IBM is staking out a major new source of business helping clients like banks or retailers manage data centers on a par with Internet players such as Google or Microsoft, a top official said on Wednesday.

Bill Zeitler, the executive in charge of IBM's hardware business, said the initiative to set up customers with the technology, software and services to operate data centers could rank in significance with IBM's support for Linux in recent years or its push to get businesses on the Internet the 1990s.

IBM has dubbed its new strategy Blue Cloud.

The name is a play on IBM's corporate nickname Big Blue and cloud computing, the trend by Internet powerhouses to array huge numbers of computers in centralized data centers to deliver Web-based applications to users, rather than making their customers run such programs on their local machines.

IBM, which pioneered centralized data centers decades ago, is looking to arm its customers with technology similar to what it has long offered in the form of hosted services for clients who rely on IBM to operate their data centers for them.

It now wants to help customers build data centers for themselves composed of thousands of low-cost personal computers, equipping them with the data-crunching power of consumer Internet giants Google Inc, Microsoft Corp, Yahoo Inc and Amazon.com Inc.

I think Google and Amazon are on to something, Zeitler said. Our particular focus is taking these standards of Internet computing and bringing them to the mainstream in the commercial world.

BIG BUSINESS, BUT HOW BIG?

Zeitler declined to say how much revenue its cloud computing strategy might produce, saying IBM was still sizing up prospects. We think this is a big move in the market and we are going to make a big move behind it, said Zeitler, a 38-year IBM veteran whose full title is senior vice president and group executive of IBM's Systems and Technology Group.

In its initial phase, IBM plans to make 200 IBM researchers available to work with clients, which may include both businesses large and small, university research centers as well as government agencies.

The first products of the program are set to be available in spring of 2008, IBM said.

One initial customer of IBM's Blue Cloud strategy will be the government of Vietnam, and it is working with a non-US automaker, the Armonk, New York-based computer company said.

IBM plans to unveil plans for Blue Cloud at an event in Shanghai on Thursday, where it said it will demonstrate a cloud computing system running on IBM's BladeCenter brand servers and low-cost Intel-class microprocessors. It said it also intends to offer a mainframe-class cloud computer system next year.

HOW CLOUD COMPUTERS WORK

The basic idea is to make corporate data centers operate more like the Internet by enabling computing to be spread across a large, distributed pool of computers, rather than on local machines or remote server farms.

This lets organizations switch to resources to where they are be needed, virtually gaining access to computers and storage on demand. The older approach of running individual applications on separate servers means as little as 10 percent of a stand-alone computer's capacity is used.

While big Internet players run networks that tie together hundreds of thousands of computers, large commercial customers may operate tens of thousands of servers, Zeitler estimated.

As part of the strategy, IBM will offer services and products that allow customers to implement cloud computing strategies of their own, rather than forcing them to rent space in other data centers and risk exposing business secrets. Companies are struggling to pack more computers into cramped data centers while coping with surging electricity demand.

(Editing by Lincoln Feast)

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