CES 2016
“The Future of the Internet of Things is Cognitive”
Las Vegas, Nevada
January 6, 2016


Prepared opening remarks:

Thank you, Gary. And good afternoon, everyone. It’s so great to see so many wonderful IBM clients here today.

But you might be wondering why you’re seeing me here—the CEO of IBM speaking at CES? In fact, I am the first IBM CEO to speak at this show.

Why and why now? I am here because the Internet of Things—a major theme at CES — impacts every industry, every company. And the future of the Internet of Things is cognitive and cognitive IoT.

But first, let me ask you all a question. By a show of hands… how many of you work for a “digital” company, or for a company that wants to become “digital?”

[SHOW OF HANDS]

You’re not alone. We see this throughout the world, in both B2C and B2B, private and public sector. At IBM, it started by building the leading and the largest set of data and analytics in the world; building a cloud platform for the enterprise that’s hybrid; reimagining how work is done through our partnership with Apple and building the world’s largest private security company. By the end of 2014, those parts of the business now account for $25 billion, and through 3Q this year, they’ve grown at over 30 percent.

But as important as all that is, let me ask you to think about the following: What happens when every company becomes digital? When every bank is a digital bank, every automaker a digital automaker, every appliance company a digital appliance company… who wins?

We are entering the Cognitive Era: Digital Business + Digital Intelligence.

We believe that “digital” is the most disruptive, transformative trend out there and it is not the destination. Instead, it’s the foundation for what is coming.

We stand at the dawn of a new era of business… enabled by a new form of digital intelligence. This is what we call cognitive business—it’s what happens as digital business and digital intelligence come together.

What is driving this new era?

First, the phenomenon of data. Data that was invisible will now be visible to you, especially the more-than-80 percent that is “unstructured” – natural language as found in books, literature and social media… video, audio, images. More and more of it comes from the Internet of Things. Computers can process unstructured data, store it, secure it, move it around, but traditional programmable computers cannot understand it.

Second, the advent of cognitive computing systems. AI is part of it, but not all of it. Cognitive systems can ingest all data – both structured and unstructured. It’s about working in natural language and in a domain. More than anything, this an era of systems you do not program.

Cognitive systems:

This is what Watson does. It is the world’s first cognitive system.

Well over a decade ago, IBM Research scientists set out to invent what we now know as Watson because they anticipated the phenomenon of unstructured data… and the need for a system that could learn.

In 2011, it famously made its debut by winning on Jeopardy! Watson at that time did one thing: natural language Q&A, powered by five technologies. It has come a long way since then. Today, Q&A is just one of 32 Watson capabilities—and they’ve all been turned into digital services, or APIs. Think of these as cognitive building blocks…powered by more than 50 technologies.

We are expanding Watson’s “senses.” Today, it is learning to see—starting with analyzing complex medical images.

We then made a key decision to open up Watson as a cloud-based API platform—to nurture an ecosystem so that anyone could build Watson capabilities into their applications. We believed this would scale and accelerate innovation.

Today, Watson is in 36 countries; 80,000 programmers; 500 people building businesses; on the Watson platform, thousands of developers and entrepreneurs are building and bringing to market their own “powered by Watson” applications for a growing range of industries: healthcare, financial services, retail, education, travel and more. It’s the ability to build thinking into anything you do.

It will change what you make, how you operate, and who you are.

Now, imagine the impact as cognition is infused into the devices, sensors, systems, and environments of the Internet of Things.

I know I don’t need to tell you about the amount of data being generated today, nor that our current computing systems simply cannot keep up with it. But the challenge goes beyond sheer volume.

Think about that 80 percent of the world’s data that is invisible to today’s systems; 9 billion connected devices; 2.5 quadrillion bytes of data daily.

The problem hasn’t been with capturing it… or storing it… or processing it. The reason the world hasn’t been able to turn most of this new natural resource into economic and societal value is that we have not been able to understand it.

Well, now we can. We have the equivalent of a new kind of telescope—which not just “see” this dark data… but understand what it means.

