Big Blue Is Watching You

IBM (NYSE: IBM  ) today debuted a new security software system that can analyze video data from surveillance cameras in real time.

Government and security agencies can use the system to detect suspicious or unusual activity in and around airports, harbors, and other areas of interest, including the U.S.-Mexico border. Because the system can even incorporate data from audio or chemical sensors, it has the ability to provide an extra layer of defense against chemical or biological attacks.

Beyond defense, the system has a variety of practical applications for businesses. In tests, the grocery industry has found it so effective that it can be used in a self-checkout line to identify whether the bananas you purchased were organic or regular -- and then ring up the correct price.

It can also be employed to detect customer and employee fraud. For example, if a person who entered the store without a package tries to return an item for a refund, or if an employee rings up a sale with no customer present, the system could notify a manager that there might be a problem.

Obviously, this system -- which is likely to compete with similar technologies from Nice Systems (Nasdaq: NICE  ) and Verint Systems (Nasdaq: VRNT  ) -- has an almost endless market of potential customers in the retail and homeland security markets. I believe, however, there is one other market where IBM could really clean up with the system: its consulting-services business.

On IBM's website, I read up on the system, dubbed the S3 for "Smart Surveillance System." One sentence in particular caught my attention, mentioning that the S3 "can be implemented on top of 3rd party relational databases."

This means that IBM consultants can begin using this powerful new tool to help clients run their businesses more efficiently. For example, a grocer want might to know the optimal location to place a certain food item. By tracking actual consumer behavior, this system will help them determine the right spot. I can also imagine the S3 being used by advertisers to determine which ad is most effective in catching a person's attention.

IBM claims that it's sensitive to the potential for abusing individual privacy. It says the system can block a person's face or a car's license plate. Still, it's likely to draw the ire of privacy advocates, and rightly so. At the end of the day, though, I'm guessing that privacy concerns will be drowned out by most consumers' general indifference. The new system should find an extremely profitable home in a number of businesses -- especially when offered as an add-on service for IBM consultants' clients.

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Fool contributor Jack Uldrich gets nervous when people look over his shoulder. He owns stock in IBM. The Fool has a strict disclosure policy.


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