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Dissecting a Business Strategy: Why Would IBM Buy the Weather Company?

How often do you think about or discuss the weather? Chances are, quite often! According to recent research by the BBC, 94% of all Brits discuss the weather at least once every six hours. This isn’t limited to our friends across the pond by any means, as weather is darn important to not only personal decisions but business ones as well. This is what makes IBM’s recent acquisition of The Weather Company one of the most successful business ideas in recent times.

Weather Matters!

Weather is a constant presence and daily influencer on both individuals and businesses. Whether an individual is worried about their daily commute or a business is concerned about the effects of a storm on a major delivery, companies are impacted daily by the need for both, instant weather reporting and accurate predictions. To provide these much-needed services The Weather Company developed its own cloud platform that uses the Internet of Things (IoT) technology. This Watson-based technology is used by over 500 companies around the globe. It is also the backbone of the fourth most-used mobile App in the U.S., which generates more than 26 billion weather inquiries daily.

IBM’s Purchase of The Weather Company

At the end of January, IBM announced that their acquisition deal with The Weather Company was complete. As successful business ideas go, this one has been given a thumbs up by industry experts who have taken the time to understand the strategy. Several years ago, IBM wanted to invest resources in developing its own IoT technology. This partnership brings a ready-made and very successful platform on board that the company can begin using immediately. In fact, they teamed up with The Weather Company to integrate Watson towards the end of 2015.

There are plenty of advertising opportunities with those 26 billion inquiries daily, yet from IBM’s perspective, this is simply icing on the cake. In the final analysis, IBM entered into this partnership for one simple reason – data. The Watson technology is going to allow companies to link both their business and sensor data to data that reports and predicts weather.

For example, trucking companies can alert their drivers to alternate routes that keep them out of harm’s way while still permitting deliveries to take place. Insurance companies can send mass text messages to policyholders warning them of an incoming storm, potentially saving both lives and millions of dollars in property damage. Utility companies can use this technology to predict outages, also saving companies money from lost production time. With weather being responsible for nearly half a trillion dollars in economic impact in the United States alone, this technology is guaranteed to help companies make better business decisions.

The deal with The Weather Channel is simply the beginning of a string of successful business ideas coming out of IBM. As their IoT-driven assets assist businesses in making better decisions, the company also plans to develop what it calls Artificial-Intelligence-as-a-Service, which will likely be an outgrowth of this technology.