‘Jeopardy’ champ Watson branching out
Banking clients at DBS Group Holdings Ltd. will soon get investing assistance from Watson, the IBM technology that triumphed over human “Jeopardy” contestants.
The Singapore bank plans to begin using the tool, which can answer questions in conversational language and learn from responses, in the second half of 2014 to aid financial planners in guiding its wealth management unit’s affluent customers, IBM said Thursday. Watson will analyze large volumes of financial data to help DBS offer more customized service.
The agreement gives IBM a proving ground as it tries to show clients the value of its Watson technology.
The company announced Thursday that it is creating a separate division for Watson to spur growth after six consecutive quarters of falling revenue.
IBM will invest more than $1 billion in the IBM Watson Group, including $100 million in venture funding for businesses that develop applications based on the technology.
Separate division
Based in New York with a staff of 2,000, the new unit will be separate from IBM’s hardware, software and services divisions, said Stephen Gold, vice president of Watson Solutions.
“It’s the first time that IBM is bringing together all of the disparate functions that support a business,” Gold said. “It’s a kind of doubling down.”
As sluggish demand for computer hardware has dragged down sales, IBM has been selling off businesses to focus on more profitable, fastergrowing areas such as data analytics and cloud computing. Watson is one of its highest-profile projects.
Michael Rhodin, senior vice president at the IBM Software Solutions Group, will lead the new division.
Rhodin said the New York City headquarters is meant to be a departure from the project’s current research facility’s sleepier surroundings about 40 miles north of the city in Yorktown Heights.
The angular glass building will stand out from the rest of its neighborhood, which is home to some of the oldest buildings in the city.
Rhodin said the move will help it attract young talent that expects Silicon Valley style.
“The millennial generation gets this, they understand what this is,” Rhodin said. “This is a departure. It’s a statement on our part.”
IBM CEO Ginni Rometty said Thursday that what makes Watson unique is that it isn’t programmed like most computers. Instead of relying only on the information that’s put into it, Watson learns by “reading” vast amounts of information and combining it with the results of previous work to find answers to problems — which she says makes it ideal for the reams of data now involved in many industries.
IBM has stumbled amid the industrywide shift into the cloud era, where information is stored online instead of on site. The transition has eroded demand for traditional hardware and spawned a new crop of competitors. To cope, IBM has spent more than $7.5 billion since 2010 on 43 software business acquisitions since 2010.
In July, the company purchased cloud-computing storage provider SoftLayer Technologies Inc. for about $2 billion. IBM will adapt Watson’s technology so it can be delivered through SoftLayer’s cloud infrastructure, it said Thursday.
Watson and other big data services, which let customers mine vast troves of information to make better decisions, were the company’s biggest focus in 2013, Rometty said in March. IBM boosted its expected sales from the data-analysis business to $20 billion in 2015, compared with an earlier forecast of $16 billion.
Business incubator
The Watson Group will also include an incubator for businesses to build on the technology, which IBM began offering to outside developers in November. The goal was to have three apps developed on the platform ready to enter the market early this year, the company said at the time.
IBM has received about 750 requests from programmers to build applications, Gold said.
DBS is willing to invest $12 million over three years in IBM’s technology, and it plans to extend the Watson service beyond wealth management to its small-business and payment services, Chief Executive Officer Piyush Gupta said.
IBM has collaborated on Watson projects with health care organizations, including insurer WellPoint Inc. and Memorial Sloan-Kettering Cancer Center. Those initial projects will show other potential clients Watson’s promise, Gold said.