IBM to pump $3 billion into new IoT business unit

Hungry for a bigger piece of the Internet of things market, IBM will invest US$3 billion over four years to establish a new business unit dedicated to providing IoT systems and services to enterprises.

“We’re only at the very beginning of an amazing revolution. If we thought we were dealing with big data now, we haven’t seen anything yet,” said Erick Brethenoux, IBM director of analytics.

IBM General Manager Chris O’Connor will oversee the new unit, which will initially court enterprises in travel, logistics, insurance, public utilities, transportation and retail, Brethenoux said.

IBM will also tailor a new cloud service, the IBM IoT Cloud Open Platform, providing a way for enterprises to build their own data-driven systems, Brethenoux said. Over time, it will also develop specialized packages for specific fields like the insurance industry.

IBM will offer a customized section of its Bluemix platform service, to be called the Bluemix IoT Zone, where developers will be able to create specialized business logic to handle and analyze data streaming from IoT devices and sensors.

It will also work with partner companies in a range of industries to align more closely in all aspects of IoT, from hardware to data. It has signed deals with AT&T, chip design company ARM, and semiconductor manufacturer Semtech.

Another partner is the Weather Company, which will provide access to a rich trove of data to it can be ingested by other systems. Predictive maintenance systems could use weather records and predictions to determine when equipment needs to be serviced, for instance.

By 2021, as many as 28 billion IoT devices will be installed around the world, IDC has estimated. General Electric has predicted that IoT systems will add up to $15 trillion to global annual Gross Domestic Product over the next 20 years.

IoT is just the latest area IBM is targeting to breath new life into its business, which has been struggling as sales from some of its traditional on-premises products, particularly hardware, decline. Just last month it said it would invest $4 billion in cloud, mobile and analytics technologies.

It is working with engine manufacturer Cummins to collect real-time performance data from its products. And SilverHook Powerboats uses IBM services to analyze telemetry data from its boats, according to IBM. Whirlpool is working with IBM to better predict when its appliances will need to be serviced.

Work IBM has done in its Smarter Planet and Smarter Cities initiatives has equipped it for the emerging IoT field, it says. Many of these engagements require network-connected remote instrumentation and analytics systems, Brethenoux said.

The Police departments of Durham, North Carolina, and Memphis, Tennessee work with IBM to collect data that canhelp them better target crime hotspots. And Carnegie Mellon University and the U.S. General Services Administration are working with IBM to build IoT systems that can cut energy costs in their buildings.