International Business Machines Corp. (IBM) is considering selling its weather operations arm, including weather forecasting services Weather.com and The Weather Co.’s business and cloud-focused operations, according to the Wall Street Journal. This comes as IBM is shifting its focus to becoming a leaner company that is more centered on AI and cloud infrastructure.
IBM acquired The Weather Company from a consortium of investors, including private equity firms The Blackstone Group and Bain Capital, in 2016 for a reported $2bn. The acquisition included The Weather Company’s internet and mobile applications assets, such as Weather Underground and Intellicast.com, plus rights to weather data and associated weather forecasts, as well as analytics projects. IBM licensed the Weather Channel name and Weather.com and took on hundreds of staff members who maintained other apps falling under the Weather Company umbrella.
As a result of the acquisition, IBM intended to strengthen its Watson artificial intelligence (AI) services unit by integrating its historical and real-time weather data on its cloud-based platform. IBM hoped the acquisition would help bolster the Watson AI service in analyzing vast unstructured data sets from The Weather Company’s IoT (Internet of Things) platform, allowing it to predict business trends and weather patterns that influence weather-sensitive industries, including retail, agriculture, energy, and insurance.
IBM’s acquisition of The Weather Co. aimed to extend IBM’s IoT platform to offer businesses insight into real-time data from IoT devices to help them make smarter, faster decisions. The IoT platform offers customizable solutions for developers and enables employees to collaborate on the same work, such as sharing weather predictions and related datasets. Moreover, the acquisition sought to integrate The Weather Company’s clients into IBM’s cloud, giving IBM access to The Weather Company’s AI-backed weather data, which can be fed into its Watson AI engine. This enabled IBM executives to brag about their IoT and AI efforts and engage with existing and potential customers who would then make essential data-backed decisions.
As a result, IBM claims it has a wealth of historical and real-time weather data that helps clients understand the “business impact of weather” on their operations. IBM uses the weather data to sell AI-based weather analytics to industry clients, including airlines, insurance companies, and governments. For example, airlines pay for weather analytics to predict runway conditions and schedule crew availability.
However, now, IBM seems to be distancing itself from this strategic move, and the possible disposal of its weather business indicates a change in direction. A sale would come as IBM tries to become a leaner, more focused company centered on AI and cloud infrastructure. The company has been working to expand its offerings that can be used to draw on the vast amount of raw information stored in the increasing number of sensors and other devices feeding the IoT. IBM seeks to use AI to distil that wealth of data into meaningful and actionable intelligence, which is a useful tool for businesses.
IBM is reportedly in the early stages of the auction phase for its weather segment, with private equity being the most likely purchaser, though there are currently no guarantees that a deal would come to fruition.