International Business Machines Corp. (IBM) is considering a sale of its weather operation in a broader effort to become a leaner company focussed on AI and cloud infrastructure, according to the Wall Street Journal. An auction for the segment, comprising Weather.com and The Weather Co.’s business and cloud-focused operations, is said to be in an early stage, with no guarantee that a deal will materialize.
IBM has made strides in these key areas over the past few years, as the combination of worldwide temperature increases, population growth, and changing weather patterns requires more and more sophisticated weather prediction capabilities. Furthermore, the demand for accurate weather forecasting cuts across all industries, as it is a key factor affecting billions of dollars’ worth of everyday transactions, making it an essential service for public authorities, farmers, fishing fleets, energy generators, delivery companies, and passenger transport providers.
In this context, in 2016 IBM acquired the Weather Co.’s digital assets, which included Weather.com, Weather Underground, and related mobile applications, for about $2 billion. The deal was crucial in enabling IBM to capitalize on the weather company’s extensive data generation and data processing capabilities that lay at the heart of its prediction service. It granted IBM access to the Weather Co.’s Internet of Things (IoT) technologies, infrastructure, and cloud services that catered to the needs of the global agriculture industry, the energy sector, and several of the world’s governments who need local (and global) weather predictions on a daily basis.
Scheduled to take over the operations of Weather.com in 2018, IBM used the digital assets acquired from the Weather Co. to cement its position in the enterprise IoT market expanding its application potential in industrial sectors such as manufacturing, agribusiness, and transport, thereby boosting data analytics advantages for its B2B clients. IBM’s IoT suite combined with its Watson language and translation platform, as well as other machine-learning technologies and weather data gained via the acquisition, allowed the company to broaden its cognitive computing capabilities and take a quantum leap in the development of next-generation IoT applications.
One aspect of IBM’s weather operation that continues to stand out is its commitment to the environment. In 2015, Weather.com was recognized by the White House Climate Data Initiative for its role in improving agricultural measurements, which are crucial to fight global poverty and strengthen food security. More recently, during the 2018 hurricane season, IBM provided real-time situational awareness of Hurricane Florence’s dynamics and impacts in order to help citizens and affected businesses to prepare and make informed decisions to protect their assets and minimize disaster impacts.
In November 2018, at the IBM Think conference in Tokyo, IBM announced plans to develop a new high-resolution weather forecast model for Japan. The resolution of the new forecast model will be double the resolution of the existing model, providing hourly forecasts of temperature, humidity, and precipitation down to one square kilometer. The enhanced forecast model, which will be based on IBM’s PAIRS Geoscope technology, is expected to give residents, businesses, and authorities in Japan more accurate information for food production, transportation, clean energy, and disaster planning activities.
As a result of this series of strategic moves, IBM’s sales of the weather operation would represent a sale of a major strategic asset, which would be an important signal of IBM’s intentions and strategy going forward. The fact that IBM is potentially considering such a sale, highlights the extent to which it is looking to restructure its operations around cloud and AI, making the company leaner and more agile to cater to the ever-increasing demand for these innovative and disruptive technologies.
