- IBM is considering to sell its Watson Health business that is generating nearly $1 billion in annual revenue but is not profitable.
- Right now, the company is in discussions and may not lead to a deal.
- IBM wanted to revolutionize the health sector with AI, but that didn’t go well.
International Business Machines Corp. is considering to sell its IBM Watson Health business. A move that would help newly appointed CEO Arvind Krishna focus on faster-growing cloud computing operations. Recently, the Wall Street Journal reported that IBM is finding a potential sale of its Watson Health business, as CEO Arvind Krishna “moves to streamline the company and become more competitive in cloud computing”.
“Watson was one of IBM’s highest-profile initiatives in recent years and a big bet on the growing healthcare sector, though results disappointed in part because physicians were hesitant to adopt artificial intelligence,” the report said on Friday.
In its fourth quarter, cognitive applications revenue, which includes Watson Health, came to $1.5 billion, a decrease of 2 per cent year over year.
IBM has been trying to increase its share of the revenue from hybrid-cloud software and services. This lets users store data in private servers and on multiple public clouds, including Amazon and Microsoft. IBM bought RedHat for a whooping sum of $34 billion in 2018 to better compete in cloud services. IBM currently has a $108 billion market value, way behind Cloud-computing rivals like Amazon and Microsoft.
As a testimony to the company’s bet on the cloud, CEO Krishna said in October that he would spin off IBM’s infrastructure services unit into a new publicly-traded company. The unit, which is currently a
part of the Global Technology Services division, handles day-to-day infrastructure operations, like managing data centres and traditional information-technology support for installing and operating equipment. The spinoff is going to happen by the end of 2021.
IBM started Watson with great goals, such as revolutionizing health care for cancer patients. Still, many of its ambitions haven’t worked out, and some customers have complained that the products didn’t match the company’s hype. IBM has scaled back its Watson ambitions, including through job cuts last year.