The Blue Horizon

As IBM prepares to embark on the second year of the Sam Palmisano era, it looks like the time for a clear, compelling vision may finally have arrived.

After a flat year in 2002, IBM needs something. Although it can count its blessings - the company has not faltered badly, as have some rivals - IBM is caught in a no-growth torpor brought on partly by a protracted downturn in technology spending. Facing increasing hardware competition from relative newcomers in enterprise technology such as Dell Computer Corp., slowing software sales and even shrinking revenues in the service business, IBM has reported level or lower revenues and earnings in every quarter under Palmisano. That's forced the company's leader to cut costs - eliminating an estimated 15,000 jobs last year - and to come up with a strategic direction that will inspire not only investors and IBMers but also - most importantly - enterprise customers.

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