IBM Backs Utility Notion With $10 Billion

in which users are charged on a per-use basis akin to the way electric bills are calculated and promised $10 billion to help make that model a reality.

Though it is little more than a slogan now, "e-business on demand" could revolutionize the way in which hardware, software and services are sold by vendors and their channel partners, Palmisano said.

The tools to offer utility-based computing have been around for years at IBM, and the company is spending $10 billion to unify them into a coherent vision, Palmisano said in a briefing here.

Companies ranging from Cisco Systems to now-defunct PSINet have experimented with ways to deliver "bandwidth on demand" through hardware devices, software features or network capacity. Their efforts have been met with varying degrees of success.

One longtime IBM solution provider, who requested anonymity, said he is unsure where his company would fit in as IBM pursues the computing-on-demand model.

"We have no idea how to get a piece of this," said the solution provider. "It's a question we have been

posing to them for a while."

Another longtime IBM observer was more hopeful. "This is going to be a boon for business partners because business partners are the way IBM can deliver the 'electricity' for utility computing," said Sam Albert,

president of Sam Albert Associates, a Scarsdale, N.Y., consultant who attended the briefing.

Tom Miura, COO of Fremont, Calif.-based Versant, an ISV that also offers integration services, said the on-demand model is not

a new concept.

Miura worked in IBM's database group years ago. "[Back then, we looked at the ASP type of pricing, where you pay for what you use. The problem we ran into was how to price it correctly and fairly. Those are the practical challenges."

STEVEN BURKE contributed to this story.