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January 9, 2014

IBM Launches $1 Billion Watson Supercomputer Division

Tiffany Trader
IBM Watson logo

Tech giant IBM announced it will invest one billion dollars in a new Watson-based business unit to promote sales of Watson-powered technologies. The supercomputer, named after former IBM president Thomas Watson, sprung to fame when it bested reining game show champions on an episode of Jeopardy in 2011. The two-day tournament was a proving ground for Watson’s analytics and natural language processing abilities.

IBM reports that it is launching the Watson Business Group in response to a greater demand for cognitive computing. “We have reached the inflection point where the interest is overwhelming and we recognized we need to move faster,” vice president of Watson Business Stephen Gold told Reuters. The new division will be led by Michael Rhodin, former senior vice president of the company’s software solutions group. The workforce of 2,000+ employees will be based in New York City.

Watson, which has been shrunk to the size of three pizza boxes, is presented as a problem-solving business tool. Advanced analytics and natural language processing abilities enable Watson to interact with users in a more familiar way, while powerful CPU chips mean that Watson can sift through reams of information much faster than its human counterparts.

In the years since Watson debuted on Jeopardy, IBM has been promoting the Watson-as-a-Service model, where Watson-powered technologies are contracted to businesses and consumers via a cloud computing infrastructure. To streamline this process, IBM will soon be deploying Watson via Softlayer, the cloud computing business that it purchased last year. Among the “powered by IBM Watson” assistive apps coming to market are Fluid’s expert personal shopper and Welltok’s personalized health plans.

The investment also includes a $100 million equity fund to boost innovation and external application development.

Watson has so-far fallen short of IBM’s expectations as a revenue-generator. Projections were that the analytics technology would bring in $1 billion a year by 2018, but according to a transcript from an October conference call cited by the Wall Street Journal, Watson only brought in about $100 million due to some planned projects falling through.

IBM in effect is doubling down, still confident in Watson’s earning power, and they are not the only ones. Analyst house Gartner for one expects there to be “a large and growing market for Watson-derived smart advisors” by next year, while investment bank Crédit Agricole predicts Watson-based systems will account for more than 12 percent of IBM’s total revenue in 2018.