Watson and the PC Era

Recent articles talking about IBM’s Watson solution and IBM’s revenue challenges are interesting but don’t discuss Watson in a historical context.

What’s actually happening mirrors the dawn of the PC Era and there are excellent lessons for us. Here is what I’m talking to my teams about and the opportunity facing all IBM’ers.

First, and regardless of what one thinks of IBM Watson’s maturity, the entire AI world from startups to established giants like Google owe IBM a thank-you for creating an environment where AI is discussed as a legitimate technology solution.

IBM, with the Jeopardy win and five years of extensive marketing since, seeded the market for everyone. No other company has done as much to put AI in the minds of corporations or consumers.

IBM legitimized AI. Just like IBM legitimized the PC

IBM is playing the same role it did when the personal computer era launched. The first computer in my house was not a PC, it was Commodore Vic-20. I used the programming skills I learned on a Radio Shack TRS-80. The list could go on forever but none of those platforms exist today.

Why doesn’t anyone say “Let me grab my TRS-80?”

Because IBM legitimized the PC by announcing it to the world and making its use an expectation.

It was not until IBM came along and established the PC standard that the concept of personal computing took off. IBM backed a standard, marketing it and sent thousands of experts and salespeople into the field evangelizing it to companies worldwide. I suspect IBM’s salesforce was one of, if not the largest, forces pushing the PC agenda in the early days.

I cannot stress this enough – IBM is one of the few, and perhaps the only, company that has legitimized multiple technologies over the last 100 years by developing capabilities around it and, most importantly, announcing it to the public.

To start a simple list consider System 360 with the concept of hardware/software scaleability, the PC with Microsoft Windows and now AI – these are all concepts IBM declared to the public and then reset expectations to a new technology baseline. (BTW – Quantum computing and Blockchain are next….)

But following the PC analogy – what can my coworkers and I learn from that battle?

We must correctly identify, and win, the platform components that generate the greatest economic value from the technology we just ordained.

When IBM established the PC standard the mistake was overestimating hardware’s criticality and wildly underestimating software’s importance. We misread what would generate economic value.

Our mistake meant we managed to create an industry of PC clones, such as Compaq and Dell, competing with us while we gave Bill Gates a monopoly.

In retrospect it was a disaster! Bill Gates ended up the richest man in the world and we ultimately exited the PC manufacturing business.

(I’ll concede creating an open market where many could thrive was necessary because of network effects generating broad adoption. But I’d argue overall a lot of non-IBM entities became rich thanks to the IBM PC sales efforts – IBM’s efforts legitimizing of the PC standard subsidized their sales, marketing and research efforts)

But back to today – Today my team and I face a similar challenge in AI.

We created an environment where AI will thrive and we’re seeing others fall into our Jeopardy and subsequent marketing slipstream. Some are trying to be the next Dell or Compaq thanks to our market awareness efforts.

These other companies are certainly performing amazing things on their own but I’d hazard a guess their cumulative investment in AI marketplace awareness pales to IBM’s efforts. Yet because AI is a platform play backed by data they may ultimately generate significant economic value. Some of them will become the next Dell or Compaq of the AI age. And that’s somewhat ok and necessary.

But it’s up to today’s generation of IBM’ers to make sure IBM retains a fair share. We must prevent the AI era from being a repeat of the PC era where the spoils were disproportionate.

Many companies have one or two elements of an AI platform but IBM is one of a unique few with all three.

The elements I consider critical for an AI platform include:

• Data
• Algorithm and computing platform (cloud based AI platform)
• Consulting and change management

Looking at IBM’s recent investments one will find data companies, AI companies and its all complimented with IBM’s Global Business Consulting Services (GBS).

Will IBM win this battle? Its too early to say. But I’m talking to my teams about this daily and we are ready for the fight. We’ve studied the PC Era and its up to us not repeat it.