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00:00TEENS FOR A NUMBER OF QUARTERS . OFF VERY MEANINGFUL REVENUE. IN A NUTSHELL, THAT IS PROGRESS. THEY DESERVE TO BE COMMENDED FOR THAT. EMILY: IBM IS TAKING ITS FUTURE ON WATSON. WHEN DO YOU THINK WHAT SOME WILL GENERATE SIGNIFICANT REVENUE? CRAWFORD: ON AN INDIVIDUAL BASIS YOU ARE STARTING TO SEE THAT. WILL WE TALK ABOUT THE INDIVIDUAL ACCELERATORS -- THE INTERNET OF THINGS, NEXT GENERATION SECURITY, ROBOTICS, COGNITIVE, SOLUTIONS, 3-D PRINTING -- YOU LOOK AT ALL OF THOSE AREAS, THE ONE AREA THAT YOU CAN PULL THROUGH ALL OF THOSE IS COGNITIVE. COGNITIVE IS A BET ON INVENTION IBM HAS MADE AND THAT WILL DRIVE SIGNIFICANT VALUE. FOR EXAMPLE, WHEN YOU LOOK AT THE COMPANY'S JOURNEY TOWARD TRANSFORMATION BETWEEN NOW AND 2020, THE ONLY AREA THAT REALLY INCREASES AND WE SEE IT INCREASING BY FOUR PERCENTAGE POINTS -- SORRY, SIX PERCENTAGE POINTS IN TERMS OF HOW PEOPLE WILL INVEST IS INFORMATION MANAGEMENT. THAT WILL BE DRIVEN BY COGNITIVE SOLUTIONS, BECAUSE PEOPLE CANNOT HELP YOU GET THOSE ANSWERS. YOU NEED COGNITIVE SOLUTIONS. WE WILL SEE THAT ACCELERATE IN THE 2018-2019 TIMEFRAME. BUT WE ARE SEEING THESE SEATS OF THAT TODAY. EMILY: DAVID, YOU SPENT TIME WITH THE IBM CEO. HOW CONFIDENT ARE YOU THAT THE STRATEGIES THE RIGHT STRATEGY? THEY ARE PUTTING A LOT OF CHIPS IN THE AI, WATSON BASKET. IS THAT GOING TO PAY OFF? DAVID: MY CRAWFORD, I ADMIRE THESE PEOPLE. I HAVE BEEN COVERING IBM FOR 45 YEARS. THEY HAVE MADE REALLY BIG THAT'S IN AREAS THAT TOOK A LOT OF GUTS TO DO AND I'M IMPRESSED AT THE GROWTH THEY ARE GETTING OUT OF THOSE AREAS. I WAS SITTING HERE THINKING, WHAT IF IBM GOT A VALUATION JUST FOR THOSE GROWTH AREAS THAT WAS COMPARABLE TO THE VALUATION NETFLIX IS GETTING FOR ITS BUSINESS? THEY WOULD PROBABLY NOT BE ABLE TO TOUT THE INCREDIBLE REVENUES AND PROFITS THEY GET FROM THE DECLINING OTHER BUSINESSES IN THEIR PORTFOLIO LIKE THE MAINFRAMES AND OLD-STYLE, RELATIVELY UNSEXY SOFTWARE THEY HAVE HAD FOR YEARS. THEY HAVE ALWAYS BEEN A PORTFOLIO BUSINESS. THEY ARE MANAGING THE PORTFOLIO WELL. IT'S HARD TO RUN A BIG FOLIO. I'M IMPRESSED. EMILY: CRAWFORD, ON THE CALL, THEY SAID THEY WILL CONTINUE TO INVEST IN ACQUISITIONS. THEY HAVE MADE 12 ACQUISITIONS THIS YEAR SO FAR. WHAT IMPACT ARE THEY HAVING ON REVENUE GROWTH? CRAWFORD: THEY ARE ABSOLUTELY HAVING IMPACT. LOOK AT THE STRATEGIC IMPERATIVES. LOOK OF THE CLOUD. THEIR ACQUISITION IN THE CLOUD IS REALLY WHAT A THEM THE BASIS TO START GROWING THAT BUSINESS THREE OR FOUR YEARS AGO. GOING MORE NEAR-TERM, THE ACQUISITION OF THE WEATHER COMPANY WAS A SIGNIFICANT ACQUISITION AND IT GAVE THEM A PLATFORM TO START BUILDING OUT AND ATTRACTING DEVELOPERS. IT ALSO GAVE THEM SKILLS AROUND BUILDING THAT INTO COGNITIVE SOLUTIONS THAT THEY DID NOT OTHERWISE HAVE. WHEN YOU LOOK AT IBM AND ACQUISITIONS, LOOK TO THE INDUSTRIES. LOOK AT VERTICAL SEGMENTS. UNDERSTAND WHAT DATA SETS ARE REALLY SCARES IN OTHER INDUSTRIES LIKE LOGISTICS, HEALTH CARE. THAT IS LIKELY WHERE IBM WILL GO. EMILY: LAST QUICK QUESTION, CRAWFORD. WHEN WILL WE BE REPORTING THE FIRST QUARTER OF REVENUE INCREASES? CRAWFORD: THAT HAS A LOT TO DO WITH A LOT OF THINGS, CURRENCY FLUCTUATIONS. I THINK IT REALLY SPENDS ON THE FINANCIAL SERVICES BUSINESS AND THE SYSTEMS IS THIS AT IBM. UNFORTUNATELY, THOSE SYSTEMS HAVE BEEN IN DECLINE FOR A LONG TIME BECAUSE THEY ARE REALLY, REALLY BIG. I DO THINK WE SHOULD BE GETTING CLOSE TO THAT IN THE NEXT FOUR QUARTERS.

No schedule data available.

IBM: Building Watson's Revenue Engine

Crawford Del Prete, chief research officer at IDC, and David Kirkpatrick, chief executive officer at Techonomy, discuss IBM's shift to newer businesses like cloud and artificial intelligence, if it's the right strategy and the impact of the company's acquisitions. They speak to Bloomberg's Emily Chang on "Bloomberg Technology." (Source: Bloomberg)

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