Don’t pick on Watson. IBM didn’t mention Jefferies analyst James Kisner by name, but it was clear CFO Martin Schroeter was trying to knock down the analyst’s critique of Watson point by point.
Following IBM’s second quarter earnings, Schroeter talked about Watson becoming easier to implement and finding more use cases in enterprises. In a 53-page report, Kisner noted that Watson may lose its cognitive computing position because it requires services and consultants to implement.
Here’s a look at the Watson debate blow by blow.
IS WATSON A BEAR TO IMPLEMENT?
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Kisner’s bottom line on Watson went like this:
Our checks suggest that while IBM offers one of the more mature cognitive computing platforms today, the hefty services component of many AI deployments will be a hindrance to adoption. We also believe IBM appears outgunned in the war for AI talent and will likely see increasing competition. Finally, our analysis suggests that the returns on IBM’s investments aren’t likely to be above the cost of capital.
Schroeter said:
We’re not just scaling our business into new areas but also improving deployment. For example, we implemented Watson for Oncology at Baheal Pharmaceutical Group in less than a month. This quarter, as I mentioned earlier, we expanded with Baheal into genomics. We also announced the new collaboration with Hackensack Meridian Health, a prominent U.S. provider, to combine Watson for oncology with their real-world data to help oncologists improve cancer treatment and reduce costs.
Now there’s a good reason IBM is noting health-care wins. One of Kisner’s core arguments was that the University of Texas’ review of a Watson deployment at the M.D. Anderson Cancer Center highlighted the issues with deploying Watson. The special review is a must read.
Kisner added:
Our checks suggest that IBM’s Watson platform remains one of the most complete off-the-shelf platforms available on the marketplace. However, many new engagements require significant consulting work to gather and curate data. Our checks suggest that Watson is a finicky eater when it comes to data enterprises can feed it – in other words, IBM has very exacting standards for data preparation. The halt of and cost overruns in the MD Anderson engagement with Watson epitomize our concerns here.
IS WATSON APPLICABLE TO MULTIPLE INDUSTRIES?
IBM launched the Watson research project in 2006, won Jeopardy in 2011 and then embarked on health care. Watson for financial services arrived in 2012 and now there’s a set of industry-specific efforts. The pitch is that Watson will augment human intelligence in multiple areas.
Date:July 19, 2017