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The Real Reason AT&T and IBM Are Partnering

By Tim Beyers - Feb 20, 2014 at 9:00PM

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A deal to make smarter cities underlies a bigger issue plaguing both companies.

AT&T (T 0.00%) and IBM (IBM -0.50%) are partnering at just the right time, Fool contributor Tim Beyers says in the following video.

The two are cooperating to help cities and mid-size utilities glean data and insights from the Internet of Things. Principally, the idea is for AT&T to provide mobile technology and software while IBM contributes data analytics for helping assess the health and performance of city infrastructure.

Sound ambitious? Perhaps, but Tim says AT&T and IBM have no choice but to think bigger, thanks to huge changes in their core industries. Look at how T-Mobile has altered how we think of mobile pricing and contract commitments. Or consider how the do-it-yourself server movement has cut into IBM's hardware sales. Big Blue sold its low-end server division to Lenovo in response.

Teaming on smart cities won't offer any immediate relief, especially since IBM has already spent years pitching its "Smarter Planet" consulting services. But it's a start. Investors can't ask for much more than that, Tim says.

Now it's your turn to weigh in. How are you investing in the Internet of Things? Please watch the video to get his full take and then leave a comment to let us know whether you would buy, sell, or short AT&T or IBM stock at current prices.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of International Business Machines at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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