IBM has confirmed the sale of its health data and analytics assets from the division Watson Health to the investment entity Francisco Partners. With this sale, IBM is withdrawing from its previous ambitions in the health field to focus definitively on the hybrid cloud, the company’s commitment since its current CEO Arvin KrishnaHe took up his position in 2015.
For now, the terms of the agreement to purchase the assets of Watson Health are unknown. It is also not known what Francisco Partners is going to pay for them, although according to Bloomberg, their price could be higher than 1,000 million dollars. As for its workers, all of them are expected to continue working in their positions for the new owner of the division, once Watson Health becomes an independent company.
Tom Rosamila, Vice President of IBM Software, has highlighted that «The agreement with Francisco Partners is a clear advance in the focus on our Artificial Intelligence and platform-based hybrid cloud strategy. IBM remains committed to Watson, our largest Artificial Intelligence division, and the clients and partners we support in health technology. Through this transaction, Francisco Partners purchases data and analytics assets, which will benefit from the enhanced investment and expertise of a portfolio focused on the healthcare industry.«.
IBM turned Watson Health into a separate division of the company in 2015, with the goal of using health-related data to help doctors, researchers and insurers solve some of the biggest problems in health care. To do so, the company invested in several health data deals, embarking on areas ranging from diabetes care to cancer treatments. But the gamble did not pan out, and it was revealed a year ago that the division had generated about $1 billion in annual revenue and no profit, and that IBM was considering its sale.
Watson Health was born from the Watson project, which aims to use Artificial Intelligence to solve various problems for businesses and consumers. Unlike what happens with Health, IBM is still committed to other Watson-related projects. But it’s hard to know to what extent, given the company’s focus on hybrid cloud.
Furthermore, under Krishna’s leadership, IBM has long been working to transform itself from a technology services provider to a modern cloud-centric company. Along the way, it has made purchases like Red Hat, and has divested itself of divisions and business areas that did not fit with its future strategy. It even created an independent company with all the areas of the company related to managed services, a subsidiary that received the name of Kyndryl and that began its journey alone several months ago.
