The News: IBM is selling the digital assets of The Weather Company to global investment firm Francisco Partners for an undisclosed price as Big Blue exits the weather forecasting business. Under the deal, however, IBM will maintain access to The Weather Company meteorological data to power its sustainability software business, including its Environmental Intelligence Suite (EIS). Read the full August 22 Press Release about the transaction on the IBM Newsroom website.
IBM Is Selling The Weather Company Assets to Francisco Partners
Analyst Take: I believe that this is an interesting move as IBM is selling the digital assets of The Weather Company because it shows IBM’s business strategy for 2023 – shedding some units that are no longer the core assets of its enterprise IT products and services.
In my view, this is a smart move for Big Blue as it refocuses on the critical enterprise hardware, software, and services that directly grew and built the IBM brand for decades.
When IBM bought The Weather Company’s digital assets in 2015 for an estimated $2 billion, it viewed the purchase as a way to grow its cloud services revenue via an aggressive and popular weather data business as traditional hardware and software products were generating less revenue at the time. IBM’s purchase did not include The Weather Company’s Weather Channel television broadcasting assets.
Today IBM, like other companies, is reevaluating some of its earlier moves and making new strategy decisions based on current business realities, including the still-changing post-pandemic economy, and a wide range of other macroeconomic factors. I believe these readjustments are sound business moves that will benefit IBM in the long term.
IBM Is Selling The Weather Company Assets: What Is Included
Under the deal by IBM to sell its digital assets in The Weather Company, here are the components that Francisco Partners is buying:
- The consumer-facing mobile and cloud-based digital properties of The Weather Channel, which were originally purchased by IBM in 2015, including Weather.com, Weather Underground, and Storm Radar.
- The Weather Channel’s digital enterprise products, which are aimed at customers in broadcast media, general media, aviation, advertising technology, and emerging industries where weather data is critical.
- The Weather Company forecasting science and technology platform.
How IBM Will Continue to Use The Weather Company Data
Even after the sale of The Weather Company’s digital assets to Francisco Partners, IBM said it will continue to use the company’s voluminous weather data in its EIS sustainability suite of products. EIS serves a wide range of climate-related use cases for IBM customers by helping them to curate, measure, report, and operationalize ESG data to make better business decisions, improve operational performance, and meet broad regulatory requirements.
In addition, EIS uses a geospatial AI foundation model powered by NASA’s satellite dataset and offered as part of IBM’s watsonx AI and data platform. This foundation model can track changes in land use, monitor natural disasters, predict crop yields, and more, all using detailed weather data from The Weather Company.
Francisco Partners’ Plans for The Weather Company
According to the IBM announcement, The Weather Company will become a standalone company after the completion of its acquisition by Franciso Partners. Plans for the company include bolstering its investments and resources and moving The Weather Company beyond just forecasting to delivering new tools and experiences to help users understand more about how weather impacts their lives, including their health and well-being.
For business users, Francisco Partners said that The Weather Company will provide more actionable insights so organizations can provide greater value to their customers.
The acquisition of The Weather Channel by Francisco Partners is expected to close by the end of the first quarter of 2024, subject to regulatory approvals and other customary closing conditions.
The deal between IBM and Francisco Partners came months after reports surfaced in April that IBM was shopping The Weather Company’s assets.
Conclusions on IBM’s Sale of The Weather Company Assets
The IBM announcement of the sale of The Weather Company’s digital properties comes as no surprise since those early rumblings of a potential sale began in April. But the transaction makes sense because, while the weather assets helped IBM bring weather data into its other offerings over the years, weather is not a core business for IBM.
It will be interesting to watch IBM in the coming months to see if the company determines that there are other non-core business units that it might want to sell to strengthen and focus more on the rest of its business. We will have to see what IBM Chairman and CEO Arvind Krishna and his executive team have up their sleeves for the company’s future.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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