IBM to invest $3B in building Internet of Things business

IBM is getting serious about the so-called Internet of Things, the idea of connecting more devices and objects to the Web.Sean Gallup/Getty Images

IBM on Tuesday said that it will create a new Internet of Things unit and invest $3 billion over four years to build it out.

The move formalizes IBM's existing Internet of Things efforts. IBM's smarter-planet and smarter-cities businesses are connected to the Internet of Things trend. The rough idea behind the Internet of Things is that sensors will be embedded in everything and networked to create data. This flow of data could improve operations.

For IBM, the formation of the Internet of Things unit follows a familiar playbook. IBM targets a high-value growth area, invests at least a $1 billion to get the effort rolling and throws its hardware, software and consultants at the issue. In this respect, the formation of the Internet of Things unit rhymes with what IBM did with e-commerce, analytics, and cloud and cognitive computing.

IBM faces a fierce battle for enterprise Internet of Things (IoT) business. Cisco has targeted IoT, as has almost every tech vendor.

Meanwhile, nontraditional IBM rivals have strong IoT efforts. For instance, General Electric, which happens to make many of the things that will be networked, has an IoT platform called Predix. GE has invested $1 billion in industrial software development. Although GE calls the Internet of Things the industrial Internet, the concept of networking things and layering analytics on top is the same.

For IBM's part, the company said it will have more than 2,000 consultants, researchers and developers aimed at IoT and the analytics that go with it. IBM said the unit will include:

• A cloud platform for industries aimed at verticals. IBM will offer dynamic pricing models and cloud delivery to various verticals.
• Bluemix IoT platform as a service so developers can create and deploy applications for asset tracking, facilities management and engineering tools.
• An ecosystem of partners ranging from AT&T to ARM to The Weather Company.
Separately, IBM announced a partnership with the business-to-business division of The Weather Company, owner of The Weather Channel. The partnership will deliver micro weather forecasts using sensors from aircraft, drones, buildings and smartphones.
The Weather Company will also move its data services platform to IBM's cloud platform and integrate Big Blue's analytics tools such as Watson Analytics.
To be sure, IBM has a bevy of IoT projects under way with customers. The new unit will hone and focus those efforts while bringing in IBM's expertise in analytics.