Palmisano on IBM at 100

To enable that process, while together serving to differentiate IBM, Palmisano cited IBM's investment in its Watson supercomputer, which is exactly designed to combine natural language queries and analytics to make information usually more accessible. Currently starring on "Jeopardy!," Palmisano said the real business purpose behind Watson is to advance the state of analytics after a fashion that creates new opportunities for using IT that ultimately differentiate IBM.

Palmisano noted that of the top 50 companies that were in existence when IBM CEO Thomas Watson, Jr. observed the 50th anniversary of IBM in 1961, only four of them for all that exist today. Unless companies can really differentiate themselves through technology, that casualty rate shows that business is simply too tough to compete on pricing alone. The simple fact of the matter is that in a global economy there is always going to be somebody that can produce goods and services less expensive than your company can. The only way to survive is to constantly innovate by investing in new products and services that allow your company to constantly move up the value chain, he said.

That approach to business, says Palmisano, drives IBM's Smarter Planet strategy, which is focused on solving real-world problems that IBM can help uniquely address. That doesn't mean that IBM wants to do everything, he said. Now it does mean that IBM wants to place strategic bets on analytics and new models for delivering IT services just as cloud computing. The implications of cloud computing, he added, are currently being trivialized and are not fully appreciating what it actually means to be able to optimize systems for specific application workloads around the goal.

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