His sale of his company's storied personal computer division may be the strongest indication that Sam Palmisano believes the PC's status as a business computing tool is in decline. But if there were lingering doubts about his views on the subject, the IBM CEO put those to rest Tuesday.
"The PC client-server model has run its course," proclaimed Palmisano, speaking in St. Louis at PartnerWorld, IBM's annual gathering of software developers and technology resellers.
As an alternate to the classic IT setup in which workers use applications stored locally on PCs while expensive servers are reduced to the role of traffic cop, Palmisano said IBM wants "to offer a new architecture for data centers."
Specifically, Palmisano said businesses need to migrate to more efficient computing models where applications -- or even components of applications -- are stored centrally and can be tapped from a broad range of computing devices beyond the PC.
Creating these so-called software as a service (SaaS) environments and service-oriented architectures will allow businesses to escape the economic waste that has plagued traditional client-server architectures, Palmisano said. "Twenty percent [server] utilization rates are unacceptable," said Palmisano.
Centralized application architectures also are essential if businesses are to cope with the fact that "millions of people now use billions of devices" to access data from cell phones, handheld computers, and other emerging platforms, he said.
Given Palmisano's vision, it's no coincidence that IBM has invested heavily to develop or acquire technologies and services that play to these new computing models. The company last week, for instance, launched a new service designed to help U.S. federal agencies build SOA environments.
In November, IBM acquired Palisades Technology Partners, a company that offers an online software platform that lending institutions can access to manage the loan process from point of sale through closing. "We have bought 50 or 60 companies and we might buy another 50 or 60 companies" that will help IBM create such offerings, Palmisano said.
Palmisano also has been divesting assets that don't fit his view of the IT landscape. The sale of the company's PC business in 2005 to China's Lenovo Group for $1.25 billion was one of the "bold bets" that IBM has made in recent years to position itself for the future.
Similarly, IBM in January announced a $725 million deal to sell its lackluster printer business to Ricoh.
IBM's view of business computing's future contrasts markedly with that held by arch rival Microsoft. With its recent release of the Windows Vista operating system -- complete with a desktop footprint that significantly exceeds that of Windows XP -- and new, feature-packed Office applications, Microsoft has signaled its belief that the PC will play a central role in business computing for years to come.
For the time being, however, most analysts believe that businesses will adopt a mixed approach under which workers will continue to use PC-based applications even as they increasingly turn to online software and data for some tasks.