IBM Invests $1 Billion to Grow Watson Supercomputer’s Struggling Business

IBM was faced with a significant challenge – to expand its “Jeopardy”-winning Watson supercomputer from a groundbreaking machine learning experiment into a $10 billion industry over the course of ten years. In order to push Watson’s potential for profitability, IBM rolled out a $100 million venture capital fund to encourage the creation of new apps that could unlock Watson’s analytical power.

The Watson supercomputer made its mark by besting human “Jeopardy” champions in multiple competitions held in 2011, demonstrating its superior learning abilities. Nevertheless, a transcript from an October 2013 conference call – later published by The Wall Street Journal – hinted at Watson’s struggles in translating its “Jeopardy” success into practical solutions.

At the time, the IBM Watson business division had produced less than $100 million. Despite this slow start, IBM persisted in injecting capital into Watson, anticipating it to become a significant aspect of its future operations. In a bold move, IBM declared it would invest more than $1 billion into the Watson business unit and initiate a $100-million venture capital fund to aid the creation of applications using Watson’s technology.

In the aforementioned conference call from October 2013, IBM CEO Virginia Rometty articulated the ambitious goal of Watson generating $10 billion in annual revenue within a decade. This goal was based on the forecast of Watson producing $1 billion annually by 2018.

Early adopters of Watson aimed to utilize its learning abilities. For example, Watson was trained to recommend possible cancer treatments according to specific cases, refining its proficiency when human doctors corrected its inaccuracies. However, converting specific clients’ technical requirements into functional software for Watson proved challenging, leading to delays in some of Watson’s crucial client projects. Among them was a partnership with the University of Texas M.D. Anderson Cancer Center to establish a Watson variant for prescribing leukemia treatments after perusing related medical literature.

A similar project in the health care industry was concurrently in motion with Memorial-Sloan Kettering Cancer Centre in New York City for Watson to provide input on cancer diagnosis and treatments. Furthermore, IBM saw adoption by Wellpoint, the largest health insurer in the United States.

While converting Watson’s “Jeopardy” intelligence into substantial business profits posed a challenge at the time, IBM held fast in their support of Watson, despite hitches in the beginnings. IBM continued to recruit AI researchers to progress Watson’s capabilities as it engaged with a growing number of interested clients.

Updated in 2025 to align with recent developments.