What is Watson?
It's the name of IBM's latest high-profile supercomputer, this time designed to play Jeopardy! rather than chess. The New York Times has a a forthcoming magazine profile on what Watson is, how it differs from IBM's past supercomputing projects and what challenges it had to overcome. The project sounds impressive, but Watson's success apparently has more to do with sheer computing power than any major language-processing breakthrough.
Watson was designed with practicality in mind, unlike Deep Blue which famously beat Chess Grandmaster Gary Kasparov in 1997. That skill -- the ability to play chess really well -- couldn't be used to make much money. Solving the "question answering" problem, however, has plenty of applications. (Just ask Google.) There is a lot of money to be made from developing a system that can "understand" questions posed in normal, everyday speech, rather than selected keywords, and return meaningful results quickly.
Watson never truly obliterates the competition and sometimes it even loses. Still, creating a question-answering machine is a difficult task because of the vagueness of language and making one that answers questions based on a pun, play on words, or other verbal trickery deployed by Jeopardy's creators is even harder.