Well surprised or not, what you see in Istio is the result of contributions from all 3 founding parties. My team on the IBM side did much of the work on the Istio Manager and added capabilities in Envoy too, such as support for zipkin tracing.
IBM Research continues to do a lot of interesting research in AI/ML (and also into basic sciences in general). I'm not sure about Watson; I've heard both good and bad things about it so I do understand the skepticism. But to call it a joke is probably taking it too far :).