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IBM Wants You to Have a Smarter Smartphone

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You may recall in early January of this year that IBM (NYSE: IBM  ) got serious about monetizing its supercomputer, Watson. Watson is the infamous computing marvel that beat the Jeopardy! champions at their own game, and is now the hub of a separate IBM unit, Watson Group. When IBM dropped $1 billion to get the Watson Group's wheels turning, along with committing a staff of about 2,000 to expand its reach, part of the challenge it faced -- and still faces -- is utilizing this extraordinary "cognitive system" to generate revenues.

Watson Group isn't starting from scratch: It already has nabbed some big-time clients, particularly in the financial-services industry, including Singapore-based bank DBS Group. The opportunity for IBM is enormous as it migrates to business intelligence (BI), big data, and cloud-related technologies to drive revenues; all areas that Watson is able to dabble in. But there's more. CEO Ginni Rometty said at the Mobile World Congress (MWC) that IBM wants to integrate Watson into the exploding smartphone and mobile-computing markets. IBM bulls, feel free to let your imaginations run wild.

What's the big deal about Watson?
Watson isn't the only cognitive computing device out there, but it does have come futuristic qualities and capabilities that separate it from the pack. According to IBM, the distinction between Watson and similar advanced devices is that it uses several advanced, computing, and data analysis functions simultaneously. One of those features, what IBM refers to as natural language processing, analyzes "unstructured data," which includes about 90% of the world's information, and is able to understand the complexities of the human language.

Watson also has the ability to hypothesize and evaluate huge amounts of data using advanced analytics, as well as employ learning algorithms to get "smarter" with each step in the analytical process. Combining all three of these advanced features gives Watson some serious capabilities, beyond Watson's integration into IBM's big-data and cloud-computing services. Those in and of themselves provide a ton of revenue upside for IBM, and investing in the Watson Group makes it clear Rometty is serious incorporating Watson into the mix.

The opportunity
Beginning March 31, Rometty and team will open the Watson doors with a global app development competition encouraging developers to "spread cognitive computing apps into the marketplace." As SVP, IBM Watson Group Mike Rhodin put it, "The power of Watson in the palm of your hand is a game-changing proposition."

Downloading apps onto smartphones and mobile devices, playing games, reading news, and all the other "stuff" readily available with the push of a button is commonplace. But can you imagine a language interpreting, ever-improving app that can decipher millions of pages of data in seconds, all incorporated into your smartphone or tablet? IBM's MobileFirst initiative could get a real shot in the arm if cognitive app developers around the world get on board and incorporate Watson's "intelligence" into mobile devices.

How serious is IBM about a mobile Watson?
Conceptually, the notion of integrating a self-learning, supercomputer into a mobile device seems to have unlimited potential. As the Internet of Things continues to drive smart homes, cars, and just about everything else around us, IBM Watson-enabled mobile devices is a natural. Think Hal from 2001: A Space Odyssey, but in your pocket. Which is why IBM's "reward" to the Watson mobile-app-developer winners seems a bit, well, lame. The winners of IBM's challenge receive design and consulting support from IBM. A bit anticlimactic if you're an app developer.

Final Foolish thoughts
It's possible the cutting-edge nature of the Watson development program is enough to get the best and brightest working on new apps, which may explain why more than 1,500 folks have already contacted IBM to share ideas. Of course, IBM can always up the ante some, too, if need be. For investors, the Watson app-development program is another example of the new IBM: Leading the way into cutting-edge markets like cloud computing, BI, and big data, and doing it with some of the most cutting-edge tools on the planet.

Another Watson-like opportunity
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  • Report this Comment On March 02, 2014, at 6:18 AM, Interventizio wrote:

    Excellent article. I'm heavily invested in IBM and I still think it has growth company potentials.

  • Report this Comment On March 02, 2014, at 8:25 AM, Studyearnenjoy wrote:

    Nice article, I always enjoy letting my imagination run wild when it comes to the possibilities of IBM! There are few stocks I can think of that are more obvious long term winners. Once I round up some capital you better believe I'll be long IBM.

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Tim Brugger

Tim has been writing professionally for several years after spending 18 years (Whew! Was it that long?)in both the retail and institutional side of the financial services industry. Tim resides in Portland, Oregon with his three children and the family dog.

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