IBM is today taking the wraps off its new Internet of Things headquarters in Munich — a $200 million project at over one year in the making. And to underscore its IoT push, IBM is announcing a series of related deals and partnerships with companies including Indiegogo, Visa, Bosch and French railway SNCF, among others.
More on the deals below, but first, some context: IoT is part of IBM’s bigger bet on investing on newer technologies to offset declines in the company’s legacy businesses of servers and the tech that supports them (although it’s trying to make a new spin on that, too). In 2014, it committed to invest $3 billion over four years to build out that IoT business, which is based around its Watson artificial intelligence business.
There have been other IoT efforts from IBM in the past — notably it acquired the Weather Company in 2016 and swapped its cloud services to that platform add what it described to us at the time as “billions of IoT sensors” to its big data and communications network. It also integrated its Watson artificial intelligence technology into Cisco edge routers, in order to provide analytics services for networks of autonomous and unmanned connected devices.
IBM doesn’t break out how much it has made in IoT revenues. However, Harriet Green, IBM’s global head of Watson IoT, commerce and education, told me in an interview this week that overall IBM’s new-wave, strategic initiatives accounted for “well over” 40 percent of its overall revenues in the last quarter.
Having the IoT center in Munich, and not IBM’s homebase of the U.S., is notable. Of course, the decision to establish the base in Europe was made well before we knew what would hit us with Trump and his emphasis on building in the U.S. plus his administration’s general push to focus on U.S. citizens first in jobs and much more.
IBM has a been a visible participant in working with the Trump administration (who could be passing some business tax changes that will benefit IBM and others greatly). Some have criticised IBM to the point of leaving the company, so unsurprisingly, last week CEO Ginni Rometty wrote an internal memo to staff about IBM’s support of diversity and belief that having access will help it influence policymaking and steering away from some of Trump’s harsher executive orders on immigration and other areas.
So this is not notable for being built outside of the U.S. in some kind of thumbing to Trump (as I said before, it was announced before we knew what we’d have today in terms of Trump’s executive orders), but more for how it emphasizes that when it comes to tech, banging on about “America First” just doesn’t make sense in terms of talent, or even American businesses.
“Munich was chosen for the skills we could bring together, getting the right people and designers into one place,” said Green. “The state of Bavaria and Germany as a whole have been at the heart of Industry 2.0 and getting companies up to speed. And then we wanted a center around cognition that could support the whole world, and Europe is today an easier route to Asia than the U.S.” She added (with a little haste) that there are also some IoT efforts underway in New York and San Francisco, “but this is our first huge ecosystem colocating clients,” or “collaboratory” as she also referred to it.
The Visa deal will see IBM embed Visa’s tokenization technology (the security layer for mobile and other transactions that means no payment details get stored in the payment instrument) into its Watson IoT platform. This will mean that any connected device on a network powered by Watson can become a point of sale. This will be the first time that a company has worked with Visa — which powers 60 percent of the world’s transactions — to monetize IoT, IBM says. (Likely use cases will involve large networks of payment points in retail or public locations, for example.)
The Indiegogo partnership, meanwhile, will see IBM working with the hardware crowdfunding platform and Arrow (a marketplace for electronics and other manufacturing parts) to provide free cloud services, mentoring and other tools to startups working with Indiegogo and Arrow.
Building on a deal between Indiegogo and Arrow inked back in May 2016, Indiegogo entrepreneurs “will have no-charge access to IBM Watson Iot Platform via Bluemix for an unlimited amount of time, giving them access to more than 160 industry-leading cloud services to incorporate ready-to-use capabilities, such as artificial intelligence, Blockchain, advanced data analytics and cyber security into their latest IoT inventions,” IBM said.
This is aimed at helping to bring smaller businesses and startups into working with IBM, Green told me — again, another departure for a behemoth that has built its business by working with very large enterprises. Two companies already taking advantage of the new Indiegogo and IBM deal are Fitly (a “smart plate” that analyses what you eat) and PlayDate (a smart ball for pets).
But that doesn’t mean that IBM is foregoing working with those big companies. It’s also announcing that system integrator Cap Gemini, Tech Mahindra, Avnet, BNP Paribas and EEBus (and IoT alliance in Europe), and Vodafone will all be taking space in its IoT center to develop services and work with their respective large enterprise clients.
And Bosch, the consumer electronics giant, will integrate its IoT Suite with Watson and its cloud platform, which will mean that companies and individuals using Bosch’s connected devices can make upgrades on a global scale. This could apply to times when Bosch may need to update software for its washing machines that are already being used in people’s homes — a key way of getting around some of the headaches of people registering their products today.
But it seems that this could also be crafted as something of a competitor to Amazon Dash — Bosch can also use the network to set up its own ordering systems for detergent, bypassing the ecommerce giant.
Two other big deals getting announced today are also straight customer wins. French railway SNCF is implementing Watson’s IoT network to improve its overall railway performance; and Ricoh, the copy machine and office product maker, is building “cognitive” whiteboards that will provide instant translations and other features. Tabula rasa has never seemed so focused.
A video of the new center below: