Cognitive Computing: A new era

UBS AI Seminar
May 2, 2017

Dr. John E. Kelly III

Senior Vice President,
Cognitive Solutions and IBM Research
Disclaimer

Certain comments made in this presentation may be characterized as forward looking under the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the
company’s current assumptions regarding future business and financial performance. Those
statements by their nature address matters that are uncertain to different degrees. Those
statements involve a number of factors that could cause actual results to differ materially.
Additional information concerning these factors is contained in the Company’s filings with the
SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor
Relations. Any forward-looking statement made during this presentation speaks only as of the
date on which it is made. The company assumes no obligation to update or revise any forward-
looking statements. These charts and the associated remarks and comments are integrally
related, and are intended to be presented and understood together.
Fueling the shift to AI

Data growth Cloud Advances in neural networks,

machine learning and deep learning

165 Zettabytes by 2025 *

We are here
Data-centric Extreme
Systems Scalability

End-to-end
Security
2010 2025

Computing power

*Source IDC. IBM projections based on analyst report

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Explosive growth in AI investment 2011-16

658

Number of venture capital investments in AI start ups

Disclosed Funding ($M)

493

364

253 $5,021

160
$3,125
$2,677

67

$1,039
$589
$282

2011 2012 2013 2014 2015 2016

Source: CB Insights, Bloomberg Beta: “The Current State of Machine Intelligence 2.0”

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 The AI landscape in 2017

Cognitive
Applications & Services

Computing

Enterprise Industry Consumer

•
Autonomous
• Cybersecurity Healthcare • Voice-activated
• Finance & Risk • Finance Chatbots Systems
• Marketing • Automotive/ • Smart Home • Self-driving Cars
• Forecasting Transportation • E-commerce • Robots
• Human Resources • Industrial Products • Wellness and • Drones
• Operations / IoT • Buildings Wearables • Planning and
• Sales • Retail • Social Media Decision
• Virtual agents • Energy & Utilities Support

• Machine Learning • Virtual/Augmented Reality

• Deep Learning • Dialog
Core AI • Natural Language Processing • Machine Reasoning
• Vision • Neural Networks
• Speech • Emotion

• Cloud
Infrastructure • Enabling hardware and software

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How we see it: IBM’s take on the AI market
Cognitive Computing
Interactive decision-making and reasoning
over deep domain models and evidence-
based explanations, using Artificial
Intelligence/Machine Learning tools

Artificial Intelligence
Range of techniques including natural
language processing, knowledge,
reasoning and planning, for advanced
tasks

Machine Learning
Statistical analysis for pattern
recognition to make data-driven
predictions

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The AI opportunity for enterprise and industry

Industrial Products
Opportunity for
decision-making support
24%
2025 Decision Support 12%
Healthcare and
Life Sciences

~$2T 12%
Retail, Wholesale,
Consumer Product Goods

Auto, Aerospace and

12% Defense

11% Financial Services

9% Telco, Media and Entertainment

Traditional global CRM ERP

20% Rest of Industries
IT spend Productivity
2020
Data center systems Infrastructure

Process automation
~$1.4T

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Source: MDI Analysis, Oxford economics, CapitalIQ, McKinsey Global Institute
Watson 2011: Natural language machine

Question
& Answer

Question Query Hypothesis

analysis scoring

Data set Evidence

sources

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Watson 2017: Robust cognitive platform

9 Languages

Understand
Vision emotions

Natural
Visual Language
Language
Recognition Translator
Classifier
Natural
Conversation Language
Understanding

Tone Discovery Document

Analyzer News Conversion
Enterprise-scale
Cognitive Platform Question Personality
& Answer Insights

Speech Tradeoff
Discovery
to Text Analytics

Retrieve
Dialog
and Rank

Text to
Speech

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Watson 2017: Strategic differentiation

Industry and
Financial
Process Healthcare Services IoT
Specialization
Analytics Security Customer Global
... Engagement ... Ecosystem

Depth of
Ecosystem
Collaboration

Built for
Security
Enterprise-scale
Cognitive Platform

Public, Private, Data

(Public, Private, Partner)
Multimodal

Public Filings Apple Medtronic

IBM Medical Journals Publically Partner Associated Press Private Thomson Reuters
Provided Sourced Provided Client
U.S. Geological Survey Twitter Johnson & Johnson
Data Data Data Data
Patents

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Watson 2017: New revenue models

Data access/
Pay-per-Insight Subscription

... ...

Shared value Licensing

with partners

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Our clients and partners are scaling
Example set of cognitive and cloud clients and partners

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Shaping the future

Cognitively enable and disrupt industries

Advanced AI / cognitive reasoning /

decision making

New data assurance and trust

New hybrid system designs

New neuromorphic and quantum devices