Real Cash in $100M Virtual IBM Investment

IBM  CEO Sam Palmisano will announce a $100 million spending plan tomorrow in front of more than 7,000 employees.

And neither he nor they will be there in the flesh.

But they’ll be there virtually, at a Town Hall meeting held on popular virtual world Second Life. There, Palmisano (or his avatar) will unveil 10 new business opportunities the company intends to pursue.

Each of those ideas will receive approximately $10 million in funding to be spent over the next 12 months.

One of the ideas Palmisano will announce is that IBM is forming a new business unit to help clients use lessons learned from virtual worlds to real-world business problems.

The Armonk, N.Y.-based company believes this new unit will become the launching pad for other-worldly growth for many of its other businesses, from services to chips, supercomputing and mainframes.

According to IBM’s chief technology officer, Irving Wladawsky-Berger, “using such virtual, highly visual capabilities to help us design, simulate, optimize, operate and manage business activities of all sorts is going to be one of the most important breakthroughs in the IT industry over the next decade.”

“I am convinced that dealing with such business applications in a kind of SimBusiness fashion — that is, the application feels like a realistic simulation of the business and its operations — will not only transform IT but business itself,” he wrote in a recent blog post.

IBM’s director of communications, Matthew McMahon, said IBM expects to drive huge gains for its chips, which are already powering the three major game consoles — XBox 360, Sony Playstation 3 and Nintendo Wii — as well as its supercomputing and visualization technology-related businesses.

“Ultimately what we want to do with this business unit here is learn how can we apply these virtual world technologies to business problems,” he told

“We view this as the next generation of the Internet, and a new way that people will interact with one another in more immersive environments,” he said.

But McMahon said that IBM has a much bigger vision beyond just that one platform, with ramifications for open source and collaboration.

“IBM’s aim is to collaborate with a community in an open source fashion to build out the 3D Internet — one that is open, immersive and makes possible new classes of applications in commerce, government, healthcare and education,” he said.

He noted that much of the early experimentation will take place behind corporate firewalls, the initial fruits of which will become tools for internal use.

McMahon said that IBM itself is itself using some virtual world technologies internally to help on-board and train new employees throughout the world.

IBM also has two dozen client engagements at various stages of development in the virtual world space.

Among its external engagements, according to McMahon, IBM is working with a major telco to help extend their services into virtual world by, for instance, offering virtual cell phone service allowing users to communicate with other virtual world inhabitants.

A major U.K. grocer is also experimenting with 3D-enhanced e-commerce, allowing customers to walk through virtual aisles, fill grocery carts with items available in inventory and then getting real-world delivery of their purchases.

The virtual world business units, as well as the nine other initiatives to be announced tomorrow, were generated by a virtual “innovation jam” held earlier this year among more than 150,000 IBM employees and partners, McMahon said.

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