IBM said Wednesday that it is acquiring The Weather Company's B2B data business and associated properties in a deal that will bolster Big Blue's Internet of things efforts.
Terms of the deal weren't disclosed, but the Wall Street Journal reported the deal was valued at more than $2 billion.
When IBM created an Internet of things unit in March it also forged a pact with The Weather Company. The general theme was to use The Weather Company's data and sensors and combine it with IBM's analytics and Watson platform.
Meanwhile, IBM's cloud unit managed to dent The Weather Company's relationship with Amazon Web Services.
In a statement, IBM emphasized that The Weather Company's TV operations weren't sold. The Weather Channel will license data from IBM under a long-term contract.
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IBM obviously thought the returns would be better on The Weather Company partnership if it owned the data and digital operations. IBM did note that "The Weather Company's cloud-based data platform will allow IBM to collect an even larger variety and higher velocity of global data sets, store them, analyze them and in turn distribute them and empower richer and deeper insights across the Watson platform."
For IBM, weather data is seen as a key cog in the enterprise Internet of things. IBM will acquire The Weather Company's data experts, forecasting tools and cloud platform. The Weather Company will also give IBM more touch points via apps, flight data and information products.
In many respects, IBM is buying a platform from The Weather Company that it can use across its businesses. IBM also referenced The Weather Company's digital advertising platform and how it can build additional tools.
As for the big picture, IBM's acquisition of The Weather Company could be viewed through the lens of competition from the likes of GE Software. GE Software already has the relationships with industrial companies in multiple sectors such as transportation and energy. Via weather data, IBM will also have those touch points in those industries for its Internet of things offerings. Also see: GE's Immelt on software strategy: 'Why not us?'
Ray Wang, principal analyst of Constellation Research, noted that IBM is looking to acquire data sources and The Weather Company fits in with that strategy. Why? It's all about context. Wang said:
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 will eventually emerge to be more of a network economy. Three components of that network economy include the content (product, services, experiences, insights), the network (distribution channels, P2P delivery, and go to market), and technology) The more data sources it acquires or partners with, the more capability it has to deliver on contextual relevant insights.
The goal here is to deliver on augmented humanity which allows humans to make better decisions.IBM wants to broker the data sources, benchmark the information, create new insights and products with the data sources.
Weather fits into the equation because 70 percent of the Fortune 500 blame earnings results on the weather, which impacts everything from crops to retail sales to transportation.
For now most of the target markets--insurance, government, retail and energy to name a few--for the IBM/The Weather Company's efforts fall into the "coming soon" category.
The deal is expected to close in the first quarter.