A whole new world: How IBM is gearing up for the Internet of Things

IBM may have been involved in IoT for years, but now it's upping the ante with a $3bn investment.

Peugeot Citroen, maker of the 308 GTI above, is one of IBM's IoT partners. Image: Peugeot Citroen

To some the Internet of Things is a very new idea: connecting up everyday objects to collect new streams of data -- and maybe even new streams of revenue too -- may seem a relatively recent trend.

But to others it's a continuation of work that's been going on under a different name for some time. IBM, for example, has been offering products and services based around tech conceptrs like ubiquitous and pervasive computing for years. Building on its previous work, earlier this year Big Blue decided to invest $3bn to set up a dedicated IoT unit.

In March, the company announced the new division, alongside a deal with The Weather Company and new products such as IoT Cloud Open Platform for industries, a vertical-focused analytics package, and additional IoT elements in its PaaS product Bluemix.

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Some six months later, the unit is now up and running, with former Thomas Cook CEO Harriet Green as GM.

Given IBM has been talking about the Internet of Things for over a decade -- through its forerunner brands such as machine-to-machine -- why the decision to create this unit now?

According to Andy Stanford-Clark, an IBM distinguished engineer for the Internet of Things, the new unit is a way to "give out the right messages that IBM is taking this very, very seriously".

"Initially we had IoT as part of [IBM's] analytics organisation. Then, in a slight reshuffle, it became an organisation in its own right. We're really putting our cards on the table here, saying, 'We're a serious player here. This isn't just a continuation of what we were doing before. It's a major deal for us'."

For all its history, IoT has only really begun to capture the attention of the tech buying public -- thanks to its heavy promotion by vendors -- in the last couple of years. Stanford-Clark likens it to the early days of the web, when clients would ask their suppliers whether they should be developing an ebusiness strategy.

"We're getting clients from so many different industries ringing up and saying, 'Can you tell us what IoT is? Can we have a workshop about it? What does it mean to me in my industry?' Twenty years ago, people were coming to us and saying, 'I hear this web thing is going to be pretty important'."

Some industries are already embracing IoT for industrial rollouts, carmakers among them. Back in 2014, IBM and Peugeot Citroen announced a deal that will see data from the car maker's vehicles put through IBM big data and analytics systems to offer connected car services to drivers and to give Peugeot Citroen information on vehicle data, driving behaviours, and environmental factors to spot problems before drivers have a chance to encounter them. This year, the pair struck a fresh seven-year agreement to enable third-party companies to offer their own connected car services.

Similarly, in the field of lift maintenance, companies are using IoT for predictive analytics to foresee when their elevators may be about to develop a fault or break down, and dispatch engineers to remedy the problem before it even happens. It's a concept that's likely to spread to other fields too. For example, white goods manufacturers could use similar setups to prevent washing machines breaking down, deliver washing powder just before the owner is about to run out, or have the machine run a cycle when electricity is cheapest.

Even verticals where IoT would perhaps not seem the most obvious fit are already exploring the potential of connected devices. Stanford-Clark cites examples from the banking and insurance industries. For example, the insurance sector could put IoT to work monitoring empty housing either to deter burglars or squatters, or to keep tabs on pipes to detect when they're most likely to leak and so act to prevent the flood damage that costs the industry dear.

Given that a lot of enterprises may not be familiar with IoT but may be keen to explore its potential, forging links with the maker community could be something of a Trojan horse in getting companies to take that first step into IoT.

IBM has been "aligning ourselves with the engineering and maker communities, people making prototypes of IoT devices... to work out how to make the custom hardware for their project," Stanford-Clark said. Maker types who've been using Arduino, mBed and Raspberry Pis for their home projects could then put that knowledge to work for an industry-specific setup for work too. "They can create their first prototype based on the technology that they use at the weekend."

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With that in mind, IBM has also been forging more IoT partnerships of late: two agreements with chip designer ARM in February and then again in September, with IoT management platform company Jasper the same month, and with outsourcer HCL in late November.

"One company can't do the whole end-to-end thing on its own. We've recognised this for a long time. We've been partnering in the industrial space with people that make industrial controllers and things like that, recognising that IBM would never wish to make those things and doesn't have expertise in that area, so we have an extensive partner ecosystem," Stanford-Clark said. "We don't make the things. We rely on our partners to make them and connect into our cloud infrastructure."

The company's agreement with the B2B arm of The Weather Company -- using IBM Cloud as its platform and providing weather information for use in enterprise decision-making -- turned into something more. Around half a year after the initial deal, IBM announced it was to buy The Weather Company's B2B assets in a deal thought to be worth around $2bn.

It's an interesting acquisition on IBM's part -- traditionally, the company sells systems and services that allow customers to crunch their own data; now, through selling the information gathered from The Weather Company onto clients, it will also be allowing them to analyse its own house-blend information.

"This is a whole new thing for IBM. It's part of the reason why we have IoT as a separate division. We're keen to do some things that perhaps you wouldn't associate with the traditional IBM," Stanford-Clark said.

Acting as an information provider is a strategy that IBM is increasingly pursuing: "IBM has been on a path to partner or acquire data sources over the past three years. This is part of their overall transformation from software to insights... IBM wants to broker the data sources, benchmark the information, create new insights and products with the data sources," Ray Wang, chief analyst at Constellation Research, said at the time of the initial deal with The Weather Company.

While IBM may not be new to IoT, that doesn't mean its competitors -- from Google's Cloud Platform to Microsoft with Azure -- haven't already stolen a march on it. "From a product perspective, IBM does not have a headstart here. While key competitors have been pushing IoT platforms in a very explicit manner, IBM reacted slowly from a product bundling and marketing standpoint, fixated rather on its Smarter Planet mantra and mired by other portfolio transformation challenges," George Mironescu, senior analyst cloud and apps at analyst PAC, wrote when the IoT division was announced.

He added: "From a consulting and systems integration perspective, IBM is the first major SI to formalize a standalone practice and to bankroll billions of dollars to build the sales and delivery capacities. It is in project services where IBM can have an early start over its domain competitors."

From the insider's perspective, however, IoT has seen IBM move faster than people would more commonly associate with a startup. Stanford-Clark said: "The speed with which IBM has reacted and turned the supertanker onto this new course is quite stunning. This is a whole new world."

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