IBM to Invest $3 Billion to Launch ‘Internet of Things’ Unit

Momentum Building in Emerging IoT Market

IBM photo

[Photo: Reuters]

International Business Machines Corp. – the company better known as IBM – announced this week that it will invest a cool $3 billion dollars (yes, that’s billion with a ‘b’) to launch a new division focused on the now rapidly emerging “Internet of Things” (IoT) market. IBM hopes to convince customers it is the expert they need when it comes to “gathering and making sense of the surge in real-time data” according to a Reuters report.

See more on why we feel this story is significant…

The IoT market has been the subject of much discussion and speculation for a few years now…albeit more as a concept that as hard products. But over the last eighteen months or so, the chatter began to pick up, as many new innovative start-ups launched new products firmly rooted in the IoT market.

Then, at the Consumer Electronics Show this year in Las Vegas, industry kingpin Samsung offered the show’s keynote presentation in which it said the future of this industry is IoT…and the future is now. Samsung’s CEO BK Yoon told the audience that by 2017 90% of all Samsung products will be IoT models. And by 2020, he said, all Samsung products – no matter what type of item – will be IoT models.

READ editor Ted Green’s story on IoT on the Residential Systems’ website

IBM heads to the cloud…

IBM will offer its customers services that based in the cloud and available remotely. The company will advise customers on ways to optimize their utilization of new data sources such as sensors, smartphones, and home appliances.

While IBM’s investment will take place over a four-year period, the company simultaneously announced that in connection with the launch of this new division, it has partnered with a unit of the Weather Company which will move all of its weather data services onto IBM’s cloud system. IBM says that this will allow its customers to employ IBM’s analytic tools in conjunction with the data.

Does this make sense?…

Graphic of story on Residential Systems

See Ted Green’s story on IoT at Residential Systems [Click image]

How does this make sense? Well, for example, insurance companies could notify policy holders of an approaching hail storm with advice on where to park vehicles to limit damage.

As another example, retailers could have direct access to weather information that would help them better predict seasonal demand or to adjust delivery schedules in response to storm patterns. The company says it is already working with tire maker Continental AG and jet engine manufacturer Pratt & Whitney to incorporate the data into their systems.

How big will this new IoT division be for Big Blue? The company is estimating that the division will generate revenues of $40 billion by 2018. If they achieve that, the division will be about 45% of the company’s total revenues.

Influence in our industry…

For the consumer electronics industry, IoT is mostly discussed in the form of Smart Home products, and especially in home automation circles. Certainly one of the first, and perhaps the most prominent IoT product launch was the Next self-programming thermostat.

Now, most major companies are looking to take advantage of the IoT market growth. Major companies such as Crestron with its Pyng line, and Control4 with an app solution are warily seeking ways to address the IoT market.

The trend is still playing out in our channel. But as we learned from a series of interviews we conducted with integrators, IoT is being welcomed with open arms. Smarter products are easier to install, operate, and troubleshoot.

You can see more on how integrators view IoT in the story written by editor Ted Green for Residential Systems.

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