IBM Merges Weather and Business Forecasts
IBM in late October announced plans to acquire The Weather Company and its digital assets, including weather.com, Weather Underground, and WSI, for an estimated $2 billion. The Weather Channel is not included in the acquisition, but the television network will license weather forecast data and analytics from IBM under a long-term contract.
While the deal might not seem significant on the surface, the enormous data-gathering operation that IBM is buying from The Weather Company could lead to more accurate climate modeling and weather forecasts, which can be vital to all businesses as they look to plan around favorable or unfavorable weather.
"With an added focus on in-the-moment marketing and predictive analytics, having the most relevant information about the weather could make or break a company," says Ray Wang, founder and principal analyst at Constellation Research. Companies alerted to a pending snowstorm, for example, can rebook corporate travel, restock shelves with salt, change staffing levels in call centers, or cancel meetings.
Weather, Wang says, is a core business contextual attribute, along with time, location, and identity.
Esteban Kolsky, principal and founder at ThinkJar, says there isn't a business in the world that couldn't benefit from weather information, especially if it is made available in advance of the six o’clock news. "If you know your supplier will be late because of a storm half a world away, could you use that for better service or sales?" he asks. "If your product will become less available, can you raise prices but manage configure, price, and quote for your top customers?"
With The Weather Company acquisition, IBM gets a wealth of additional data to feed into its Watson cognitive computing and analytics engine to help companies. The combination of technology and expertise from IBM and The Weather Company will serve as the foundation for IBM's new Watson IoT Unit and Watson IoT Cloud platform.
Thanks to The Weather Company's cloud-based data platform, IBM can collect an even larger variety and higher velocity of global data sets, store them, analyze them, and distribute them to its business clients.
"The Weather Company's extremely high-volume data platform, coupled with IBM's global cloud and the advanced cognitive computing capabilities of Watson, will be unsurpassed in the Internet of Things, providing our clients significant competitive advantage as they link their business and sensor data with weather and other pertinent information in real time," said John Kelly, senior vice president of IBM Solutions Portfolio and Research, in a statement. "This powerful cloud platform will position IBM to arm entire industries with deep multimodal insights that will help enterprises gain clarity and take action from the oceans of data being generated around them."
IBM could, for example, take the predictive weather analytics and couple it with real-time analysis of social media chatter, transportation flows, supply networks, consumer buying patterns, and other related data to help retailers ensure that the right items are on the shelves at precisely the right moment.
Executives at IBM also plan to advance The Weather Company's digital advertising platform to build another source of revenue.
The acquisition is not the first dealings between IBM and The Weather Company. The two entities formed a strategic alliance early last year through which IBM licensed The Weather Company's cloud data platform and jointly developed industry solutions, data services, and interfaces that incorporate real-time weather insights into business platforms. "Customers should see [the acquisition] as a sign that IBM intends to be a key supplier of insights, the network to distribute them, and the technology to enable data-to-decisions to emerge," Wang says. "The more data sources [IBM] acquires or partners with, the more capability it has to deliver contextually relevant insights that its customers will want to consume."
"Having access to the incredible amount of local data that the weather channels can feed to Watson, IBM found a way to influence virtually every transaction conducted by virtually every organization on the planet," Kolsky says. "Not too shabby."