IBM's Latest Services Plays Worry Partners

But solution providers were also reminded that Gerstner, who will resign the chairman post effective Jan. 1, is no longer in charge, as IBM made several announcements that underscore its continuing efforts to grow its services revenue,efforts that have IBM partners worried about potential channel conflict.

"IBM is a monster company trying to morph itself to remain competitive in a very challenging economic climate," said Jerry Tabeling, president of Data Processing Solutions, Columbia, Md. "IBM's focus is on services because they are less likely to be 'commoditized' and carry much higher profit margins. But as a partner, I'm left wondering, is IBM working with me or against me?"

IBM last week said it would invest $1 billion over three years to establish a new IT services division, to be housed within its research group. And last Friday, IBM Global Services added four more hosted applications to its palette of hosted and outsourced offerings for SMB customers, with fees as low as $50 per user per month depending on the application.

IBM CEO and Chairman-elect Sam Palmisano last month spoke of "e-business on demand," a computing model under which users are charged for the resources they consume, much the same way electric bills are figured.

Jarir Chaar, program director for services research for IBM's research arm, said non-IBM solution providers could benefit from expertise in the new services group, to be known as Innovation on Demand Services.

The Innovation on Demand Services staff will work most closely with IBM Global Services' Business Consulting Services division, which is where the bulk of the 33,000 employees gained in IBM's acquisition earlier this year of PwC Consulting are housed, an IBM spokesman said.