Comment by getnormality
4 months ago
A decade ago, IBM was spending enormous amounts of money to tell me stuff like "cognitive finance is here" in big screen-hogging ads on nytimes.com. They were advertising Watson, vaporware which no one talks about today. Are they bitter that someone else has actually made the AI hype take off?
I don't know that I'd trust IBM when they are pitching their own stuff. But if anybody has experience with the difficulty of making money off of cutting-edge technology, it's IBM. They were early to AI, early to cloud computing, etc. And yet they failed to capture market share and grow revenues sufficiently in those areas. Cool tech demos (like the Watson Jeopardy) mimic some AI demos today (6-second videos). Yeah, it's cool tech, but what's the product that people will actually pay money for?
I attended a presentation in the early 2000s where an IBM executive was trying to explain to us how big software-as-a-service was going to be and how IBM was investing hundreds of millions into it. IBM was right, but it just wasn't IBM's software that people ended up buying.
Xerox was also famously early with a lot of things but failed to create proper products out of it.
Google falls somewhere in the middle. They have great R&D but just can’t make products. It took OpenAI to show them how to do it, and the managed to catch up fast.
"They have great R&D but just can’t make products"
Is this just something you repeat without thinking? It seems to be a popular sentiment here on Hacker News, but really makes no sense if you think about it.
Products: Search, Gmail, Chrome, Android, Maps, Youtube, Workspace (Drive, Docs, Sheets, Calendar, Meet), Photos, Play Store, Chromebook, Pixel ... not to mention Cloud, Waymo, and Gemini ...
So many widely adopted products. How many other companies can say the same?
What am I missing?
24 replies →
Google had less incentive. Their incentive was to keep API bottled up and in brewing as long as possible so their existing moats in search, YouTube can extend in other areas. With openai they are forced to compete or perish.
Even with gemini in lead, its only till they extinguish or make chatgpt unviable for openai as business. OpenAI may loose the talent war and cease to be leader in this domain against google (or Facebook) , but in longer term their incentive to break fresh aligns with average user requirements . With Chinese AI just behind, may be google/microsoft have no choice either
Google was especially well positioned to catch up because they have a lot of the hardware and expertise and they have a captive audience in gsuite and at google.com.
The original statistical machine translation models of the 90's, which were still used well into the 2010's, were famously called the "IBM models" https://en.wikipedia.org/wiki/IBM_alignment_models These were not just cool tech demos, they were the state of the art for decades. (They just didn't make IBM any money.)
Neither cloud computing nor AI are good long term businesses. Yes, there's money to be made in the short term but only because there's more demand than there is supply for high-end chips and bleeding edge AI models. Once supply chains catch up and the open models get good enough to do everything we need them for, everyone will be able to afford to compute on prem. It could be well over a decade before that happens but it won't be forever.
This is my thinking too. Local is going to be huge when it happens.
Once we have sufficient VRAM and speed, we're going to fly - not run - to a whole new class of applications. Things that just don't work in the cloud for one reason or another.
- The true power of a "World Model" like Genie 2 will never happen with latency. That will have to run locally. We want local AI game engines [1] we can step into like holodecks.
- Nobody is going to want to call OpenAI or Grok with personal matters. People want a local AI "girlfriend" or whatever. That shit needs to stay private for people.
- Image and video gen is a never ending cycle of "Our Content Filters Have Detected Harmful Prompts". You can't make totally safe for work images or videos of kids, men in atypical roles (men with their children = abuse!), women in atypical roles (woman in danger = abuse!), LGBT relationships, world leaders, celebs, popular IPs, etc. Everyone I interact with constantly brings these issues up.
- Robots will have to be local. You can't solve 6+DOF, dance routines, cutting food, etc. with 500ms latency.
- The RIAA is going door to door taking down each major music AI service. Suno just recently had two Billboard chart-topping songs? Congrats - now the RIAA lawyers have sued them and reached a settlement. Suno now won't let you download the music you create. They're going to remove the existing models and replace them with "officially licensed" musicians like Katy Perry® and Travis Scott™. You won't retain rights to anything you mix. This totally sucks and music models need to be 100% local and outside of their reach.
[1] Also, you have to see this mind-blowing interactive browser demo from 2022. It still makes my jaw drop: https://madebyoll.in/posts/game_emulation_via_dnn/
1 reply →
What you are saying is true. But IBM failing to see a way to make money off a new technology isn't actually news worth updating on in this case?
They were selling software as a service in the IBM 360 days. Relabeling a concept and buying Redhat don't count as investments.
What is your reason for believing that IBM was selling software as a service in the IBM 360 days?
What hardware did the users of this service use to connect to the service?
3 replies →
> but it just wasn't IBM's software that people ended up buying.
Well, I mean, WebSphere was pretty big at the time; and IBM VisualAge became Eclipse.
And I know there were a bunch of LoB applications built on AS/400 (now called "System i") that had "real" web-frontends (though in practice, they were only suitable for LAN and VPN access, not public web; and were absolutely horrible on the inside, e.g. Progress OpenEdge).
...had IBM kept up the pretense of investment, and offered a real migration path to Java instead of a rewrite, then perhaps today might be slightly different?
Oh wow I didn’t know Eclipse was an IBM product originally. IDEs have come so far since Eclipse 15 years ago.
And while I’m writing this I just finished up today’s advent of code using vim instead of a “real IDE” haha
Websphere is still big at loads of banks and government agencies, just like Z. They make loads on both!
I still have PTSD from how much Watson was being pushed by external consultants to C levels despite it being absolutely useless and incredibly expensive. A/B testing? Watson. Search engine? Watson. Analytics? Watson. No code? Watson.
I spent days, weeks arguing against it and ended up having to dedicate resources to build a PoC just to show it didn’t work, which could have been used elsewhere.
It's like poetry, it rhymes
This is going on all over again.
Agentic AI really is changing things. I've had a complete change of heart about it. It's good enough now to boost productivity MASSIVELY for devs.
1 reply →
If anything, the fact they built such tooling might be why they're so sure it won't work. Don't get me wrong, I am incredibly not a fan of their entire product portfolio or business model (only Oracle really beats them out for "most hated enterprise technology company" for me), but these guys have tentacles just as deep into enterprises as Oracle and are coming up dry on the AI front. Their perspective shouldn't be ignored, though it should be considered in the wider context of their position in the marketplace.
Millions of people like ChatGPT. No one liked Watson.
Apples and Oranges from an enterprise perspective, with the additional wrinkle that consumer tech is generally ad-supported (ugh) while Enterprise stuff is super-high margin and paid for in actual currency.
If you assume the napkin math is correct on the $800bn yearly needed to service interest rates on these CAPEX loans, then you’d need the collective revenue of the major players (OpenAI, Google, Anthropic, etc) to pull in as much revenue in a year as Apple, Alphabet, and Samsung combined.
Let’s assume OpenAI is responsible for much of this bill, say, $400bn. They’d need a very generous conversion rate of 24% for their monthly users (700m) to the Pro plan for an entire year to cover that bill, for one year. That’s a conversion rate better than anyone else in the XaaS world who markets to consumers and enterprises alike, and paints a picture of just how huge the spend from enterprises would need to be to subsidize consumer free usage.
And all of this is just for existing infrastructure. As a number of CEBros have pointed out recently (and us detractors have screamed about from the beginning), the current CAPEX on hardware is really only good for three to five years before it has to be replaced with newer kit at a larger cost. Nevermind the realities of shifting datacenter designs to capitalize on better power and cooling technologies to increase density that would require substantial facility refurbishment to support them in a potential future.
The math just doesn’t make sense if you’re the least bit skeptical.
IBM ostensibly failing with Watson (before Krishna was CEO for what it's worth) doesn't inherently invalidate his assessment here
It makes it suspect when combined with the obvious incentive to make the fact that IBM is basically non-existent in the AI space look like an intentional, sagacious choice to investors. It very may well be, but CEOs are fantastically unreliable narrators.
You expect somebody to be heavily invested currently and also completely openly pessimistic about it?
6 replies →
> Are they bitter that someone else has actually made the AI hype take off?
Or they recognize that you may get an ROI on a (e.g.) $10M CapEx expenditure but not on a $100M or $1000M/$1B expenditure.
