IBM Starts NYC Business Unit Focused On 'Jeopardy'-Winning Supercomputer Watson

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Watson computer, Yorktown Heights, NY, in July 2011.

IBM’s Watson supercomputer is the newest Manhattan resident trying to make it big in business.

The Armonk, N.Y.-based computer giant (NYSE:IBM) announced Thursday that the supercomputer, which famously bested “Jeopardy” champions Ken Jennings and Brad Rutter in three rounds of the quiz show in 2011, will form the heart of a new business unit in New York City. The company is pouring $1 billion into the Watson Group to start, including $100 million to invest in startups working on apps that run off of Watson’s vast data-sifting abilities.

"Watson does more than find the needle in the haystack," IBM CEO Virginia Rometty said in remarks released Thursday, according to the Associated Press. "It understands the haystack. It understands context."

Watson’s abilities go beyond answering clues in the form of a question. The computer is at the forefront of artificial intelligence, designed to grasp natural language patterns better than other machines. Watson’s far from perfect, as demonstrated by its struggles with contextual clues during its “Jeopardy” bouts (the computer gave “What is Toronto?” as the answer to a clue in the category of U.S. Cities, for example). But it has the ability to learn from past mistakes.

And Watson’s ability to sift through staggeringly large data sets, spot patterns, and weigh options may be the ideal tool for a world driven by Big Data. Over the last few years, the supercomputer began advising doctors at Memorial Sloan-Kettering hospital and elsewhere on treatment decisions for lung cancer patients. It’s hoped that Watson, able to sift through the most up-to-date cancer research and patient records and make connections, might make it much easier for new medical insights to be incorporated into care.

“IBM has transformed Watson from a quiz-show winner into a commercial cognitive computing breakthrough that is helping businesses engage customers, health care organizations personalize patient care, and entrepreneurs build businesses,” IBM Senior Vice President Mike Rhodin, who was tapped to lead the new IBM Watson Group, said in a statement.

On Thursday, Singapore’s DBS Bank announced that it would be Asia’s first Watson business customer. The bank will be investing $11.8 million in Watson over three years to help wealth managers offer better advice to clients, according to ZDNet.

“We see Watson’s cognitive ability brought together with the traditional analytics we have built around our customers’ experience,” DBS' managing director of group technology operations, David Geldhill, said in a statement. “We can change the game in how we target and give advice.”

IBM has long been hoping to exploit Watson’s capabilities for business uses, but things haven’t gone smoothly as hoped, as the Wall Street Journal reported earlier this week. On a conference call with executives, Rometty told IBM executives that Watson’s business plan would be bringing in $1 billion in revenue per year by 2018, according to the WSJ. But by last October, Watson had total revenue of just $100 million.

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