LOS ANGELES--Google Chief Executive Eric Schmidt gave a speech and chatted with IBM's CEO Sam Palmisano onstage Thursday at IBM's Business Partner Leadership Conference here. The two talked up their relationship, which primarily involves a joint research project. In October, Google and IBM announced a cloud computing initiative, based on Google's expertise in distributed, parallel computing and IBM's industrial enterprise management technologies, for public use by universities.
IBM is taking some of the learnings from the project and plans to operate a cloud that will allow partners to house their Web-based applications and sell them to customers, Palmisano said. "It is the first time we have taken something from the consumer arena and applied it to the enterprise," he said.
Google CEO Eric Schmidt joins hands with IBM CEO Sam Palmisano.
(Credit: Dan Farber/CNET News.com)Schmidt said that over time there won't be much differentiation between consumer and enterprise architectures. The major difference is that enterprise customers will pay for software and services, with required security and other features, and consumers won't.
Schmidt gave IBM lots of credit for pioneering many of the technologies that underlie today's computing architectures. He noted that IBM, which has about 87 years on Google, has figured out that the underlying platform is a server and Web services.
"Cloud computing is the story of our lifetime," Schmidt said. "Eventually all devices will be on the network." Both IBM and Google, and a host of competitors, have the same idea, which was actually first promoted by Sun with its "the network is the computer" slogan. Google figured out how to monetize the fruits of the pages its massively parallel servers manage.
IBM wants to provide the infrastructure and support services to the planet, and Google wants to provide the world's information, and some applications, on its platform. "The two companies are great and have lots of innovation in their gene pool," Palmisano said. "There isn't a lot of overlap in the strategies." Both are committed to open standards and an open Internet, and they are both going in the same direction, he added.
Google's YouTube captures 10 hours of video every 60 seconds, and IBM might like that business if it could figure out how to make money at it. But eventually, IBM, Microsoft, Sun, Google, and other big players will look more similar in their technical architectures and business models.
Google and IBM have more in common than a shared view of the world and an academic research project. It turns out that Google outsources its accounting to IBM and that Schmidt considers IBM's sales organization important to Google's enterprise software efforts.
As more companies look for Web-based tools, mashups, and standard applications, such as word processors, Google stands to benefit. "IBM is one of the key planks of our strategy--otherwise we couldn't reach enterprise customers," Schmidt said.
While IBM isn't selling directly for Google in the enterprise, IBM's software division and business partners are integrating Google applications and widgets into custom software solutions based on IBM's development framework. The "business context" is the secret of the Google and IBM collaboration, Schmidt said. Embedding Google Gadgets in business applications, that can work on any device, is a common theme for both Google and IBM.
Currently, Salesforce.com is selling Google Apps as an integrated part of its platform. It's not far-fetched to think that Google would seek out IBM's help with its business partners to spread the Google word in the enterprise.
LOS ANGELES--Following renditions of "Goldfinger," "Mission Impossible" and "Star Wars" and other movie inspired themes, IBM CEO Sam Palmisano took the stage at the Nokia Theatre here to address 1,000 of the company's top business partners.
Regarding the current economic climate, Palmisano, who is also IBM's chairman and president, told his business partners, "We are going to weather the storm and come through it stronger than most. Just like IBM had to rethink its business model, you have to pick the segments of space and prioritize the opportunities. We have to invest and we have to invest together."
IBM chief Sam Palmisano
(Credit: Dan Farber)So far, it appears IBM is doing exactly that. The company blew through first quarter earnings expectations with $1.65 per share earnings on revenue of $24.5 billion.
Palmisano took over as IBM's CEO in 2002 after serving as president and COO under Lou Gerstner. He commands an army of 386,558 employees generating nearly $100 billion in annual revenue. During his 35-year tenure at IBM, Palmisano has run business units such as IBM Global Services and Personal Systems and the Enterprise Systems groups.
In his remarks, Palmisano also dropped broad hints that IBM would provide a marketplace for applications using Google-like technical infrastructure. "Through collaborating together, we could create an application marketplace with business partners, with some applications in the cloud or some on premises," he said.
He described how the world is changing, requiring different kind of investments. "If you have expertise, capabilities and can innovate, you are of value in this world. If you don't, you have a strategic issue to work on," Palmisano said.
The so-called mid-market, with a million potential clients and $500 billion in revenue, is a key new target for IBM. Palmisano argued that smaller business need help and providing the right-sized solution that solves problems is a big opportunity. IBM has stepped up its focus on the mid-market with vertical solutions in 120 sub-industries and in 20 countries, he said.
Much of IBM's business is focused on the data center. "We have to solve problems end-to-end in a holistic way. Clouds have a role in the enterprise, many times behind the firewall because of issues of security and protection of information," Palmisano said. "Virtualization is key, but don't dumb down the problem. If the answer is to take four Intel servers down to one, they will ask you to take your PowerPoint and go home. The problem is more complex. We have to work together and help out."
"We are pretty well positioned," Palmisano told the crowd of partners. "We are at a point in time where we will have to make some investments and commitments to each other. You have to do self assessment of skill sets, of our people and your people."
He concluded, as you would expect, that IBM is a better bet for its partners. "When you are old, you are disciplined. You've seen it all before and you re-prioritize investments and go for share because you have the balance sheet," he said.
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