By virtually all accounts, the advent of the Internet of Things (IoT) -- the notion of a "connected" world including our homes, cities, devices, and cars, to name but a few -- will result in the collection of an unprecedented amount of data.
Storing all that information will require the building and maintaining of huge data centers, which heavy hitters like IBM (NYSE:IBM) are already developing. Last month, IBM announced a new cloud-based data center in Italy, moving Big Blue closer to its plans of building 46 sites around the world, in large part to store IoT-related information.
Collectively, all that information is referred to as "big data," and along with a world of opportunity, it also poses challenges. Constructing the centers to securely store data is one thing. It's another thing altogether to actually utilize the information to enhance business processes -- and that's where powerful analytic solutions enter the picture.
IBM, thanks in large part to its significant investment in its Watson supercomputer, has been at the forefront of the big-data revolution, and already has several big "wins" to its credit. But before IBM CEO Ginni Rometty and team start celebrating their early stage big-data successes, Microsoft (NASDAQ:MSFT) would like to have a word.
Anything you can do ...
To CEO Satya Nadella's credit, Microsoft is rounding the corner in terms of being recognized less as a PC-reliant software provider and more as a developer of cloud and mobile solutions for the next generation of technologies. Next week's fiscal 2015 Q4 earnings announcement is likely to include news that Microsoft's cloud division has once again enjoyed triple-digit growth -- which would mark its seventh straight quarter of knocking cloud sales out of the park.
But providing software as a service (SaaS) via the cloud, as lucrative an opportunity as that is, represents only part of Nadella's plan. Introducing easy-to-use, comprehensive big-data services is also high on Microsoft's to-do list, and it appears its time has come.
About a year ago, shortly after taking the CEO reins from Steve Ballmer, Nadella laid out his plans to focus on business-intelligence solutions to help manage the ever-growing amount of data.
Microsoft's answer to overcoming the big-data hurdle is about to be released to the masses. The differentiator, as per Power BI product head James Phillips, is its ease of use. According to Phillips, even nontechnical users will be up and running "within five minutes," and Power BI seamlessly integrates with all the Microsoft apps the business world is familiar with, as well as with external services, including fellow big-data analytics provider Salesforce.com.
Phillips went so far as to say, "It's [Power BI] years ahead of IBM Watson and Salesforce Wave," primarily because of its user-friendly interface. It's easy to see how Microsoft's simple, big-data analytics solution would appeal to potential customers, particularly non-techie types. But "years ahead" of Watson?
Not so fast
Before the big-data torch is passed to Microsoft and its new Power BI, IBM's cognitive computing wonder Watson warrants consideration. Though IBM doesn't break out its big data BI revenue -- one of its key "strategic imperatives" -- it did say that business analytics revenue grew 12% in Q1. And don't be surprised to see another quarter of double-digit growth when it announces Q2 earnings on July 20.
IBM has inked multiple, big-ticket data-analytics deals -- delivered via the cloud, naturally -- with partners including the U.S. Army and The Weather Company. It has also devoted both time and money to a health-industry-specific analytics unit utilizing its Watson supercomputer. IBM fans may recall that IBM committed $1 billion to form a separate division for Watson in early 2014, and it's been paying dividends since.
According to IDC, companies will spend five times more on outsourced, cloud-based big data and BI solutions than on legacy in-house services in the coming years. Predictive analytic apps, similar to Watson, are expected to grow 65% faster than big data BI apps without the ability to "learn." All that bodes well for IBM, particularly for securing more deals with large businesses and industry groups.
But Microsoft's Power BI also has a place in the fast-growing big data BI market, and thanks to its ease-of-use it's a natural for (relatively) smaller firms without huge IT budgets or personnel. Bottom line, both IBM and Microsoft are positioned to succeed in their respective big-data initiatives: each within its own niche.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Salesforce.com. 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.