IBM to invest $1bn in Watson supercomputer unit

Tech giant aims to source new revenue streams from supercomputer made famous by TV show Jeopardy

IBM is to invest more than $1bn (£608m) in a new business unit for Watson, as the hardware giant aims to source revenue from its supercomputer from a number of different avenues.

The supercomputer was made famous when it competed successfully against humans in US TV show Jeopardy. It is a cognitive machine that uses analytics and natural language to "work" or "think" like a human. It has an advantage over the human brain, in that it can process, analyse and interpret large amounts of data in a short space of time.

IBM said that the $1bn investment incorporates a $100m (£60.8m) equity fund that it hopes can support an ecosystem of entrepreneurs developing Watson-powered apps.

It hopes that the new unit, led by former IBM software solutions head Michael Rhodin, will stop the supercomputer being perceived as a gimmick and start a process by which it is taken seriously as a commercial technology. The demand is there, according to Stephen Gold, vice president of Watson Business.

"We have reached the inflection point where the interest is overwhelming and we recognised we need to move faster," he said.

Watson is now delivered from the cloud as a result of IBM's acquisition of cloud computing infrastructure provider SoftLayer in July 2013. IBM said that it can be used to power both consumer and enterprise apps.

Meanwhile, the supercomputer itself is 90 per cent smaller, the firm said.

"[Watson] has shrunk from the size of a master bedroom to three stacked pizza boxes," the company stated.

The new unit will be based in New York City and will focus on R&D and commercialising software, services and apps that can tap into the Watson supercomputer.