3 of 5
BACKNEXT
Watson
Investment: An estimated $900 million to $1.8 billion

Some famous IBM projects, like the chess-playing Deep Blue computer, are more about showing off what's possible than building a major revenue stream. But then there's Watson, perhaps IBM's most famous -- and expensive -- gamble.

Watson is an under-development computer program that understands normal human language so well that it can successfully play Jeopardy! The show's producers plan to feature Watson on TV soon, possibly as early as this fall.

IBM says this is no Garry Kasparov-beating gimmick. The company believes it has found the true Holy Grail of automated search: a computer that understands everyday human speech, and a system that it can sell to its clients.

"The future of Watson is to get it embedded in IBM's solutions and products to help customers deal effectively with unstructured content," says David Ferrucci, head of the Watson team at IBM.

If Watson can answer complex Jeopardy! questions, then perhaps it could help doctors treat patients, bankers mitigate risk or consumers plan a dinner menu at a grocery store, IBM theorizes.

IBM will not say how much it has spent on Watson and offers no timeline for when Watson-derived technology could be sold to businesses. But Richard Doherty, research director for the Envisioneering Group, which does some consulting for IBM, estimates that the project costs roughly 5% to 10% of IBM's entire $6 billion R&D budget each year. That puts Watson's three-year development price tag at roughly $900 million to $1.8 billion. He believes that Watson systems could start appearing in some businesses as early as next year.

But those buyers would need deep pockets: It takes a $1 million supercomputer simply to run Watson's software, before you even factor in the cost of licensing it.

NEXT: Tesla
Last updated August 26 2010: 12:40 PM ET
More Galleries
My part-time job is a dead end, but it's all I can find CNNMoney profiles 4 of America's 7 million part-time workers unable to find full-time jobs. More
Cool cars from the LA Auto Show There are some of the standout vehicles on display this year at the Los Angeles Auto Show. More
American Dream homes: Prices in 10 cities How much does the American Dream home cost? From $2 million in Los Altos, Calif., to $65,000 in Cleveland, here's what you'll pay for a 4-bedroom, 2-bath house, according to Coldwell Banker's annual survey. More

Special Offer

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.