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New IBM boss describes $10bn ‘gamble’

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ComputerWire: IT Industry Intelligence

Sam Palmisano, president and chief executive of IBM Corp used his first speech as the company's chief executive to highlight the company's vision of "on-demand" computing.

Palmisano, who is set to add the mantle of chairman to his business card next year when he takes over from current incumbent Lou Gerstner, addressed his fellow 350,000 "IBMers" plus some of the company's largest clients at New York's Natural History Museum.

The speech did not exactly cover any new ground for IBM. It has been touting its ability to deliver computing power, storage and applications as a utility service for the last 12 months, having trumpeted recent "on-demand computing" contract wins with American Express, Saks Department Stores and ABN AMRO.

However, Palmisano claimed that IBM has so far invested $10bn in gearing its products and services to the point where clients can meet their IT needs without needing to buy lots of new machines and hiring large numbers of professionals. "On-demand computing requires a different approach to building systems to the way we have done it in the past. We have to interface with more standard devices... It's a bold bet but not a risky one. The technology is ready and we understand it," he said.

Palmisano did not detail exactly where the $10bn had been invested, but said that the company's recent acquisitions of middleware vendor CrossWorlds, database developer Informix and 3,000-strong IT services operation PwC Consulting were all part of this strategy. He also highlighted the company's recent projects in the area of grid computing, notably the eDiamond cancer research venture with the UK government, as well as its autonomic computing product developments as key components of his "on-demand" vision.

He said the IT sector is in a state of "fundamental transition", but said that since he took over the day-to-day leadership of the company from Gerstner in March, his conversations with business and government leaders have been largely positive. "People have not given up their faith in technology and still believe that IT is a fundamental driver of competitive advantage," he said.

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