IBM has been "quietly" churning out their Granite models, with the latest of which performing quite well against LLaMa and DeepSeek. So not Anthropic-level hype but not sitting it out completely either. They also provide IP indemnification for their models, which is interesting (Google Cloud does the same).
I see Watson stuff at work. It’s not a direct to consumer product, like ChatGPT, but I see it being used in the enterprise, at least where I’m at. IBM gave up on consumer products a long time ago.
Just did some brief Wikipedia browsing and I'm assuming it's WatsonX and not Watson? It seems Watson has been pretty much discontinued and WatsonX is LLM based. If it is the old Watson, I'm curious what your impressions of it is. It was pretty cool and ahead of its time, but what it could actually do was way over promised and overhyped.
I’m not close enough to it to make any meaningful comments. I just see the name pop up fairly regularly. It is possible that some of it is WatsonX and everyone just says Watson for brevity.
One big ones used heavily is Watson AIOps. I think we started moving to it before the big LLM boom. My usage is very tangential, to the point where I don’t even know what the AI features are.
Has it really taken off? Where's the economic impact that isn't investor money being burned or data center capex?
It's good we are building all this excess capacity which will be used for applications in other fields or research or open up new fields.
I think the dilemma I see with building so much data centers so fast is exactly like whether I should buy latest iPhone now or should wait few years when the specs or form factor improves later on. The thing is we have proven tech with current AI models so waiting for better tech to develop on small scale before scaling up is a bad strategy.
Initial Watson was sort of a mess. But a lot of the Watson-related tech is integrated into a lot of products these days.
What related tech and what products, interesting to read about them
Baked into a lot a Red Hat products including Ansible and RHEL. Not that directly involved any longer. Probably read up on watsonx.ai.
Such as? I'm curious because I know a bunch of people who did a lot of Watson-related work and it was all a dead end, but that was 2020-ish timeframe.
IBM did a lot of pretty fragmented and often PR-adjacent work. And getting into some industry-specific (e.g. healthcare) things that didn't really work out. But my understanding is that it's better standardized and embedded in products these days.
2 replies →
> Are they bitter that someone else has actually made the AI hype take off?
Does it matter? It’s still a scam.
Watson X is still a product line sold today to qualified customers :)
Honestly I'm not even sure what IBM does these days. Seems like one company that has slowly been dying for decades.
but when I look at their stock, its at all time highs lol
no idea
They make business machines, internationally.
Pretty sure they made all their money fighting the paperwork explosion.
They are in the business of international machinations.
IBM is probably involved somewhere in the majority of things you interact with day to day
Yep. When a brand has tarnished itself enough, it makes sense for the brand to step back. Nowadays, we interact with their more popular properties, such as Redhat.
My limited understanding (please take with a big grain of salt) is that they 1.) sell mainframes, 2.) sell mainframe compute time, 3.) sell mainframe support contracts, 4.) sell Red hat and Redhat support contracts, and 5.) buy out a lot of smaller software and hardware companies in a manner similar to private equity.
Mainframe for sure, but IBM has TONS of products in their portfolio that get bought. They also have IBM Cloud which is popular. Then there is the Quantum stuff they've been sinking money into for the last 20 years or so.
I can think of nothing more peak HN than criticizing a company worth $282 Billion with $6 billion in profit (for startup kids that means they have infinite runway and then some) that has existed for over 100 years with "I'm not even sure what they do these days". I mean the problem could be with IBM... what a loser company!
:) As much I love ragging on ridiculous HN comments, I think this one is rooted in some sensibility.
IBM doesn’t majorly market themselves to consumers. The overwhelming majority of devs just aren’t part of the demographic IBM intends to capture.
It’s no surprise people don’t know what they do. To be honest it does surprise me they’re such a strongly successful company, as little as I’ve knowingly encountered them over my career.
I think you're hallucinating this scenario. There is no contradiction with a company making money and someone not understanding what they do.
They manage a lot of old, big mainframes for banks. At least that is one thing I know of.
Basic research and mainframe support contracts. Also they bought RedHat.
IBM makes WatsonX for corporate who want airgapped AI