Much is made of the potential of burgeoning new markets like big data and cognitive computing -- sometimes referred to as artificial intelligence (AI), or machine learning. And for good reason: as the world around us becomes increasingly connected via mobile and "smart" devices more prevalent in our homes, cars, and cities, the sheer volume of data is quickly becoming overwhelming. Welcome to the world of big data.
Of course, amassing all that consumer data is one thing; scrutinizing it to formulate actionable results, let alone utilizing it for predictive analysis, is a whole other ball game. From a marketing perspective -- digital or otherwise -- big data and cognitive computing offer a world of upside, which is one reason industry leaders like IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) are intriguing for investors in search of growth opportunities.
How big is big?
This year alone, according to research firm IDC, big data and related analytics are expected to generate a whopping $125 billion in revenue. And thanks to the advent of the Internet of Things (IoT) -- essentially the inter-connecting of the world around us -- and a growing appreciation among information technology folks for just how valuable information can be for business, the future of big data and analytics is limitless.
In fact, IDC predicts that by 2018, half of all consumers will interact with cognitive computing-generated services, whether we realize it or not.
Understanding -- and more importantly, predicting -- consumers' buying habits will enable marketers to target offers and advertising like never before, not to mention help drive a management team's decision-making processes. But the impact of big data and supercomputers that can actually "learn" has the potential to go well beyond marketing and driving strategic business decisions.
To your health
It's been over a year since IBM announced it was investing $1 billion to develop a distinct Watson supercomputer business unit. Watson, you may recall, is the AI computer that beat Jeopardy contestants at their own game. Watson doesn't just amass and analyze data; similar to our own thought processes, Watson "learns" from its previous analysis to continuously improve future results.
Microsoft's virtual assistant Cortana is a relatively basic example of computing "intelligence," in that it's able to read and interpret emails, and presumably improve its results over time. Microsoft recognizes the potential of supercomputing, and is working to enhance Cortana's machine learning capabilities. But IBM's new "Health Cloud" partnership goes far beyond a "smart" virtual assistant. It's not only a big step in the fast-growing health care market, but it may literally help save lives.
As we increasingly use smartphones, fitness trackers, and any number of other devices, IBM estimates that each of us will generate a "million gigabytes of health-related data in their lifetime (the equivalent of more than 300 million books)." Now, imagine combining all that user-generated information with medical records, clinical research, and doctor information -- instantly.
IBM's new "Watson Health" unit is working to do just that, and already has partnerships with some of the biggest pharma and health care providers on the planet. IBM's new favorite mobile king, Apple, is also on board -- which should not be surprising, given their recent strategic alliance. Naturally, considering IBM CEO Ginni Rometty's focus on growing her "strategic imperatives," Watson Health is compliant with HIPPA (the health care industry's patient data security standard), and is cloud-based.
To help jump-start its Watson Health unit, IBM also announced that it acquired Explorys and Phytel, two niche players in the health care industry's big data, analysis, and cloud services sector.
An ever-improving Cortana is a helpful utilization of cognitive computing, and Microsoft will no doubt expand its AI development efforts going forward. But when it comes to big data and machine learning, IBM and Watson lead the pack, and as its Health Cloud initiative demonstrates, the potential of supercomputers goes far beyond the basis for making marketing or strategic management decisions.
For investors, Watson Health is the latest example of the far-reaching implications of IBM's big data and AI possibilities. Considering health care as an industry generated over $3 trillion in costs in 2014 in the U.S. alone, there is certainly revenue to be had, and IBM just took another big step in the right direction.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and 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.