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IBM to invest $3B in building Internet of Things business

IBM formalizes its focus on the Internet of Things as it faces competition from traditional tech rivals as well as companies such as General Electric.

Larry Dignan
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Larry Dignan
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IBM is getting serious about the so-called Internet of Things, the idea of connecting more devices and objects to the Web. Sean Gallup/Getty Images

IBM on Tuesday said that it will create a new Internet of Things unit and invest $3 billion over four years to build it out.

The move formalizes IBM's existing Internet of Things efforts. IBM's smarter-planet and smarter-cities businesses are connected to the Internet of Things trend. The rough idea behind the Internet of Things is that sensors will be embedded in everything and networked to create data. This flow of data could improve operations.

For IBM, the formation of the Internet of Things unit follows a familiar playbook. IBM targets a high-value growth area, invests at least a $1 billion to get the effort rolling and throws its hardware, software and consultants at the issue. In this respect, the formation of the Internet of Things unit rhymes with what IBM did with e-commerce, analytics, and cloud and cognitive computing.

IBM faces a fierce battle for enterprise Internet of Things (IoT) business. Cisco has targeted IoT, as has almost every tech vendor.

Meanwhile, nontraditional IBM rivals have strong IoT efforts. For instance, General Electric, which happens to make many of the things that will be networked, has an IoT platform called Predix. GE has invested $1 billion in industrial software development. Although GE calls the Internet of Things the industrial Internet, the concept of networking things and layering analytics on top is the same.

For IBM's part, the company said it will have more than 2,000 consultants, researchers and developers aimed at IoT and the analytics that go with it. IBM said the unit will include: