Could Watson Be a Game-Changer for IBM?
Can Strategic Imperatives Turn IBM Around in Fiscal 1Q16?
Morgan Stanley research shows strong growth in Watson customers
In the previous part of this series, we looked at Watson’s role in the improvement of IBM’s (IBM) rating by Morgan Stanley (MS). Watson, through its deep learning, artificial intelligence, and cognitive computing skills, can break down and analyze data to provide new information.
Morgan Stanley believes that with $5 billion in data acquisitions in less than a year, IBM is well on its way to generating revenue from Watson. Morgan Stanley’s Watson Customer Tracker tracks Watson’s customer growth. As you can see in the graph below, Watson is indicating strong growth.
Inefficiency in healthcare space offers billion-dollar opportunity for Watson
We’ve already seen that IBM’s recent acquisitions of Truven Health, Merge, Explorys, and Phytel have boosted Watson’s data analytics and other opportunities in the healthcare space. In late 2014, IBM also entered into a data analytics partnership with Twitter (TWTR).
IBM is also working on offerings in 20 sectors with initiatives in IoT (Internet of Things) and commerce. To boost its footing in the IoT space, IBM also acquired Weather Company.
At the Morgan Stanley Technology, Media and Telecom Conference, IBM’s management pointed to inefficiencies that are worth $2 trillion in the health space. When translated, these point to a $200-billion opportunity for IBM. Morgan Stanley said Watson technology is at least as disruptive as ERP (enterprise resource planning) since both can address human errors and inefficiencies.
Investors interested in exposure to IBM could consider investing in the Technology Select Sector SPDR ETF (XLK). XLK has about 38% exposure to application software and invests almost 3.1% of its holdings in IBM.
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