IBM finally reveals why it bought The Weather Company

In 2015, IBM Corp. had everyone scratching their heads when it announced plans to buy The Weather Company. Was it for the sensors, stuck to buildings and satellites all around the world? Was it for the access to data, or to help retailers better prepare for unpredictable swings in weather?

Jokes ensued on Twitter following the announcement, with people picking apart IBM for misunderstanding the technical term “cloud,” and taking its transition to cloud computing from traditional hardware all too literally.

As it turns out, Big Blue had its reasons — and it may finally put an end to retailers’ excuses of bad weather for poor financial results.

On Wednesday, IBM IBM, -0.25% revealed its first joint product with The Weather Company: a hyperlocal weather forecast—at a 0.2-mile to 1.2-mile resolution—to provide enterprise clients with short-term customized forecasts. It’s hoping to include this service, dubbed Deep Thunder, as part of a growing suite of products offered to enterprise clients through its Watson arm.

Deep Thunder combines big data and machine-learning tools from IBM Research with The Weather Company’s global forecasting model, which includes more than 195,000 personal weather stations.

Mary Glackin, head of science and forecast operations at The Weather Company, said the tool will help companies with critical decision making. The data will be able to show how minor changes to weather, such as temperature, might affect things like consumer buying behavior, helping retailers to adjust their supply chains and shelve stocks, she said.

Also see: What meteorologists have to say about retailers’ ‘bad weather’ excuse

Companies, especially retailers, but also those from other industries, have consistently used bad, poor, or colder-than-usual weather and temperature as a scapegoat for worse-than-expected financial results. In 2014, many retailers blamed the Polar Vortex on why people didn’t come out to shop; more recently, retailers have shifted the blame to El Niño.

Earlier this year, Ascena Retail Group Inc. ASNA, +4.26%   , the owner of Ann Taylor, blamed unseasonably warm winter weather and an unseasonably cold spring for disappointing sales results. Large department stores such as Macy’s Inc. M, +1.75%   have also pointed the finger at severe weather swings.

The launch of Deep Thunder comes about a year-and-a-half after IBM first invested in The Weather Channel as part of the launch of a new $3 billion Internet of Things division. At the time, the companies said their tie-up would help industries “operationalize their understanding of the impact of weather on business outcomes.”

IBM later bought The Weather Company’s digital assets for an undisclosed amount, in a deal valued at around $2 billion, according to The Wall Street Journal, citing sources close to the matter.

Shares of IBM rose 0.2% to $151.34 in late-morning trade. They are up 6% over the past three months, outperforming the Dow Jones Industrial Average DJIA, -0.20%  , which is up 3%.

IBM’s shares have underperformed the index over the past year, however, declining by 9%, versus the Dow’s 0.5% decline.

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