And while various competitors—none of whose financial performance matches IBM’s—have attempted to position those sell-offs as signs of IBM becoming risk-averse or narrow or shallow or greedy, Palmisano says the exact opposite is true:
"We obviously felt the PC era was over—and so did some other companies, but we actually did something about it," he said, emphasizing that the PC business had essentially turned into a consumer-electronics category "while we’re an enterprise company—a business company—and not a consumer-electronics company." …
"Dell and HP say they’ve learned how to make money off their PC businesses. They brag about their 4%, 5% margins. But grocery stores do better with a lot less risk in their inventory. Groceries don’t change much—but with PCs, you get a big change in technology, which you always will, and suddenly the $2 billion you’ve got in inventory has lost a huge amount of its value." …
All that, as Palmisano sees it, is prelude to the new-technology waves that are about to hit—particularly business analytics and cloud—and the parallel explosion in the number of intelligent devices of every shape and size that are being stuffed into more and more pieces of the world around us. And when you take the flexibility and economics of the cloud, and add in the predictive power of business analytics, and apply them in concert with the billions upon billions of intelligent devices making their way into transportation and water management and food supplies and appliances and machines and more, you’ve got all the makings for a more-intelligent world, Palmisano said.
"So now we see all this manifesting itself in Smarter Planet—and we think the analytics wave is just at the beginning," he said. "Cloud computing—what we’re really talking about is ‘highly virtualized infrastructure’—it’s also just beginning, but it’s an unfortunate name.
"There’s tons of hype in the beginning and then the industry starts to ascertain what’s real and what’s not, and that’s where we are now. It’s starting to take off on the consumer side, which has been very visible, but we don’t play there, we’re an enterprise company—but even with all the talk and rhetoric about cloud starting to slow down, the real thing behind the name is starting to ramp, with everything from Lotus Live, to Desktop Cloud, to Test Cloud."
The significance of that transition from geeked-out technology hype to real business value is a theme Palmisano touched on a few times: “The big challenge now is, with all these devices out there, how do you create an infrastructure to deal with all the inputs—sensors, devices, phones, everything?”