Tipping Point for Industrial Internet at Hand Seen by IBM

IBM is of the opinion that the mass market would soon be hit by the so-called Internet of Things (IoT), which is essentially plugging computer sensors into factories, cars, shops and offices to help them operate more smartly on the industrial Internet.

IBM’s industrial Internet business has surged to 6,000 paying customers from 4,000 at the end of 2015 said the computer services and software company, which has struggled with flagging growth in its traditional business in recent years.

IBM has refocused on areas that promise profitable growth such as analytics, security and cloud services and the IoT, which gives many billions of machine parts the capability to send and receive data, is vital to IBM’s turnaround.

A recent global survey of 4,500 corporate decision-makers in 27 countries by market research firm IDC that found the market is moving beyond proof of concept projects to full-scale project deployments and the fact that a tipping point may now be being reached for the industrial Internet is borne out by this revelation.

“We think 2019 is going to be that inflection curve where the market really takes off,” IDC IoT analyst Vernon Turner said of how business cases proven over the next two years will set the stage for IoT to hit the mainstream. IoT projects have been launched by nearly a third of the corporate customers in the IDC survey while another 42 percent said they plan to do so in the next 12 months.

IBM executives said that over the next few years at its new global IoT headquarters in Munich, the company plans to hire 1,000 people to meet rising demand.

While cutting jobs and costs in its slower growing hardware and services businesses, the hiring is a part of a broader move by IBM to hire 25,000 new employees in growth areas globally.

“There was so much tire-kicking a year ago. Now you are seeing adopters in every single industry actually building solutions,” IBM’s vice president in charge of IoT platforms Bret Greenstein said in an interview.

In a deal where both firms invest and jointly market services data analytics, cloud services and consulting would be supplied to German industrial ball bearing giant Schaeffler by IBM as the two companies are expected to announce a new strategic partnership.

From preventive maintenance once cars, trains, wind turbines and other moving parts are sold to product development and to manufacturing, the deal covers a range of areas.

Four to five big deals with Asian firms involved in manufacturing and robotics, are in the pipeline of IBM, said the company’s global head of IoT business Harriet Green. To use IoT for inspecting oil rigs, power lines, cellphone towers and city traffic patterns, the company also signed up new clients such as Dutch drone maker Aerialtronics, IBM said.

However so far, declines that the company’s overall business has seen for the last five years have not been offset by high-growth areas – “strategic imperatives” in IBM parlance.

Bernstein Research calculated that while core businesses of IBM in services and hardware fell 14 percent year-on-year, IBM’s “strategic imperative” businesses, which include IoT, slowed to only 7 percent growth, excluding acquisitions in its latest reported quarter.

(Adapted from Reuters)


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