“How’s the weather out there today?” might be a simple question to ask, but coming up with an answer is a multi-billion dollar industry.
What happened: IBM is putting its weather arm—which includes Weather.com—up for sale and is reportedly expecting bids of over US$1 billion, likely coming from private equity firms.
- IBM bought its weather services from The Weather Company in 2015 for US$2 billion but is willing to sell it for only half that price.
- The company is desperately trying to offload assets and streamline services as it transforms into a hybrid-cloud and AI business.
Why it matters: Even though IBM is willing to take a loss on the sale, its weather operations could be valuable to some firms. As extreme weather events become more frequent, the forecasting biz has immense growth potential as both governments and businesses seek the most accurate predictions possible to be better prepared to save lives and/or money.
- From companies that use sailboat drones to forecast to those that use machine learning, weather tech start-ups have raised ~US$880 million as of last fall.
In Canada: The country suffered $3.1 billion in insured damage from severe weather events last year, among the highest amounts on record. With severe weather on pace to cost the economy $139 billion by 2050, private weather firms are sure to find lots of customers.–QH