Despite layoffs, IBM still leads in blockchain innovation
- IBM’s blockchain unit missed its revenue targets by a wide margin for two years in a row, and has cut its blockchain team down significantly
- Yet, IBM came fourth in the number of blockchain patents held, making it the only non-Chinese firm in the global rankings lead by Alibaba’s Ant Group.
- IBM has pumped a lot of money into blockchain since 2016, when it began exploring the technology’s potential to transform the way industries do business
Considered one of the largest companies to adopt the blockchain in its operations, International Business Machines Corporation (IBM) has drastically reduced its blockchain team after failing to meet its revenue targets for two years in a row. The layoffs however contradict the company’s achievement with the technology itself, coming fourth in the number of blockchain patents held worldwide.
In fact, IBM is the only non-Chinese company in the top ten, taking the fourth spot in the number of blockchain patents last year with 647 filings, according to a report by International Asset Management that cited data from Clarivate’s Derwent World Patents Index or DWPI. Nevertheless, the DWPI score pushed IBM into the second spot behind Jack Ma’s Ant Group. Ant, the financial technology affiliate of e-commerce giant Alibaba Group Holding Limited retained its spot as the most prolific holder of blockchain developmental patents in 2020.
Facing the repercussions of several rounds of layoffs, IBM director of public relations Holli Haswell said that the “blockchain business is doing well” and that some changes were made to the unit to “continue to drive growth. IBM maintains a strong team dedicated to blockchain across the company. We changed some resources, but we remain committed to blockchain technology, ecosystem, and services. We see blockchain as a driver for our cloud business.”
Amidst layoffs, IBM capitalizes on blockchain tech
The DWPI scores patents based on various metrics such as technical breadth, geographical coverage, and average annual citations to build an “average strength index” of companies’ patents. The metrics highlighted IBM as the surprising only-non-Chinese company in the top 10 globally despite news of the layoffs happening within IBM and its blockchain team.
The 109-year-old technology giant popularly known as Big Blue has been at the forefront of the Distributed Ledger Technology (DLT) that forms the backbone of blockchain development. In 2017, IBM ranked number one amongst blockchain tech providers based on an enterprise survey by Juniper. Over the years, IBM has developed solutions based on blockchain and worked with clients to serve their industry-specific needs and to provide end-to-end implementations.
In 2020 alone, IBM’s blockchain had few initiatives and one of them was IBM Rapid Supplier Connect launched in April; a blockchain-based network designed to help government agencies and healthcare organizations identify new, non-traditional suppliers who have pivoted to address the shortage of equipment, devices, and supplies needed for COVID-19 relief efforts—was announced. The network has been joined by Northwell Health and The Worldwide Supply Chain Federation.
In August, IBM introduced the Digital Health Pass which enables individuals to digitally proclaim their vaccination and health status. Individuals can manage their information via an encrypted digital wallet on their smartphones and control what they share — and for what purpose — while organizations can set criteria (test results, temperatures, etc) to determine responses for each health status they review.
In the world of finance, in an interesting application of blockchain technology, the Bank of Thailand recently launched the world’s first government savings bond on IBM blockchain and cloud tech. Leveraging blockchain capabilities on the IBM Cloud, the platform allows investors to benefit from speedy bonds issuance, reducing the process from 15 days to just two days. The efficiencies of blockchain also reduces operational complexity and the overall cost of issuing bonds.
Blockchain for other businesses
In a Deloitte survey from 2019, the growing popularity of blockchain among organizations was highlighted, with 84% of business decision-makers surveyed agreeing that the technology is scalable and will eventually become mainstream. As blockchain adoption moves steadily forward, it needs a closer look from an investment perspective for retail investors. Gartner’s VP David Furlonger said, “Even though they are still uncertain of the impact blockchain will have on their businesses, 60% of CIOs in the Gartner 2019 CIO Agenda Survey said that they expected some level of adoption of blockchain technologies in the next three years.”
According to IDC, spending on blockchain will witness some decline in 2020 compared to the pre-COVID-19 forecast scenario, led by reductions in IT spend and bleaker economic growth in recent months. IDC expects blockchain spending to grow at a five-year compound annual growth rate (2018-2013) of 57.1% (compared to 73.2% estimated earlier) with worldwide spend reaching $14.4 billion by 2023. Gartner estimates that worldwide IT spending will decline by 8% compared to 2019.