Chris Pepin

"We've been very conscious of the value of information, and we knew the market behavior was going to shift from the bad economy and budget pressure," Palmisano said in an exchange at IBM headquarters in Armonk. "So we sold things because we knew the old model was going to end, and we turned around and made acquisitions where things were going to grow and you know the numbers—100 acquisitions for $20 billion.

"But no matter how many acquisitions we do we always do our research up-front because we're very rigorous about that and we're conservative and we always pay cash."

"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 (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."

"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 strategy's working," he said in Armonk last week. "We have hundreds of reference customers around Smarter Planet. And the stimulus is helping as well," he added, underscoring his comment about the potential to boost employment for up to 1.2 million workers by saying, "You can count the jobs. It's very defensible."