IBM Update: IOT Transformation on Track?
There have been some interesting developments for Big Blue in the IOT space recently. Last time we reported on them, we were monitoring analysts’ worries about the semiconductor business and other divestures late last year. This year, it seems clear IBM is poised to create even more profitable opportunities in our IOT space. Let’s check in and see where they are.
Healthcare connectivity key to IOT growth
The healthcare giant, Pfizer, recently contracted with IBM to create IOT solutions for clinical trials. In a recent news article, the two have teamed up to create one of the first completely connected clinical trial environment for Pfizer’s Parkinson’s Disease medication.
For enterprise connectivity, Big Pharma has long turned to IBM for its enterprise software used in manufacturing, for finance and accounting and, of course, as an outsourced service desk delivery provider. The move to clinical uses of IBM expertise is not that much of a stretch—and cross-selling to this industry will get easier and easier as use cases — such as the Parkinson’s trial — gain traction.
In the meantime, to prepare for a 2019 launch of this experimental drug, Pfizer and IBM are setting up a “connected house” in Yorktown Heights, NY. About 200 people will live there, with IBM and Pfizer tracking them throughout their days (and, presumably) nights. This control group will help the team test the premise—and also will yield much valuable data for IBM to expand into similar uses for “connected houses.”
Stock recovering mightily- thanks to the Cloud
March saw IBM stock rebounding from lows late last year, largely due to a Morgan Stanley rating that took into account the company’s growth opportunities in the IOT. After experiencing fifteen months of declining revenue, it seems that March’s bounce-back reflects mostly IBM’s perceived power in the cloud.
“Although Amazon (AMZN) continues to lead overall in the cloud space, within the private and hybrid cloud space, IBM looks to be out front. Katy Huberty, an analyst at Morgan Stanley, believes that the market has, in fact, “underappreciated” IBM’s growth potential, as reflected by its share prices.”
The turnaround is related to IBM’s investment in “strategic imperatives… in cloud, analytics, mobile, social, and security technologies” with “IBM’s total cloud revenue (growing by) 57% on a year-over-year basis to $10.2 billion.” Analysts watching this movement will continue to upgrade the stock—and companies looking to invest in gamechanging cloud technologies to gain competitive advantage—will sit up and take notice, as well.
SAP partnership in Cloud computing allows companies to “dip a toe into the IOT”
When we talk about the IOT among ourselves, chances are we are operating from a set of assumptions that the general business community does not share. Everyone sees the opportunity. But some companies don’t have a clear path to leveraging it. Enter an IBM-SAP cloud partnership.
This partnership will allow businesses who want to “dip a toe” into IOT technologies continue to use classic, SAP enterprise infrastructure while introducing cloud-based services over time. The IOT investment might gain sign-off more quickly if the SAP-IBM partnership allows decision-makers to trust their providers more—and which companies are more ensconced in corporate IT than SAP and IBM?
“SAP’s collaboration with the 104-year-old tech giant appeals to established companies that have shied away from outsourcing operations or want use a combination of their own data centers and those in the cloud.”
First Quarter IOT Champs?
So what’s going to happen on April 18, when IBM is scheduled to report 1st Quarter earnings? That depends on who you talk to. Goldman Sachs is maintaining a neutral rating—and the stock is generally thought to be overvalued by about $3 to $10—once again, depending on who you talk to.
As we started out saying, IBM’s focus on healthcare is seen to be its “white knight” in this regard. Using its Watson capabilities, IBM is actively searching for hospital and pharmaceutical partners in oncology, in particular, to build a Watson-based information repository which will “deliver…quick access to the top-tier cancer care exclusive to MSK oncologists, enabling them to provide elite cancer treatment to their patients anywhere in the world.” Using Watson technologies to fine-tune offerings in the IOT, particularly in healthcare, seems to be IBM’s “ticket to ride” for IOT opportunities in the future.
Leveraging its global headquarters for Watson Internet of Things (IoT) in Munich, Germany will be key to IBM’s IOT momentum, as well. Their focus since the center opened in December of 2015 has been on “launching a series of new offerings, capabilities and ecosystem partners designed to extend the power of cognitive computing to the billions of connected devices, sensors and systems that comprise the IoT.” This strategy will play out to its fullest later this year and in the next five years, as the company solidifies its leadership role in the IOT space.
Stay tuned to these pages for more on the players in IOT, or give me a call with IOT recruiting needs. An IOT-enabled CIO responsible for M2M and manufacturing connectivity? Check out our latest article on the IOT-powered ride you’re in for in 2016.