During IBM’s Q3 earnings call a few weeks ago, IBM CFO Mark Loughridge highlighted business analytics as a sector where Big Blue is investing significant amounts of cash. The company recently acquired data analytics company SPSS for $1.2 billion and business analytics firm RedPill. Tonight, IBM is unveiling a new internal analytics product that the company is touting as the “largest private cloud computing environment for business analytics in the world,” which launches internally with more than a petabyte of information. Along with this internal product, IBM will launch a companion product for clients to build upon this cloud-based architecture, called IBM Smart Analytics Cloud.

The internal product, dubbed Blue Insight, will provide 200,000 employees in IBM’s sales and development department with the ability to extract data and information to make decisions and gain further insight at the point of sale. Blue Insight will gather information from nearly 100 different information warehouses and data stores, providing analytics on more than a petabyte (1,000 terabytes or 1,000,000 gigabytes) of data. For example, sales execs may use customizable queries of real time data to understand revenue opportunities and how many sales in their region are closing to help improve prediction. Or a manufacturing process engineer can evaluate real-time data on the plant floor to identify trends and data to improve yield and reduce shipment delivery times.

IBM Smart Analytics Cloud offering for clients will similarly deliver powerful business intelligence via the scalable, private cloud. The product will lets the client import data and than transform this information into insights to develop strategies and decisions. The service sill offer the ability to create reports, analysis, dashboards, and scorecards to monitor business performance and measure results.

IBM has been shifting its focus towards software and services as opposed to hardware and Big Blue’s strong earnings are an indication that this strategy is paying off in a big way. It’s not surpising that company is continuing to invest in R&D in cloud computing and business analytics, which seems to be the future for both Big Blue and other enterprise-focused tech giants like Oracle.

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Tis’ the season for holiday shopping and many of the tech giants are already staking their claim in the e-commerce industry. Google recently launched Google Commerce, its hosted search offering for online retailers. Today, IBM is announcing a significant upgrade to WebSphere Commerce, Big Blue’s software platform framework for e-commerce.

WebSphere Commerce is a integrated software package that handles online storefronts, merchandising, operational reports, shopping cart technology, search, payments, analytics and also provides developer tools. It operates the front and back end of e-commerce operations for Sears, Vineyard Vines, Staples and other retailers.

The new version of the software now helps e-retailers create mobile-optimized sites that match the look and feel of retailer’s web sites. The software can create online stores accessible via mobile phones that let consumers browse, conduct side-by-side product comparisons, view store locations, check inventory availability and complete the purchase.

Shoppers can even place orders online and pick up their merchandise at the closest store – which can be automatically mapped out for them on their mobile phone. Retailers will also be able to deliver personalized brand campaigns, coupons and promotions to a customer’s mobile device through text messages or e-mail.

IBM highlights emerging markets, like China and India, as optimal regions where advanced e-commerce mobile sites will be popular among consumers. Big Blue says that because broadband access remains difficult in many areas, hand-held devices are often the only means of access to the Web.

Thew new version of Websphere Commerce leverages social networks by bringing brand and product discussions that are taking place on external sites back to the retailer’s site. For example, a consumer’s product review or blog post with a link back to the retailers’ site can automatically be sent to Facebook or other social networking sites. IBM is also adding the capability of consumers to share ratings and reviews that include rich media content, like photo, video or audio files.

IBM’s new software also provides intuitive marketing tools that will evaluate customer buying behaviors and respond by delivering targeted promotions or other content. For example, if an online buyer abandons a sale before checkout, a coupon or other incentive could be immediately forwarded to the shopper’s mobile device to help revive the transaction.

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IBM is reporting a 14 percent growth in year over year net income, posting a third-quarter profit of $3.2 billion, or $2.40 a share, on revenue of $23.6 billion. IBM has been shifting its focus towards software and services from hardware and it appears to be paying off. Chairman, president and CEO, Samuel Palmisano said in a statement that IBM’s “strategic shift to higher-value businesses” contributed to the growth and the company saw “improved revenue trends in business and share gains in software and hardware.”

IBM expects increased full-year 2009 earnings of at least $9.85 per share compared with its previous expectation of at least $9.70 per share. IBM CFO Mark Loughridge said in the earnings call that revenue was boosted by increased sales of software and services. He added that IBM gained share in software areas, specifically mentioning competitor Oracle.

IBM says the company is continuing to invest in R&D in cloud computing and business analytics, which seems to be the future for Big Blue. The company recently acquired data analytics company SPSS. Loughridge called specific attention to IBM’s reach in the health care space, particularly with regard to the electronic medical records. The services segment as a whole drove an eleven percent increase in pre-tax profits. IBM signed $6.7 billion in the outsourcing segment of the business.

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Many people still think of IBM as the company that sells Big Iron—mainframes and its enterprise server descendants.  Of course, the engine of the company’s profits long ago shifted to consulting and software.  In a financial slide presentation IBM released today to the SEC as an 8K document, however, you really get a sense of how much IBM has continued to shift its business towards software and services over the past eight years.

The result has been a very healthy expansion in its profit margins.  As can be seen in the chart above, IBM’s pre-tax income margins have more than doubled from a low of 7.2 percent in 2002 to 16.1 percent in 2008.  And the slide presentation suggests that IBM has further to go.  It cites data showing that the top quartile of companies in the S&P 500, and 30 percent of tech companies, have pre-tax income margins of above 20 percent.  IBM makes $90 billion in revenues per year, so each percentage gain in pre-tax profit margins adds up to nearly $1 billion.

The reason for IBM’s margin expansion is that the pre-tax profits in its  software and services businesses are growing at double-digit rates.  Both segments will make an estimated $8 billion in pre-tax profits this year, compared to about $1.5 billion for hardware.  Eight years ago, the software business brought in only $2.8 billion in pre-tax profits and the services business produced $4.5 billion.

IBM has made big investments in middleware, database software, virtualization, cloud computing, and business analytics, to name a few areas. It sounds like these are paying off big-time.

Contrast IBM’s financial condition today to that of the late 1990s.  Back then, gross margins were declining every year, even as it was cutting expenses to compensate.  Today, expenses as a percentage of revenues are actually going up as it continues to plow more money back into the business in the form of investments and R&D.  Over the past five years, IBM spent $30 billion on R&D, second only to Microsoft’s $36 billion (Google spent only $7 billion, which also is less than Cisco, HP, and Oracle).

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The interesting part of the patent filing, which was submitted by IMB engineers last year but only surfaced online a few months ago:

A viewer selects a media program to view by use of a remote controller with networking capability.

Upon the viewer wishing to send a blog posting to a blog, the viewer determines whether a tag to be included in the blog posting is to be a pre-existing tag or a custom tag, wherein the blog posting comprises program information about the media program useful to identify the media program. If the tag is to be a pre-existing tag, the viewer selects the pre-existing tag from a plurality of pre-existing tags using the remote controller and if the tag is to be a custom tag, the viewer generates the custom tag using the remote controller.

If a protocol provided by the remote controller to send the blog posting to the blog allows a snapshot of the media program to be included in the blog posting, the remote controller takes the snapshot of the media program and includes it in the blog posting.

Imagine that: tuning in to Mad Men from the couch and letting your blog subscribers, Facebook friends or Twitter followers instantly know what you’re watching, even including a snapshot of the lovely Christina Hendricks, all by using your network-enabled remote controller.

According to the patent filing, the remote would even allow a viewer to not only communicate with a blogging service but also display responses to and from other bloggers with whom the viewer is communicating. That’s right, that means your buddies could be sending you an @reply or direct message with their opinions on the show (and the actress) and you’d be able to view the responses simply by using that super remote of yours.

Sign me up for one!

Screenshots from the filing:

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Big Blue said the acquisition of the publicly-held Chicago company was expected to strengthen its information-agenda initiative, which helps companies take information and turn it into a strategic asset. IBM shares fell 67 cent to $116.96 in pre-market trading, while SPSS shares jumped 41 percent to $49.59.

A message from SPSS Chairman, CEO & President Jack Noonan:

We and IBM view this as a highly-complementary move from both a technology and a market position perspective.

We’re excited about this agreement and the positive prospects that SPSS and IBM can achieve together in continuing to lead an industry that we helped shape. The depth and breadth of IBM’s resources, its customer and market reach can only enhance our ability to address the growing market for Predictive Analytics.

In joining with IBM, we will advance Predictive Analytics as a competitive advantage for companies and organizations worldwide. We see this as a transformative event that will accelerate the adoption of Predictive Analytics.

Between now and the acquisition close, we will continue to support our customers and partners in normal fashion. Existing contracts will remain in effect, account relationships and support infrastructure will remain unchanged.

Predictive analytics software captures and analyzes data about people’s attributes, attitudes and behaviors to gain a full understanding of anticipated future behaviors, so companies can make smarter decisions for improved business outcomes.

IBM says it will continue to support and enhance SPSS technologies while allowing customers to take advantage of its own product portfolio. SPSS will become part of the Information Management division within the Software Group business unit, led by Ambuj Goyal, General Manager, IBM Information Management.

Update – In other news: IBM also acquired Ounce Labs, a provider of enterprise source code security testing and intends to integrate it into its Rational software business. Financial terms were not disclosed.

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Some of the most promising set of mobile apps being built today use a cell phone’s camera and GPS to overlay data onto the real world. In other words, instead of looking at a browser, you look through the camera lens at the real world around you and information is layered on top of the view projected on the small screen. (It’s not just a viewfinder, you know). Last year at TechCrunch 50, the Sekai Camera demo from Japan that does this blew away the audience. More recently, Layar showed us similar augmented reality apps for the Android phone. Now IBM has its own augmented reality mobile app for Wimbledon called Seer Android (see demo in the video above).

In order for these apps to be worthwhile, people first have to do the hard work of tagging the world, otherwise the apps have no data to pull down and display. Since it is the technology provider of the tennis tournament, IBM decide to tag Wimbledon. Using the Android G1’s compass, camera, and GPS, IBM’s app shows pop-up windows whenever it recognizes whatever you are pointing at: tennis courts (along with who is playing), bathrooms, buses, and so on. It can tell the user how far away a court or food concession stand is, and can stream in live data such as scores.

As you look through the camera, Seer Android essentially reads the environment and pumps that data into the app. It is very cyborg. But the app only works at Wimbledon. It is location-specific, which brings us back to the challenge of tagging the world. For IBM, Seer Android is a cool way to demonstrate how much data they are collecting at Wimbledon. But as more of the world gets tagged with geo-coded data, this sort of mobile app will become more practical to use everywhere.

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Larry Ellison has always wanted to be the Steve Jobs of the enterprise. With this morning’s announcement that Oracle will buy Sun Microsystems for $7.4 billion, he took a big step towards making Oracle more of a soup-to-nuts provider of enterprise technology. With Sun, he will now be able to build and package together everything from chips and servers to operating systems, Java middleware, databases, and enterprise applications.

Here is the money quote from Ellison on the deal:

Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up

Like Apple, Oracle wants to take away complexity for its customers and bundle the entire IT stack neatly together so that it works without hassles and is optimized for Oracle’s software. With this deal, Ellison has come full circle from his early-1990s mantra of “best-of-breed” systems, which he abandoned long ago. Rather than look like Apple with its dedication to making the perfect product, Oracle just became IBM. It will use Sun’s existing server market share to push Oracle databases and software, and bundle it all with IT services. Sure, it will continue to support Dell and HP and even rival enterprise software, but the sales pitch will be around the bundled product. If that turns out to be a superior product at a lower price, then both Oracle and customers will win out. But to the extent that it takes away choice from IT buyers, it could be an even tougher sell than convincing them to give up their beloved Blackberries for an iPhone.

How different really is Oracle buying Sun than if IBM had bought it, other than the price? Sun’s powerful servers are a way to sell expensive software—always have been, always will be. A big motivation for the deal was to acquire Sun’s Solaris operating system and Java. As hardware margins keep getting squeezed, that software component becomes more and more important. At least with Oracle, Sun will stay in the Silicon Valley family, so to speak.

But what may be the most valuable part of the deal from Oracle’s perspective, although Ellison hardly mentioned it, is MySQL. Oracle now owns the open-source database Sun acquired last year for $1 billion. As MySQL grows in popularity, it keeps disrupting Oracle’s high-end database business from below. Now Oracle can at least try to disrupt itself, or kill MYSQL (which would be a bone-headed move).

What makes more sense is a two-pronged approach: On the high-end, sell highly optimized Sun servers running Solaris, Oracle databases, and Oracle enterprise apps. On the low-end, sell MySQL on Dell and HP servers running Linux.

Another unanswered question is what will happen to Sun’s cloud computing efforts, given Ellison’s disdain for the term. Watch him change his tune on that one as well.

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Earlier this month, discussions over a potential takeover broke down when IBM withdrew its earlier $7 billion bid to buy Sun.

Discussions have stalled, still according to the sources, and both companies are now waiting for the other to make a move.

The information provided by the two unnamed sources implies that Sun withdrew exclusive negotations with IBM because there were apparently no guarantees that they would ultimately stick with the takeover if the companies encountered barriers such as an antitrust review. So basically Sun is saying: if you’re going to talk the talk, you’d better be prepared to walk the walk.

Spokesmen from both companies declined to comment.

Meanwhile, other potential acquirers like Cisco Systems and HP are acting like their noses are bleeding, which means nothing has really changed since last week, except for the fact that acquisition talks between IBM and Sun have simply been delayed rather than blown off completely.

(Image credit: InternetNews.com)

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The Sun board did not reject the offer outright, but wanted certain guarantees that the I.B.M. side considered “onerous,” according to that person.

It is not as if the payroll reductions will help save the quarter or even have a material impact on it. But the companies can point to the measures during their conference calls with investors and analysts and project the savings going forward.

We’ve added the job cuts to our Layoff Tracker. To see who is hiring, check out our CrunchBoard.

• Total Layoffs Since August 27, 2008: 448
• Total Employees: 316,246

Company	Date	Location	#	%	Source
Amazon	March 26, 2009	Red Rock, Nev.; Munster, Ind.; and Chambersburg, Pa.	210	1%	NYT
The New York Times	March 26, 2009	New York, NY	100	5%	NYT
Google	March 26, 2009	Mountain View, CA	200	1%	NYT
IBM	March 26, 2009	USA	5,000	1%	LA Times
Imeem	March 25, 2009	San Francisco, CA	6	4%	TechCrunch

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We are still working on the first version of the manifesto which will be published Monday, March 30th with a goal of being ratified by the greater cloud community. Given the nature of this document we have attempted to be as inclusive as possible inviting most of the major names in technology to participate in the initial draft. The intention of this first draft is to act as a line in the sand, a starting point for others to get involved. That being said this manifesto is not specifically targeting any one company or industry but instead is intended to engage a dialogue on the opportunities and benefits of fostering an open cloud ideology for everyone.

When Apple hired away Mark Papermaster from IBM as its new senior vice president of hardware engineering for devices, IBM struck back with a lawsuit attempting to bar him from switching jobs. Citing his non-compete clause, IBM convinced a judge to order Papermaster to stop working at Apple until the dispute was resolved. IBM even brought Papermaster’s children into it.

Well, now he can finally go make future iPhones and iPods for Apple. The two companies have settled out of court. It kind of makes you wonder why companies even bother with non-compete clauses in employment contracts, especially when they are overly broad. More often than not, they are not worth the paper they are written on.

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LinkedIn has partnered with IBM to create a new plugin that integrates its professional social network into Lotus Notes, a popular business desktop client that includes Email, calendar, and IM functionality. The plugin is making its debut to the public at Lotusphere, with plans for its release in the first half of 2009.

For users who spend much of their day ‘living’ in their Email client, the new plugin could be a welcome addition. Its primary purpose is to display information relevant to the people in your Emails, as well as providing a handy way to browse through some of LinkedIn’s most oft-used features (like your news feed and search). However, the plugin does not yet automatically look up the contacts mentioned in your Emails – you’ll still have to click on their names or use the pre-populated search to look them up (automatic lookup is planned for a future release).

The two companies are also announcing LinkedIn integration into Lotus Connections (an internal social networking product for businesses), as well as an option to launch a Bluehouse web conference directly from someone’s LinkedIn profile. Both of these features are slated for some time in 2009, but the companies couldn’t give anything more specific.

For those of you who aren’t Lotus users, check out Xobni, which added LinkedIn support to its Outlook plugin last year. LinkedIn has also built an Outlook toolbar which you can find here.

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Can’t afford a ticket to China to go visit the Forbidden City? Well, now all you need is your computer. IBM, which is a big believer in virtual worlds, and China’s Palace Museum have created an exact replica of the 178-acre Forbidden City. After working meticulously for three years to recreate every building and thousands of major artifacts, the virtual Forbidden City is now available for download (for Windows, Mac, or Linux). It’s free, although, I warn you the Mac version, at least, is a massive 275MB file.

Once inside, you can choose an avatar, dress him or her up in Qing Dynasty-era robes, take virtual tours, play Go with computer-controlled characters, call up maps, explore buildings and objects that allow you to click for deeper information. The virtual world was built on a gaming platform from Garage Games called Torque. ( I guess OpenSim wasn’t good enough. No word on whether it will be interoperable with Second Life)

So if you are looking for somewhere to weather out the current financial storm, but don’t have any money to actually go anywhere, you can spend hours roaming IBM’s virtual Forbidden City.

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Jajah, a popular VoIP service provider, has released a new English/Chinese translation service called JAJAH.Babel just in time for the Olympic Games. The service, which was developed in conjunction with IBM, allows users to call a free number to get a near-instant translation of spoken sentences. The service isn’t meant for voice calls abroad – instead, it’s a handheld translator. After speaking your message into the phone, you hand it to the person you’re speaking with, and the phone spits out the translated message.

Using the service is fairly simple, and should work from any phone line:

How does JAJAH.Babel work? From English to Chinese or in reverse:
Dial JAJAH.Babel from any phone. U.S. local access number: +1.718.513.2969
Choose which language you want your message translated into (either English to Chinese or Chinese to English)
Say your message and press #
You will be able to confirm that your message was properly understood by the system.
The message will automatically be played back in Chinese. If you wish, simply hand your phone to the other person or put the phone on loudspeaker so they hear the message.
The other person can then record a message in Chinese, following the steps above, and you will hear their message in English.

To help test the service I recruited TechCrunch intern Matthew Schulz, who is fluent in Chinese. His conclusion was that it worked surprisingly well. The translation from English to Chinese sounded a little bit awkward, but the meaning was obvious. As for speech detection, the service had some trouble when he spoke Chinese in his normal tone, but when he enunciated a bit more than usual the results were almost perfect.

For now, the service is limited to translations between English and Chinese Mandarin, but the companies plan to release new languages in the near future. You can get more information about the service along with more local access numbers here.

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Take a look at the video above (which oddly reminds me of the early 90s) and you’ll see that IBM has taken a page from Evernote’s book.

Its research labs have been working on a project codenamed “PENSIEVE” that promises to algorithmically construct digital address books from photographs of business cards and the people they represent.

While not production ready for at least another year, PENSIEVE will get rid of that stack of business cards sitting unhelpfully on your desk. Instead of chipmunking business cards away, PENSIEVE users can take photos of them with their camera phones upon receipt. Later, when they plug those phones into their computers, PENSIEVE will analyze the photos and extract contact information – name, phone number, address, etc. – and associate their data with any photos you took of people on location. That data gets integrated into your digital address book, making it searchable, shareable and generally more useful.

IBM won’t offer PENSIEVE directly to consumers; the company plans to distribute the service through its telco partners. Pricing details are also not available, since they are bound to be determined by the mobile providers themselves.

We’re told the service will sync with common address books (Outlook, etc). Let’s just hope the data doesn’t get into the wrong hands.

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Virtual worlds like Second Life have a silo issue—they are virtual worlds unto themselves. Today, Linden Lab (which operates Second Life) and IBM announced that they have successfully bridged two virtual worlds, with avatars from Second Life successfully “teleporting” to an entirely different metaverse based on an OpenSim server.

The two companies have been working together on the Open Grid Protocol to allow for interoperability between virtual worlds. In a post on the Second Life blog, Hamilton Linden explains:

An open standard for interoperability based on the Open Grid Protocol would allow users to cross freely from one world to another, just as they can go from one Web site to another on the Internet today.

Here’s a video showing the avatars “teleporting” from one world (i.e. set of computer servers) to another:

Interoperability between virtual worlds is fine, and is definitely a step towards breaking down the walled gardens they are increasingly finding themselves in. But ultimately it is the wrong answer. What we really need is interoperability between virtual worlds and the Web.

Otherwise, virtual worlds will remain isolated in their alternate universe. If you can’t link to it from the regular Web (and vice versa), it doesn’t exist. That is why virtual 3D worlds are going to come to the browser. One startup, Vivaty (which launched in public beta earlier today), is already creating these browser-based virtual environments, where each place and object is a regular URL.

These still pale in comparison to what you can do in Second Life, but they will get better. And being connected to the rest of the Web will ensure that they never have any interoperability issues. The Web will just become more 3D over time. Will Second Life join the Web, or will its legacy architecture (built when there was no other choice) prevent it from doing so?

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Who do you trust more, Google or Toyota? The answer might depend on where you live. In its annual corporate reputation survey of 60,000 people worldwide, the Reputation Institute finds that Google scores highest in the U.S., but is No. 2 worldwide after Toyota. On the global list, Ikea is No. 3, Johnson & Johnson is No. 5, and Walt Disney is No. 12. Apple doesn’t even make it into the top 25 (see below).

Using the same data, Forbes breaks out the top 75 companies in the U.S. In the U.S. alone, Apple is No. 17, HP is No. 18, Intel is No. 19, Dell is No. 25, IBM is No. 35 and Microsoft comes in at No. 43. Bringing up the rear is Motorola at No. 50, Cisco at No. 55, CBS at No. 62, and American Express at No. 75. (See partial list below).

These rankings are based on an opinion poll, but they just don’t seem right to me. How can Dell be No. 25, with all of its customer service issues last year? And why is American Express, which regularly ranks as one of the most admired companies in the world and one of the top brands, dead last?

It is instructive to compare some of these rankings to the top 100 brands, as measured by an estimate of brand value. (See below). Google, again is No.1. Microsoft is No. 3, IBM is No. 6, Apple is No. 7, Toyota is No. 12, HP is No. 16, American Express is No. 20, Intel is No. 27, and Dell is No. 41. About the only company the two rankings agree on is HP. These brand rankings feel like a better measure of reputation to me than the Reputation Institute’s survey.

What do you think? Take our own poll. Vote for the companies you trust or admire the most. Multiple answers are allowed.

Editor’s note: I put in BMW twice by mistake in our poll, so please only vote once for BMW if you vote for it at all. I’m keeping the existing poll up rather than put up a new one and throwing away the votes that have already been cast.

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