Watson is not the dominant force contributing to IBM's downfall
If you have seen the advertisements of the International Business Machines Corp. or if you’ve read the declarations made by the company then you might agree that they are making a huge bet with Watson. Its popular “cognitive computing” engine might make many believe that the project is not doing quite well.
The company informed the investors recently, irrespective that the company has tried to make all sort of services available with Watson insight, the net income of the company dropped down by 19% during the last trimester of FY15 and will drop down further this annum. However, the issue is not that Watson has failed as a technology. The challenge by the business segment of IBM is so extravagant that it makes it difficult to believe that any other smart business service could actually solve it.
To be particular, masses have the right to ask how valuable Watson actually is. Two years back, it was made obvious that the processing of natural language, geniuses designing the data scanning program paved its way to a show Jeopardy! Was not actually conveying and attracting businesses in the right manner which other businesses could use. The Financial Times recently observed two weeks back, that IBM has brought so many cloud computing technologies under the Watson label making it very difficult to deduce what the service primarily is. This however aroused several questions regarding the brand is now making use of a halo effect for several technology that are not as evolutionary as perceived.
Even if the company would have transformed Watson into a business, still IBM would be in hot waters due to the present market trends that have strengthened over a relatively long span of time. The increase in popularity of the cloud computing services has minimized the need for big organizations to buy mainframes and IBM servers. This was happening before the time Ms. Ginni Rometty became the CEO of the company in FY11.
However, the predecessor of Rometty, Mr. Palmisano was great enough to camouflage the shortcoming and still make Wall Street happy by selling out all those unprofitable business segments. The strategy deployed was simple, the company was buying high end software firms and then paid investors back in the via share buyback plans and dividents. However, there are a few financial cards that the company needs to pull out. It has been 15 consecutive quarters where revenues have ripped apart. It needs to change now before it’s too late.
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