The Wall Street Journal quoted sources as reporting that IBM, which is eager to switch to cloud services, is considering selling the Watson Health unit. The latter uses AI technology to enter the medical industry market.
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Watson Health was established by IBM in 2015 to develop artificial intelligence (AI) to assist medical care. It has worked with colleges, medical institutions, pharmaceuticals or insurance companies in AI research and analysis and literature search. Plus, it uses medical data or medical Image interpretation of symptoms and other programs to assist diagnosis, health management, new drug development and other functions.
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Watson Health is the strategic investment area of former CEO Ginni Rometty. But Arvind Krishna, who took over last year, focuses on cloud services, such as hybrid cloud services represented by cloud platforms and Red Hat OpenShift.
The source pointed out that Watson Health’s annual revenue has reached $1 billion. But it is still unable to make a profit. IBM executives are considering Watson Health’s future plans, including selling it to private equity funds or medical AI companies, or with blank check companies. (Blank check company is a company listed for the purpose of acquisition) merger. But they are not sure about the selling price of Watson Health, and may not sell it.
Why Can IBM Sell Watson Health?
Since Krishna took office, it has been reported that IBM has disbanded or sold non-strategic departments. When the new and old CEOs were handed over last year, Watson Health also cut a group of manpower. At the beginning of February this year, the media reported that IBM had once again reorganized its organization significantly, slashing 90% of the manpower in the blockchain department. The report also said that as long as the departments not related to hybrid cloud will be marginalized.
According to IBM’s latest financial report, the company’s total revenue fell 6% in the fourth quarter of 2020. The revenue of cognitive software related to Watson Health declined by 2%. Red Hat is one of the few growing product divisions.