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IBM's Watson to Enable Lotte Gain Insight into Customer Data
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International Business Machines Corporation (IBM - Free Report) recently announced an agreement with the Lotte Group. Per the agreement, Lotte will be able to leverage IBM Watson’s cloud-based solutions and drive innovation across its business verticals.
With the help of IBM Watson, Lotte will be able to gain valuable insights from the huge amount of customer data (both structured and unstructured) that is generated everyday from its various channels. This will enable Lotte to have a deeper understanding of customer preferences and their feedback.
With this information, Lotte will be better positioned to offer more customized services as well as provide expert advice depending on the customer’s requirements.
What this Means for IBM?
Per an IDC report, worldwide spending on cognitive systems and artificial intelligence is estimated to be over $47 billion by 2020 at a CAGR of 55.1%. Not surprisingly, there is stiff competition in the space, with the presence of some big players such as Alphabet (GOOGL - Free Report) owned Google’s DeepMind, Amazon’s (AMZN - Free Report) Amazon AI and Microsoft’s (MSFT - Free Report) Microsoft Artificial Intelligence and Research Group.
Recently, IBM announced that Unruly – a British ad tech company – has teamed up with IBM Watson to build a new cognitive powered psychographic targeting tool to make digital video ads more audience targeted and thus more effective. (Read More: IBM Watson to Make Unruly's Digital Video Ads More Targeted).
In Oct 2016, IBM bought Promontory Financial Group – a Washington-based financial consulting firm – in a bid to broaden the reach of Watson into analysis of financial regulations and provide the most appropriate course of action to financial institutions. (Read More: IBM to Create Watson Financial Services with Promontory Buy).
During third-quarter 2016, IBM introduced Watson Conversation Service and Watson Virtual Agent for Customer Service. The service has already been selected by the likes of The Royal Bank of Scotland.
Given Watson’s popularity in the space, we anticipate more such adoptions in the future, which will definitely have a positive impact on the company’s bottom line.
Stock Performance Overview
Shares of IBM have underperformed the broader Zacks Computer Integrated Systems industry on a year-to-date basis. While the industry generated a positive return of 13.0%, the stock returned only 9.4%.
The underperformance of the stock could be attributed to the ongoing and heavily time-consuming business model transition to the cloud. Further, sluggish IT spending, particularly in on-premises and data center hardware, and foreign exchange volatility are concerns. Moreover, intensifying competition in the cloud is a major headwind.
Nevertheless, IBM's strategic growth initiatives, including its Big Data & business analytics, cloud computing, mobile and social business are expected to drive growth. In addition, the company’s policy of making strategic acquisitions will lead to incremental revenues, strengthen its technology leadership, resulting in a more favorable mix of business. The acquisitions have also increased its scale of operations globally.
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IBM's Watson to Enable Lotte Gain Insight into Customer Data
International Business Machines Corporation (IBM - Free Report) recently announced an agreement with the Lotte Group. Per the agreement, Lotte will be able to leverage IBM Watson’s cloud-based solutions and drive innovation across its business verticals.
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How will it Benefit Lotte?
With the help of IBM Watson, Lotte will be able to gain valuable insights from the huge amount of customer data (both structured and unstructured) that is generated everyday from its various channels. This will enable Lotte to have a deeper understanding of customer preferences and their feedback.
With this information, Lotte will be better positioned to offer more customized services as well as provide expert advice depending on the customer’s requirements.
What this Means for IBM?
Per an IDC report, worldwide spending on cognitive systems and artificial intelligence is estimated to be over $47 billion by 2020 at a CAGR of 55.1%. Not surprisingly, there is stiff competition in the space, with the presence of some big players such as Alphabet (GOOGL - Free Report) owned Google’s DeepMind, Amazon’s (AMZN - Free Report) Amazon AI and Microsoft’s (MSFT - Free Report) Microsoft Artificial Intelligence and Research Group.
Recently, IBM announced that Unruly – a British ad tech company – has teamed up with IBM Watson to build a new cognitive powered psychographic targeting tool to make digital video ads more audience targeted and thus more effective. (Read More: IBM Watson to Make Unruly's Digital Video Ads More Targeted).
In Oct 2016, IBM bought Promontory Financial Group – a Washington-based financial consulting firm – in a bid to broaden the reach of Watson into analysis of financial regulations and provide the most appropriate course of action to financial institutions. (Read More: IBM to Create Watson Financial Services with Promontory Buy).
During third-quarter 2016, IBM introduced Watson Conversation Service and Watson Virtual Agent for Customer Service. The service has already been selected by the likes of The Royal Bank of Scotland.
Given Watson’s popularity in the space, we anticipate more such adoptions in the future, which will definitely have a positive impact on the company’s bottom line.
Stock Performance Overview
Shares of IBM have underperformed the broader Zacks Computer Integrated Systems industry on a year-to-date basis. While the industry generated a positive return of 13.0%, the stock returned only 9.4%.
The underperformance of the stock could be attributed to the ongoing and heavily time-consuming business model transition to the cloud. Further, sluggish IT spending, particularly in on-premises and data center hardware, and foreign exchange volatility are concerns. Moreover, intensifying competition in the cloud is a major headwind.
Nevertheless, IBM's strategic growth initiatives, including its Big Data & business analytics, cloud computing, mobile and social business are expected to drive growth. In addition, the company’s policy of making strategic acquisitions will lead to incremental revenues, strengthen its technology leadership, resulting in a more favorable mix of business. The acquisitions have also increased its scale of operations globally.
Zacks Rank
At present, IBM carries a Zacks Rank #3 (Hold). Microsoft is a better-ranked stock in the broader technology space, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>