IBM on Wednesday said that it had acquired most of The Weather Company including Weather.com and Weather Underground news sites as well as its vast trove of weather data. The deal does not include the company’s cable television outlet, The Weather Channel, which will continue to broadcast.
IBM would not confirm the financial terms of the deal, but the Wall Street Journal reported that the price was over $2 billion.
If you’re scratching your head at the deal, you’re not alone. Why would Big Blue (IBM), purveyor of mainframe computers and business software, acquire a company that brought us Hurricane Sandy coverage?
One word: Data.
Like rivals Google (GOOG) and Microsoft (MSFT), IBM is hell-bent on becoming a data-based company. It has been betting that its Watson data crunching service — popularized by its winning run on Jeopardy — will eventually offset the declines in its traditional software business.
The Weather Company already moved its weather data technology to IBM’s cloud computing platform as part of a partnership announced in March. So the deal essentially formalizes what’s already been in the works.
Now instead of having to lease the Weather Company’s data and related data sifting technology, IBM can simply own it and do what it wants. Presumably, that means IBM will sell companies access to the information as well as related weather forecasting services.
As part of the acquisition, IBM will get over 5,000 of the Weather Company’s customers in the aviation, energy, and insurance industries, among others. Many businesses that are potentially impacted by weather depend on the Weather Company for forecasts of storms, heat waves, and wind.
IBM said the acquisition will lift the company’s new Watson Internet of things unit and related cloud platform. The Internet of things generally refers to devices like automobiles, manufacturing equipment, and toasters being outfitted with sensors that can connect to the web.
Big Blue said that its customers will now be able to link all of their business and sensor data from their connected devices with weather data using Watson. This, in theory, could help companies make better business decisions.
For example, a trucking business could access IBM’s weather data, receive notifications that a storm is moving in a certain direction, and then alert all of its drivers to steer clear of its projected path. The same idea could be applied to airliners or salespeople on the road.
Most businesses that can be impacted by weather could benefit from accurate weather forecasting and predictions. If Watson gets “smarter” by being fed data, it’s possible its analytical capabilities could improve. Perhaps Watson will be able to produce better five-day forecasts than your local television news meteorologist, who often rely on the National Weather Service. Time will tell.
Of course, this is just the beginning of IBM’s weather ambitions. And it’s hard to tell if the company will be able to provide better information than what anyone can get for free online.
A simple Google search can give you free access to a weather forecast. Although, to be fair, that’s probably not the type of information an airline would want to bet its business on. Instead, it would need more sophisticated data related to flight paths and weather patterns at high altitude, which presumably is what IBM will be able to provide.
IBM is not alone in trying to build a business around the burgeoning Internet of things. Many companies, like Cisco (CSCO), Amazon (AMZN), and Oracle (ORCL), all brag about their own technology and why their products are better than their competitors.
But weather is something that affects all of us. A stormy day can force businesses to change their plans, and companies that better plan for rainy days could gain a competitive edge over companies that don’t.
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