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IBM’s Cognitive Cash Cow

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Watson is a key component of Cognitive Solutions

IBM’s (IBM) Cognitive Solutions segment consists of solutions software and transaction processing software. IBM’s IoT (Internet of Things), Watson Health, and other focus areas of its cloud computing business fall under this segment. Apart from being IBM’s most profitable segment, Cognitive Solutions’ performance holds a special importance for the company.

IBM’s competitive edge and lead in Strategic Imperatives—especially in its cognitive technology—can be seen in its Watson platform, which continues to hold the limelight. IBM has taken several steps to expand Watson’s expertise as well as presence.
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Cloud analytics including Watson and security were key areas of continued growth for IBM in fiscal 2016. IBM’s Watson has also expanded its expertise into the healthcare, financial services, regulatory compliance, and now into the AI space. IBM does not report revenue contribution by Watson.

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Growth in 2016

In fiscal 4Q16, the Cognitive Solutions and Services segment’s revenues grew 2% on a YoY (year-over-year) basis to $5.3 billion, on a constant currency basis. Within this segment, strategic imperatives and cloud revenue grew by 7% and 55%, respectively.

The Strategic Imperatives segment consists of IBM’s investment in cloud, analytics, mobile, social, and security technologies, this segment grew 14% in fiscal 2016, driven by the growth in the cloud. Notably, IBM generated $13.7 billion of revenue from the cloud, which represented 17% of the company’s overall revenues.

Now let’s discuss IBM’s Global Technology Services segment. In fiscal 4Q16, the Cognitive Solutions and Services segment’s revenues grew 2% on a YoY (year-over-year) basis to $5.3 billion, on a constant currency basis.

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