IBM Watson is a question-answering computer system capable of answering questions posed in natural language, developed in IBM's DeepQA project by a research team led by principal investigator David Ferrucci. Watson was named after IBM's founder and first CEO, industrialist Thomas J. Watson. IBM’s then- CEO Ginni Rometty called the project a “moon shot,” but her replacement was less enthused about the business. The computer system was initially developed to answer questions on the quiz show Jeopardy!.
IBM launched Watson Health in early 2015 and made a series of acquisitions that cost $4 billion. They included Merge Healthcare, Truven Health Analytics, Phytel, and Explorys. IBM sold Watson Health for $1B, which is 25% of what it paid to acquire four strong businesses. The assets involved include Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software products. IBM offloaded Watson Health this year because it doesn't have the requisite vertical expertise in the healthcare sector.
Talking at stock market analyst Bernstein's 38th Annual Strategic Decisions Conference, the big boss was asked to outline the context for selling the healthcare data and analytics assets of the business to private equity provider Francisco Partners for $1 billion in January.
The Watson brand will be carrier for AI.
It's a question of verticals versus horizontals. IBM believes that they are best positioned to take these technologies.They will always have an industry lens but through their consulting team. They want to work on technologies that are horizontal across all industries."
Verticals should belong to people who really have all of the domain expertise, they have credibility in that vertical. And healthcare companies, people in medical devices, they will have the credibility to carry out how AI is applied to health in depth i.e AI as applied to healthcare, to financial services, to compliance, in that case, regulatory compliance, is going to be a massive market.
To succeed in health, they need doctors and nurse practitioners to speak to the buyers of Watson Health. That's not the IBM go-to-market field force, so there's a misalignment. Ditto in Promontory, that needed ex-regulators and accountants to go talk to people worrying about financial compliance. So, that's a little bit different than IBM. IBM still sells Watson solutions in financial services, advertising, business automation, and video streaming and hosting. As for AI in the enterprise where inflation, labor costs and the world undergoing a "demographic shift" means that "there are fewer people with the skills" and so AI and automation will be "applied to more and more domains." Trend is going to reverse in the next few decades."
IBM’s Watson Health is being sold for parts. The technology giant has agreed to sell the division’s data and analytics assets to private equity firm Francisco Partners. Terms weren’t disclosed, although Bloomberg values the deal at more than $1 billion. Launched in 2015, Watson Health’s goal was to revolutionize medicine through AI. After years of pricey expansion — it spent more than $4 billion on acquisitions, per Axios — and reports of ineffectiveness, the unit scaled back its ambitions.
Once viewed as a flagship of AI in medcine and life science, IBM Watson Health couldn't live up to its ambitious promises to transform everything from drug discovery to cancer care. It would be interesting to see how the new firm who bought this giant from IBM will transform its data and analytic assets and realize their full potential.