IBM buys the Weather Channel company and has big plans.

Is IBM Building the Most Powerful Weather Service the World Has Ever Seen?

Is IBM Building the Most Powerful Weather Service the World Has Ever Seen?

Moneybox
A blog about business and economics.
Oct. 29 2015 4:37 PM

Is IBM Building the Most Powerful Weather Service the World Has Ever Seen?

2015-ibm-weather-company-logo-clouds
Hold on to your anemometers, IBM just became a weather-forecasting powerhouse.

IBM/The Weather Company

The future of weather got a lot more interesting this week.

On Wednesday, IBM announced its purchase of the Weather Company’s digital and data assets, a deal that the Wall Street Journal valued at more than $2 billion. The company’s flagship TV network wasn’t included as part of the deal and will remain the property of a consortium of hedge funds that includes Bain Capital.

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The Weather Company has sat on the auction block for a while now, and its digital assets were considered the crown jewel, including Weather Underground, weather.com (that bastion of glorious clickbait), and WSI, the company’s data-driven business-to-business arm that fits especially nicely with IBM’s cloud-based “Insight” initiative. So, yes, this deal gives new meaning to the phrase “cloud computing.” (I couldn’t resist.)

An email to Slate from IBM spokeswoman Laurie Friedman confirmed that Big Blue has big plans for mining weather data as the core of a potentially decades-long growth strategy:

With this acquisition, IBM is going to harness one of the largest big data opportunities in the world -- weather.  Weather is probably the single largest swing factor in business performance -- it impacts 1/3 of the world's GDP and in the U.S. alone, weather is responsible for about half a trillion dollars in impact. Weather affects every aspect of the economy - energy usage, travel and transportation, new construction, agricultural yields, mall and restaurant traffic, etc.

Yeah, you can’t dream much bigger than that. Fortune’s headline underscores this sentiment: “IBM bought The Weather Company because weather affects nearly everything.”

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The deal echoes Monsanto’s 2013 purchase of the Climate Corp. for $1 billion, which essentially provides products to farmers guaranteeing they’ll have exactly the weather conditions they need for a good harvest. (If they don’t get enough rain, for example, farmers would receive an insurance-like payment from the company.) IBM’s plans for the Weather Company are along the same lines, but magnified at least tenfold. So, yes, this is exciting.

The two companies’ joint press release announcing the deal focused on IBM’s Internet of Things unit powered by its Watson artificial intelligence project. The basic idea is that small changes in the weather drive all sorts of human activities, and by predicting the weather in advance, an IBM supercomputer could also help position businesses to be more profitable. “People generally check the weather because they're planning to do something," Weather Company CEO David Kenny told the Wall Street Journal back in 2013. Having one of the most popular mobile apps and an easy-to-remember URL helps a lot in making money off checking the weather. Kenny will join IBM as part of the deal.

On the other side, the deal leaves an uncertain future for the Weather Channel, the now-lonely cable TV network that inspired a generation of weather nerds since its launch in 1982, but has had a tortured recent history. As more and more weather watchers cut the cable TV cord, its ratings have been in a decadelong decline. Back in July, Comcast devalued its stake in the Weather Channel by a whopping 72 percent in just one year.

Back in September, I speculated that a surprise overnight shift away from reality programming and toward “general meteorological nerdery” signaled the broader company’s intent to literally get down to business—essentially abandoning its TV strategy and shifting to a overt emphasis on science and technology. At that time, in an interview with CNN, Kenny said “we’re now a technology company that owns a TV channel, not a TV company.” The terms of Wednesday’s deal will require the Weather Channel to license the weather data it used to produce for itself from IBM.

On Wednesday, I asked Weather Company spokeswoman Shirley Powell about the TV network’s path forward. Regarding Kenny’s comment to CNN, she said she’s “not sure that quote is relevant after today.” Essentially, it’s probably time to pour one out for the Weather Channel network as we now know it. With its profit center gone, it’s hard to imagine the channel holding on to recent high-profile hires, like Sam Champion and Al Roker, for much longer.

That day, if it comes, will be a sad one for weather diehards. But fret not, celebrators of cumulus. Because what IBM seems to be building could blow the current Weather Channel out of the sky. 

Eric Holthaus is a meteorologist and a contributing writer at Grist. Follow him on Twitter.