When Starbucks Corporation (SBUX) - Get Report wants to gauge how many iced or hot drinks it may sell in a given season, it turns to AccuWeather's predictive analytics team. AccuWeather can advise the coffee chain if, say, October will be colder than usual, meaning more hot Pumpkin Spice Lattes than chilled brews will fly out the door.
And when Class I railroads, including Norfolk Southern Corp (NSC) - Get Report , Union Pacific Corp (UNP) - Get Report and CSX Corp. (CSX) - Get Report , need to know if tornadoes could derail their trains, they turn to AccuWeather, too, just as other clients, such as Live Nation Entertainment (LYV) - Get Report , Garmin Ltd. (GRMN) - Get Report , Ford Motor Company (F) - Get Report , Samsung (SSNLF) , LG Display Co (LGL) - Get Report and Motorola Solutions Inc. (MSI) - Get Report , do when they must find out if storms, blizzards and heat waves could turn their businesses upside down.
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Accuweather is one of two major weather predictive-analysis firms that cater to companies that rely on forecasts to stay profitable. The other is The Weather Company, also a provider to multinational companies.
Accuracy, naturally, is paramount, and, predictably, each company claims it has the edge. But both companies have been named "most accurate" for different aspects of meteorology. Last year, ForecastWatch cited AccuWeather as the most accurate source of overall temperature forecasts and The Weather Company, the most accurate overall across time and geography.
So they do have accolades. However, their histories and client bases differ.
Joel Myers founded AccuWeather in 1962 by cold-calling almost 25,000 companies to snag his first 100 clients for what he claimed would be more accurate than the government's. Fast-forward 55 years, and Myers, now 77, is still at it. But he's working with bigger and more deep-pocketed clients that make up more than half, 245, of the Fortune 500.
The Weather Company was bought by International Business Machines (IBM) - Get Report in 2015. The company contends that its connection to IBM offers a competitive advantage, because it can access the supercomputer Watson, which uses artificial intelligence to "parse out" information. "A lot more capabilities are available to us," said Jim Menard, meteorologist and the Weather Company's head of travel, transport, energy and utility.
Among the Weather Company's clients are Apple Inc (AAPL) - Get Report . All 700 million iPhones are preloaded with The Weather Channel, a Weather Company subsidiary. The Weather Company also serves more than 3,500 businesses in 70 countries. Menard's division focuses on airlines, working with seven of the top 10, including Southwest Airlines Co (LUV) - Get Report and American Airlines Group Inc (AAL) - Get Report .
As for pricing, Accuweather can cost clients between $5,000 and $1 million per year to subscribe. Like AccuWeather, The Weather Company doesn't charge a flat rate, but declined to quote fees. Southwest, for example, might need a range of services with varying degrees of sophistication—detailed weather predictions for its pilots and watered-down outlooks for screens in airport terminals.
No firm statistics exist on just how much companies' bottom line could suffer from weather-related costs. But the National Weather Service reported nine weather events through July 7 of this year, which have cost over $1 billion each in damages. The sum for those nine events reached $16 billion last month.
With major storms brewing this season, using such weather predictive-analysis can spare devastating losses to companies and countries. According to the National Centers for Environmental Information, the United States has sustained 212 weather and climate disasters since 1980, where overall damages and dollar amounts reached or exceeded $1 billion, including a consumer price index adjustment to 2017; the total cost of these 212 events exceeded $1.2 trillion.
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