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If IBM (IBM) is moving further, faster into AI with Watson, why is their stock performance so poor? In its quarterly earnings report last week, IBM showed how they are having a very difficult time transforming into a growth company going forward. IBM has been around forever. They have transformed several times in their history. Their latest move into AI with Watson is ambitious and does capture the imagination. So, where is the growth?

IBM is not a regular company. They are a technology company that thinks and talks in technology terms. One problem is investors think and talk a different language. All they are interested in is performance and growth. Bridging the gap has always been a challenge for IBM. Now as they move further, faster into the AI space, this gap shows no sign of closing up.

IBM Struggling to Transform in AI and Show Growth

IBM is not alone. Other companies face the same challenge. Leaders of yesterday, facing real challenges to remain in a leadership position going forward. Some are more successful at this transformation than others. Cisco (CSCO), for example, has been struggling with this same issue for years. However, it appears they are having more success than IBM.

Why is that? Some say, it’s because IBM may find it more difficult to attract top quality AI workers outside of Silicon Valley, where most seem to congregate. That may be part of the problem, but only part.

I attended the IBM World of Watson event in Las Vegas several months ago and have to say, I was blown away. The event was huge and many other companies were represented in what may have been one of the largest, most impressive and most inspiring shows in recent times.

Kagan Spoke at IBM World of Watson Event

I was asked to be a speaker at the event. After my remarks, we had time for conversations about AI and Watson and where we are heading as an industry. After my speech, I had many such conversations with the audience, as well as others at the show over a couple days.

With that said, what I learned may play an important role in the IBM problem today with their stock price. It has to do with translation. With speaking the language of customers, investors, analysts and the media.

The people in attendance were from IBM. They were from partners which are other companies working with Watson. They were users, which are customers of Watson. They were industry analysts and media covering the event.

The IBM Growth Wave Problem

What I heard from others was the same as what I was thinking. As amazing as AI and IBM Watson are, it’s difficult to translate. Difficult for outsiders to connect the dots. And unless you speak the technology language of IBM, you will have a difficult time understand Watson, and getting it to fit into your plans going forward.

It’s like watching Star Trek and seeing the transporter work. You see it and are wowed by it, but have no idea how it really works. That’s part of IBM’s problems today. They are seen as a company in a world of fiction. Tomorrow, when we are all familiar with AI, it will be easier for IBM to talk and be understood. However, today it’s very difficult.

IBM has been spending money on a recent ad campaign introducing us to Watson. It is a simple and clever attempt to start getting us used to AI and Watson and what it means going forward. Perhaps, this education of the marketplace is what is needed. I see the need and they are finally doing a good job solving this problem.

Is IBM Watson Advertising Campaign on Right Path?

So, will this be the magic bullet to solve IBM growth problems? That’s the real question. It will take a while for the marketplace to be brought up to speed. And it will take several companies like IBM to do just that. And we are just in the very early stages of that re-education process.

The problem is, the longer a company is stuck in a no-growth mode, the harder it is to break out and grow once again. Companies are either growing or shrinking. They are either on the growth side of the wave, or they have crested or they are on the falling side.

IBM has been on the downward side of the growth wave for much too long. The longer they are there, the more stuck they become. The same story has happened to many other leading companies like Motorola, Nokia, Blackberry and others, who fell from leadership.

So, the next question is simple. Can IBM start to grow again? They are in the right business. AI is a rapidly growing industry and will remain that way. Watson is a breakthrough technology. The only real question is, can IBM connect the dots and let customers, investors, analysts and the media understand and translate the new opportunity. Only time will tell.

Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan