floor, so to speak.
DHagar
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DHagar,
User Rank: Light Sabre
4/1/2015 | 6:48:02 PM
Re: Is IBM on the ball or late to the game?
[email protected] - I vote that they are on the ball.  I see them as establishing themselves as a platform for the pieces coming together in the IoT framework.  By developing the foundation, expertise, and systems to pull these pieces together, they can establish themselves as "the leader" and take advantage of their driving leadership in analytics.

I think they have timed this well - the market is recognized and is now forming - great timing..
Ray@LR
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[email protected],
User Rank: Blogger
4/1/2015 | 8:11:40 AM
Is IBM on the ball or late to the game?
being first to market isn't always advantageous... is IBM's timing good, considering the immaturity of the IoT sector?
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