How Do You Fit Into IBM's Aggressive New On-Demand Computing Vision?

Only time will tell, but Palmisano certainly put a stake in the ground last week when he declared he was moving IBM toward a strategy in which it will sell access to computing power, much like utility companies sell access to electricity. Palmisano calls this on-demand computing.

This vision sounds a lot like a return to the mainframe model, where computing services are leased and customers pay for what they use,an era, by the way, that IBM has dominated.

In making his argument for the way that computing power will be sold in the future, Palmisano noted that during a given 24-hour period today, just 60 percent of mainframe computing capacity is being utilized, while 10 percent of Unix systems capabilities, 5 percent of Intel-based systems and roughly 50 percent of storage is being used. That's a lot of wasted power sitting around idle.

If Palmisano's vision of on-demand computing proves a success, IBM just might regain its leadership status largely because it has few, if any, competitors that offer all the components needed to carry out such a strategy.

Should this vision materialize, Palmisano would become enormously more visible than his predecessor, Lou Gerstner. Although Gerstner is a more powerful speaker than Palmisano, he never allowed the industry, the channel or customers to engage with him.

In laying out IBM's future strategy, Palmisano pointed out that high-tech is still working through excess capacity and is managing through issues that go beyond the general challenges posed by the economy. But he also said he believes the business climate for technology has hit bottom, and things have flattened out.

The move by Palmisano to step out in front of several hundred customers, analysts and journalists and set a future vision was long overdue and should be repeated often.

This industry always advances fastest when there is a great deal of debate among the top CEOs in the business. IBM, and Palmisano in particular, needs to be part of that debate in order to move the market forward.

Of course, there is a big danger in all of this for IBM. Two-thirds of all technology is sold through indirect channels, and IBM does far too little in terms of communicating with these partners and helping solution providers understand where the manufacturer is heading and how the channel will participate.

Palmisano, who has run huge pieces of IBM's indirect channels in the past, understands solution providers and needs to regularly take the channel's pulse and leverage its influence if his vision for the company is to take hold. Is he doing that?

On-demand computing is a concept that may be easy to understand for the largest users in the world, but how does it play outside of the Fortune 500?

Let's remember one thing about IBM. Lou Gerstner came in and turned the company around, but he was never able to get Big Blue back into a growth mode. The rest of the industry grew by leaps and bounds over the past 10 years, while IBM merely became more profitable. If IBM is to truly become a growth company again, Palmisano is going to have to embrace the channel and the millions of customers the channel delivers.

For on-demand computing to be realized in the midtier market, the channel has to understand its role and how it participates in all of this with IBM. So far, I see no signs that this communication is happening.