rainy day

Why IBM Cares About the Weather

4 minute read
Erika Morphy avatar
If this were a Lord of the Rings trilogy, The Weather Co. would be the ring.

Enough already with the synergies that a partnership can provide. IBM wants – no, make that needs — more from The Weather Co. than just its business friendship and collaboration.

So the ‎Armonk, N.Y.-based tech giant has formalized the relationship. It is acquiring almost all of The Weather Co.'s media assets and brand —WSI, weather.com and Weather Underground — except for the most iconic property of them all, The Weather Channel.

Terms of the agreement were not announced but media reports put the deal at $2 billion, which even for IBM is quite a tidy sum — almost as much as the $3 billion Internet of Things initiative it launched earlier this year.

If you work through business case, though, you can see that $2 billion (if that is what IBM indeed paid) is a bargain.

3 Important Data Attributes

There are numerous data points and datasets out there that are nice to have, says R "Ray" Wang, chairman and founder of the Silicon Valley-basedConstellation Research consultancy. But there are three data attributes you simply must have to make a prediction or perform any decent kind of analysis.

"One is time," he told CMSWire. "The second is location and the third is weather."

IBM has beenannouncinga slew ofpartnershipsin recent months anddays.

Now it has hit the mother lode with its purchase of The Weather Co. So have its users and prospective users.

The Mother Lode of Data

To understand why this is so for the latter group, let’s listen in on a shoe and apparel manufacturer's earnings call held last week to discuss its performance for the third quarter.

Based inNelsonville, Ohio, Rocky Brand is both a manufacturer and wholesaler of footwear and apparel, better known for its product lines, which include Rocky, Georgia and Durango.

The company doesn't rely on long-term supply chain planning, CEO David Sharp readily admitted on the call. Year-to-date, 79 percent of the company's business had been derived from customers requesting delivery within 10 days of the order date. It is an issue that many wholesalers face.

"At any time of the year, we have very little visibility into our future business," he said.

What itcanplan around, though, is the weather. Cold weather equals insulated work and hunting boots. Summer is sandals weather.

Except for when the weather goes south, so to speak. Then, Rocky Brand's sales go with it. This happened in the third quarter when "the unseasonably warm temperatures in September across much of the country were not conducive to sales of cold weather insulated work boots," Sharp told listeners.

Ditto its hunting line of foot wear, the company's most weather-sensitive category.

"We benefited earlier in the year from the cold snowy weather, which helped drive first-half sales up 14 percent. Now we are seeing the opposite effect here in the back half.

Can IBM's Mix of Data, Computing Help?

Weather and its unintended consequences on business is a very common theme in earnings calls, Wang said. "It is a major context driver." Okay. How major?

Learning Opportunities

Well, let's look at what Weather Co.'s cloud data platform is processing. For starters, it powers the fourth most-used mobile app daily in the US, handling 26 billion inquiries each day.

Its models analyze data from three billion weather forecast reference points, more than 40 million smartphones and 50,000 airplane flights per day.

The mobile and web properties handle 82 million monthly visitors.

The acquisition of The Weather Co., in short, will allow Big Blue to collect an almost unfathomable variety and velocity of global datasets.

It will store these datasets, analyze them and, of course, distribute them. Watson's cognitive computing platform, clearly, will play a role.

Imagine the possibilities, Wang said. With this rich store of weather data IBM can marry it with just about any other dataset to gain contextual insight. "The weather plus point of sale transactions, the weather plus employment data. All of this can yield insights that a business can use."

Certainly that appears to be the plan, according to IBM's statements on the deal.

The Weather Company's high-volume data platform, coupled with IBM's global cloud and Watson, will give clients a major competitive advantage "as they link their business and sensor data with weather and other pertinent information in real time," said John Kelly, SVP of IBM Solutions Portfolio and Research.

"This powerful cloud platform will position IBM to arm entire industries with deepmultimodalinsights that will help enterprises gain clarity and take action from the oceans of data being generated around them."

Or for the Rocky Brands of the world, to at least get a better handle on their demand signals.

Title image by Gabriel Ssantiago

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