January 2, 2017 10:30 am JST
Interview

More to IBM's AI business than Watson: Japan chief

Paul Yonamine cites need for IT firms to collaborate as well as compete

TOKYO -- IBM Japan succeeds in marketing artificial intelligence solutions by giving customers the advice needed to make the most of its Watson technology, according to the company's president.

Paul Yonamine, at the helm since 2015, discussed IBM Japan's strong points and desire to cooperate with some competitors, in an exclusive interview with The Nikkei. Edited excerpts from the conversation follow.

Q: How are orders for Watson services doing in Japan?

A: Japan AirlinesSoftBank and others have started full-scale use, but the better part of our earnings comes from providing consulting for clients on what Watson can do for them, or from demonstration experiments of services we've developed. We have around a hundred companies as clients, some of the biggest being megabanks and insurers, and since launching Japanese-language Watson services in February 2016, we've had zero early contract cancellations.

Our clients are highly interested. We're short on staff in the Watson consulting department, so we're hurrying to take on new hires and reassign employees to that division. During 2017, I'd like for us to reach at least 600 or so consultants -- double the force we have now. I also hope to improve our internal education and training system so each consultant is equipped to handle more business.

Q: IBM's U.S. Watson-related sales rose to $17.8 billion in 2015, putting it far in front of the AI pack.

A: Watson is really only a trigger. There's more to the business than just handing a client an AI tool and saying, "Here you go." Besides delivering Watson software, we build systems and even help clients create new organizations for interacting with the services we've developed.

I had a chance recently to tour a competitor's facilities. Their AI was certainly wonderful, but I asked the boss: "You've got great AI, but you're having trouble selling it, right?" and they told me, "That's right." The key in this competition is not just the AI itself, but a comprehensive package of services. IBM's strength is that we run the gamut from consulting to software.

Q: What about Google and the other tech giants pushing into AI?

A: A Google or a Microsoft, with all their data on consumers, does pose a threat. But we have the expertise that comes from providing systems for all kinds of industries, from finance to automobiles. In business-facing terms, I believe we're far and away the best.

Q: How do you see other players in Japan's IT field?

A: I don't see companies such as Hitachi or Fujitsu as rivals so much as potential partners. I'd certainly like to sell Watson more, but the next important thing will be data. From the perspective of Japan as a whole, it's wasteful for every company to spend the management resources to develop their own AI and service platform. Watson's platform is open, so we can cooperate with them anytime. What we should be competing on is services including management and practical applications of data.

Interviewed by Nikkei staff writer Kentaro Toda

Japan Airlines Co., Ltd.

Japan

Market(Ticker): TKS(9201)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 12,394.61M
Shares: 353.71M

SoftBank Group Corp.

Japan

Market(Ticker): TKS(9984)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 87,438.54M
Shares: 1,100.66M

Hitachi Ltd.

Japan

Market(Ticker): TKS(6501)
Sector:
Industry:
Producer Manufacturing
Industrial Conglomerates
Market cap(USD): 31,915.00M
Shares: 4,833.46M

Fujitsu Ltd.

Japan

Market(Ticker): TKS(6702)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 15,357.52M
Shares: 2,070.01M

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