Watson and IBM’s Big Bet on Analytics

Over at GigaOm, Derrick Harris writes that IBM has launched a new Billion-dollar division based on the Watson platform. But as Big Blue looks to bring home its Big Bet on developing a 20 billion dollar analytics business by 2015, it may find itself in good company with a slew of companies waiting for the big pay off. According to Harris, IBM first needs to figure out the cloud.

And IBM appears to be seeing about the same results as other companies pushing big data technology, such as Hadoop. There’s some money coming in, but it’s not yet a billion-dollar business. There’s potential for really big deals, but it probably means slogging through long proofs of concept and deployment cycles — IBM has been working with its current health care partners for years now — because this stuff is complicated, even if some Watson services are delivered via the cloud. There are existing data-management systems and applications in place. In the case of health care, law, finance and other fields IBM is targeting with Watson, wrong decisions are costly.

In terms of technology, one cannot discount the achievement that Watson represents. IBM has reduced the hardware footprint down from the multiple racks it required to win Jeopardy just a few years ago to just three 1U servers. That sounds like great potential margins to me.

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