A few examples:

In Data:

That is the role I see ahead. What is needed to turn this amazing technology into business and societal value? Specifically, how do we make the Internet of Things cognitive?

There are three critical success factors:

First, you need the right Platform.

It’s all about real-time data, but you need the right platform to take action on that data. We’ve built a cloud platform that’s in 41 countries and includes Bluemix to develop applications.

It’s the largest could foundry deployment in the world that connects to 120 services and uses Watson APIs that let you put cognitive in all your work.

Second, you need new forms of Data.

IBM is committed to helping you collect, manage, analyze and act upon the data you possess, both structured and unstructured. We have the world’s largest, most comprehensive data analytics business, built with an approaching $30B, including more than 30 acquisitions, 15,000 business experts and hundreds of mathematicians focused on developing innovative analytics technologies.

Importantly, we also bring you the data you need -- but do not possess -- which includes the vast, rich flows of data from social media. That is why we forged strategic alliances with Twitter and Facebook. It also includes weather data – which is among the largest, most pervasive and important sources of IoT data in the world. That is why, late last year, IBM announced our intention to acquire the Weather Company.

That move may have surprised you. I used to think that weather apps and services like Weather Company relied entirely on data from the government agencies like NOAA. Not so. In fact, they augment that information with data they collect—and they've built an incredibly sophisticated platform that ingests, processes, analyzes and distributes enormous data sets at scale in real time.

The company’s models analyze data from three billion weather forecast reference points daily, more than 40 million smartphones and 50,000 airplane flights per day. The Weather Company handles 26 billion inquiries to its cloud-based services each day. Combine this with Watson, and it will enable our clients to integrate their business data with weather to understand context, uncover new insights and transform their operations.

But weather is just the beginning.

The Weather Company’s platform can—and will—be used to collect data from multiple other sources:

In fact, the Weather Company is an Internet of Things company whose first use case is weather.

Another huge data source will be the flood of video, including streaming video, which is growing exponentially—it will soon make up 80 percent of the world’s data. Of course, video has long been the currency of the media and entertainment industry, but now we see it fundamentally transforming the application architecture of every industry.

This is why we are integrating IBM’s new and existing video services on a cognitive-enabled cloud platform, to help firms differentiate their offerings and provide compelling new services.

We already provide video services for some of the world's best brands – from Wimbeldon, the Masters, the U.S. Open, HBO, A+E Networks, the NFL, BBC America, Sony Movie Channel, Time Warner Cable and Verizon.

Now, think about any company being able to recommend exactly the right content to the right person, at the exact moment she wants it. Or being able to predict churn in a subscription service—and take action before you lose that customer. Or predict the demand for a new film or television show before you even release it to the marketplace. And we’re just getting started.

Third, you need an ecosystem. You need partners who bring expertise, additional APIs and data sets. This brings me to the most exciting part of our time together here.

IBM is committed to building these ecosystems, by industry, by domain. In fact, we are well underway. For example, we are building an industry ecosystem around Watson Health, including Johnson & Johnson, Apple, Medtronics, Epic, CVS Health, Welltok, Boston Children’s Hospital, Memorial Sloan Kettering Cancer Center, MD Anderson, Mayo Clinic, and more.

Last month, we announced the creation of the Watson Internet of Things (IoT) business. We’ve been working on IoT for quite some time. We already serve more than 4,000 IoT clients, including 7 of the 10 largest automotive companies; 8 of the 10 largest oil and gas companies; and 11 of the 12 major aerospace and defense companies.

Now, it’s about bringing cognition into IoT. I believe any IoT that will differentiate you in the future will have to be cognitive.

IBM’s Watson IoT business is headquartered in Munich, bringing together 1,000 IBM developers, consultants, researchers, and designers in innovation labs to build a new class of connected solutions.

The Watson Internet of Things is here today.

We have the leaders of three pioneering companies with us — IBM partners who can tell you themselves about the remarkable work they are doing in the area of cognitive IoT. Thank you.

[Ginni introduces three partners to the stage: