by Thor Olavsrud

IBM invests $200 million in Watson IoT AI business

Oct 04, 2016
Emerging TechnologyHigh-Performance ComputingInternet of Things

Citing escalating demand from customers looking to transform their operations with Internet of Things and artificial intelligence technologies, IBM makes a $200 million investment in the IBM Watson IoT global headquarters in Munich.

The venerable 105-year-old IBM may be a global company, but while it has operated important labs and offices overseas, its business units have always been headquartered in the U.S. Until December of last year, that is, when it opened the new global headquarters for the IBM Watson Internet of Things (IoT) unit in Munich, Germany. Now, faced with dramatically increasing global demand for Watson IoT solutions and services, Big Blue is doubling down on that investment.

On Tuesday, IBM announced a $200 million investment in the Watson IoT headquarters, marking one of the company’s largest investments in Europe in its history. The investment is part of the $3 billion IBM has earmarked to bring Watson cognitive computing to IoT. IBM says the move is a response to escalating demand from customers who are looking to transform their operations using a combination of IoT and artificial intelligence technologies.

IoT growth requires global focus

“IoT simply became too big to not have a focus,” explains Bret Greenstein, vice president, IBM Watson Internet of Things, IBM. “We began with a business unit last year, specifically for IoT. It was a really good start. It gave us focus.”

“We’re changing our center of gravity a bit,” Greenstein adds. “It’s important for us to get the global focus. This is the first time we ever put a global headquarters for IBM outside of the [U.S.]. It’s a really big move for us.”

To underscore that point, eight months ago, IBM had 4,000 clients globally who were tapping Watson IoT solutions and services. Today, IBM says the number has grown to 6,000 clients.

IBM says the new investment will make Watson IoT headquarters the home of the first ever cognitive IoT Collaboratories — hands-on industry labs that will bring IBM clients and partners from around the world together with the company’s 1,000 Munich-based researchers, engineers, developers and business experts with the goal of driving innovation in the automotive, electronics, manufacturing, healthcare and insurance industries.

Why Germany?

Germany, as a global leader in manufacturing and industry, is a perfect match for IBM’s IoT efforts, Greenstein notes.

“IBM is making tremendous strides to ensure that businesses around the world are able to take advantage of this incredible period of technological transformation and develop new products and services that really change people’s lives,” Harriet Green, global head of IBM Watson IoT, said in a statement Tuesday. “Germany is at the forefront of the Industry 4.0 initiative and by inviting our clients and partners to join us in Munich, we are opening up our talent and technologies to help deliver on the promise of IoT and establishing a global hotbed for collaborative innovation.”


Automotive and industrial supplier Schaeffler, based in Ehningen, Germany, is just one of the customers that underscores IBM’s move to center its IoT efforts in Munich. Schaeffler on Tuesday announced a multiyear strategic partnership with IBM focused on the digital transformation of its entire operations and customer solutions via Watson and IoT.

“Our goal is to be the world’s leading manufacturer of cognitive solutions which keep the world moving,” Peter Gutzmer, deputy CEO and CTO, Schaeffler, said in a statement Tuesday. “We are entering an age where parts can monitor and evaluate their own performance and even order their own replacement when necessary. Schaeffler is a world leader in product development and manufacturing, IBM in hybrid cloud and cognitive computing; through this partnership, we are ushering in the new industrial era.”

Schaeffler specializes in precision-engineered components for machines — from parts in automotive clutch systems to the industrial bearings used in wind turbines. With the help of Watson IoT, it plans to build virtual models that represent entire industrial systems. The models will be fed by data from millions of sensors and devices across its operations to enable new approaches to product design, manufacturing and aftersales service.


To the northwest of Munich, in the Netherlands, is another Watson IoT customer: Aerialtronics, a designer and producer of unmanned aircraft systems for industry. Aerialtronics drones leverage cognitive computing capabilities from the IBM Watson IoT Platform on IBM Cloud to provide inspection services ranging from monitoring city traffic patterns to inspecting wind turbines, oil rigs and cell tower optimization.

The drones use Watson Visual Recognition analytics to understand what they’re seeing, like loose or frayed cabling and damaged equipment that could impair telecommunications quality.

“By pairing the unmatched perspective of drones with the proven power of Watson IoT solutions, companies can gain actionable insights into anything, anywhere and use this knowledge to help drive important business decisions,” Jeremy Wigmore, CEO of Aerialtronics, said in a statement Tuesday.

Thomas Jefferson University Hospital

Even with its center of gravity in Europe, the Watson IoT unit is still winning business in IBM’s U.S. backyard. A prime example is Thomas Jefferson University Hospital, a 957 acute care bed facility in Philadelphia that’s part of Jefferson Health. IBM is working with the hospital to launch cognitive hospital rooms powered by Watson IoT. Patients in these rooms can talk to in-room speakers connected to the IBM Watson IoT Platform, allowing them to control lights and window blinds with natural speech. They can also ask questions about hospital facilities or get background information on their physician.

While consumers have gotten a rudimentary taste of speech recognition through services like Apple’s Siri or Microsoft’s Cortana, Greenstein says Watson IoT allows the cognitive hospital rooms to parse complex sentences rather than predetermined commands. They can even continue simple conversations. For instance, a patient might ask about the temperature. Upon getting a response, Greenstein says the patient might continue, “That’s too hot. Make it cooler.”

New IBM Watson IoT offerings

IBM also announced a number of new IBM Watson IoT offerings on Tuesday, including:

  • Watson IoT and Blockchain. This new capability connects IoT data to Blockchain through the IBM Watson IoT Platform. Businesses can share IoT data in a secure, private blockchain to reduce the costs and complexities of doing business across a network of people and goods. This capability is fully integrated into IBM Blockchain. Kouvola Innovation (Kinno), an economic development company based in Finland, used the IBM Watson IoT Platform to connect devices to a blockchain. Using the technology, Kinno is developing a solution that tracks, monitors, and reports on container status and location, and optimizes packing and transfer of shipments through shipping lanes.
  • Security Solutions and Services. A new set of IoT Security Solutions and Services help companies proactively identify potential risks and protect their devices from compromise. Enhanced security features in the Watson IoT Platform will provide visibility to potential exposures across the network, alerts for immediate notification, and automatic operational responses tailored to individual customer environments. The service offerings will also include advanced security assessment, threat intelligence to identify anomalies and data anonymization to ensure data privacy while maximizing data utility.
  • Natural Language Interface. This new offering enables customers to tap the Watson IoT platform to develop new voice interfaces for customers — in homes, cars, stores, hotels and offices. For example, Local Motors uses a Watson powered Natural language Interface for Olli — one of the world’s first self-driving vehicles capable of a natural language interaction with its passengers.
  • Cognitive IoT Cookbook. This new resource includes new recipes for developers that contain code and best practice approaches for solving cognitive IoT challenges using Watson’s Natural Language Application Program Interfaces (APIs).