“There’s a reason IBM is 105 years old. It has a history of making big bets and being proven right,” said Gary Shapiro, CEO of the Consumer Technology Association.

That’s how Shapiro introduced IBM CEO Ginny Rometty for her CES 2016 keynote on Wednesday at the Venetian in Las Vegas.

And Rometty didn’t waste any time revealing IBM’s next big bet as “cognitive” solutions–a word she used repeatedly throughout the event. We might also think of it as cognitive computing or artificial intelligence, but Rometty was quick to point out that this is bigger than just AI, and in fact, AI is just one of component of it.

She applauded the pace of society digitizing everything but she asked the logical question: “When everyone becomes digital, then what? Who wins?”

The answer is the one who brings the most intelligence and insights.

Rometty said the two most important factors driving digital transformation are:

  1. Data that was invisible to you will become visible
  2. The advent of cognitive computing

“It’s the dawn of a new era,” she said. “The cognitive era.”

She asserted that in the cognitive era, not everything will need to programmed, because “it understands.” If SpaceX CEO Elon Musk was listening, he probably winced. Musk has famously stated his fear that AI could take over the planet and make humans subservient.

But Rometty’s version of AI is far more utilitarian and sharply focused on practical solutions for people and businesses.

She said that in order to bring this kind of intelligence to companies, IBM identified that it needed three things:

  1. The right platform — It built out a cloud platform in 44 countries
  2. New forms of data — This includes “dark data that you need, but you don’t have to own”
  3. An ecosystem — IBM committed to building an ecosystem for every industry and every domain

All of this will be powered by the company’s crown jewel, IBM Watson, and the place where it will have its biggest impact will be the Internet of Things.

To prove that this wasn’t just CES-level hot air, Rometty trotted out three companies that have already achieved breakthroughs by pairing Watson with the Internet of Things:

1. Medtronic — With the help of Watson’s analytics engine, the company has developed an app that, for the first time, can predict and help prevent low blood sugar episodes in diabetics. Since it’s based on learning the individual’s patterns, it’s a combination of predictive analytics and personalized medicine.

2. Softbank — The company’s humanoid robot helper, Pepper, is also powered by Watson on the backend. Pepper is being used in banks and retail stores in Japan to answer customer questions. At a Nestle cafe, Pepper asks customers a few questions and then recommends the perfect cup of coffee. Pepper made a guest appearance on stage next to Rometty and got a great reaction from the audience.

3. Under Armour — The sports apparel company has been buying up apps like MapMyFitness and MyFitnessPal and has used that knowledge to build its own app UA Record, that’s powered by Watson and available on iOS and Android. Using Watson’s dataset of athletes and learning the person’s patterns, it not only gives deep feedback on training progress but functions as a virtual coach, bringing some of the benefits of personal trainers to the masses through software.

SEE: IBM Watson ups the ante on digital wellness with gene-based health app

Where the rubber meets the road

The day after Rometty’s keynote, TechRepublic met with several of her lieutenants at CES to talk further about what cognitive solutions are, the company’s roadmap for IoT, and the state of Watson.

Stephen Gold, the CMO of Watson, said that IBM has traditionally been very proprietary about its products and has kept its intellectual property to itself, but “the cognitive journey is the complete opposite.” It’s establishing a platform and a set of APIs for other companies to build their apps and their businesses. Instead of viewing its IP as its secret sauce, IBM now views radical transparency as the key ingredient–a significant shift.

“Complete transparency gives [people] the trust to work with the system,” said Gold.

The other critical factor is scale. IBM works with massive projects and huge corporations and governments, which gives it a lot of data and learning. It’s been five years since Watson defeated Ken Jennings in Jeopardy and the company commercialized it into a product. That’s given IBM a tremendous amount of practical experience in artificial intelligence and natural language processing. And, that’s the foundation of the cognitive platform that Rometty extolled.

“These cognitive systems are now able to understand–at scale–all kinds of information,” said Gold.

Companies from 17 different industries are now building solutions on top of Watson, Gold reported.

Chris O’Connor, General Manager of IBM’s Internet of Things division, highlighted Rometty’s assertion that the company’s cognitive strategy is about triangulating three areas where IBM has existing strengths and is making substantial investments: cloud, analytics, and IoT. O’Connor summed up the investments:

  • Cloud: $1 billion in infrastructure in 44 different countries
  • Analytics: $16 billion over the past six years
  • IoT: $4 billion over four years (which started in 2015)

IBM has closely aligned its strategies for IoT and big data analytics and focused on providing easily accessible APIs in IBM’s IoT cloud to give organizations shortcuts in getting their IoT strategy off the ground. For example, IBM acquired The Weather Company in October 2015 and is making its data sets part of the IBM IoT cloud so that customers can easily triangulate weather data with their various data sets.

“Simplicity of access is the key to making big data usable,” said O’Connor.

He pointed out that what we call Watson is actually 50 different technologies channeled into a set of 28 APIs. By the end of 2016, it will be approaching 50 APIs. And while the original Watson from 2011 was a room full of servers, that same amount of processing power could now fit in our hands, said O’Connor, pointing to a black leather notebook with IBM’s “THINK” moniker emblazoned in white on the cover.

IBM’s biggest challenge

TechRepublic spoke with a tech industry entrepreneur who recently sold his latest company and is now in the process of launching a machine learning startup. The founder and his team started with the intention to build their new product on top of IBM Watson, but they found it was too difficult to work with and so they went in a different direction.

That experience speaks to IBM’s biggest challenge as it attempts to make its cognitive platform a force in the industry. IBM has a long history of working with multinational conglomerates, sprawling government agencies, universities, hospitals, and other massive organizations. In fact, no company is better at working with other big companies. But, for IBM to fully impact the future, it’s going to have to get a lot better at working with startups and SMBs who don’t have entire business development and strategic alliance teams to shape deals with companies like IBM. They will need a much easier on-ramp to the Watson-based IoT cloud.

There are signs that IBM gets it and wants to make headway.

O’Connor stressed that the company is focused on making access to its IoT cloud more widely available via trails and a self-service portal that startups can delve into at ibm.com/iot. He pointed to the Texas Instruments CC3200, a little $35 red device with 13 sensors, as something a startup can buy and start experimenting on IBM’s IoT cloud.

Gold pointed to a $100 million investment fund that IBM is using to create relationships with startups. He said that IBM can also use its relationships with many of the world’s largest companies to help startups get a foot in the door and build relationships that could enable them to become suppliers or partners with other important companies.

He stated that 24 months ago, IBM had just three partners on board for this kind of program and now it has over 500.

Nearly all of the world’s biggest and most complex organizations already work with IBM in one capacity or another. The extent to which it can both win them over to its cognitive solutions strategy and provide an on-ramp for SMBs will determine how influential the new strategy ultimately becomes. But one thing is crystal clear after CES 2016, IBM has revealed that this is its next big bet and the core of Big Blue’s strategy in the years ahead.

“IBM now is a cognitive solutions and cloud platform company,” said Rometty. “I believe every decision humankind makes is going to be better because of this technology.”