IBM '5 in 5' predicts no more passwords, mind-reading smartphones

IBM is predicting that in the next five years we'll no longer need passwords for email or even ATMs, we'll be able to control smartphones and laptops with our minds, and we may even live in a world without junk email.

Too good to be true? Today, yes. But researchers at tech companies such as IBM are working on bringing these ideas to fruition, which is why the 100-year-old tech giant is including these and other ideas in its sixth annual "5 in 5" report of five technologies "that have the potential to change the way people work, live and interact during the next five years."

Mind-reading gadgets: IBM and other companies are working on devices that you can control with your mind. For example, rather than having to tap on a touch screen or through a series of buttons to place a phone call, someday you may need only to imagine calling someone and a mind-reading phone will make the connection, IBM said.

"If you just need to think about calling someone, it happens," IBM said of its prediction. "Or you can control the cursor on a computer screen just by thinking about where you want to move it."

Mind-reading technology, known as bioinformatics, has already shown up in simple forms from toy makers such as Mattel, and engineers at IBM and other companies "have designed headsets with advanced sensors to read electrical brain activity that can recognize facial expressions, excitement and concentration levels, and thoughts of a person without them physically taking any actions," the report said.

"Within five years we will begin to see early applications of this technology in the gaming and entertainment industry," IBM said. "Furthermore, doctors could use the technology to test brain patterns, possibly even assist in rehabilitation from strokes and to help in understanding brain disorders, such as autism."

No more passwords: Passwords will be left behind as devices instead grant you access by recognizing who you are, IBM is predicting.

"Your biological makeup is the key to your individual identity, and soon it will become the key to safeguarding it," IBM said. "Imagine you will be able to walk up to an ATM machine to securely withdraw money by simply speaking your name or looking into a tiny sensor that can recognize the unique patterns in the retina of your eye. Or by doing the same, you can check your account balance on your mobile phone or tablet."

A bit freaky right? An example of this sort of technology hitting the mainstream can already be seen in the facial recognition technology used in the "face unlock" feature found in the latest version of Google's Android operating system, known as Ice Cream Sandwich.

"Biometric data -- facial definitions, retinal scans and voice files -- will be composited through software to build your DNA-unique, online password," IBM said. "Referred to as multifactor biometrics, smarter systems will be able to use this information in real time to make sure whenever someone is attempting to access your information, it matches your unique biometric profile and the attempt is authorized."

Cyber Monday sales up 33%, new sales records set, IBM says

Cyber Monday deals lured a record number of online shoppers, leading to a 33% jump in U.S. sales compared with the Monday after Thanksgiving last year, according to a new IBM report released Tuesday.

Consumers spent an average of 2.6% more this year than they did in 2010, with the value of an average online order rising from $193.24 to a record $198.26 this year, according to IBM's fourth annual Cyber Monday Benchmark study.

Also increasing this year was the number of shoppers who made purchases on their smartphones and tablets, the study said. On Cyber Monday, a record 10.8% of people used a mobile device to visit a retailer's site, up from 3.9%  in 2010. Mobile sales also grew to 6.6% on this year's Cyber Monday purchases, up from 2.3% a year earlier, the tech giant said.

"Consumers flocked online, with shopping momentum hitting its highest peak at 11:05am PST/2:05pm EST," IBM said in a statement. "Consumer shopping also maintained strong momentum after commuting hours on both the East and West coast."

Two statistics not included in IBM's study was an estimate of how much in total was spent or exactly how many people were shopping on Cyber Monday. IBM produces its Cyber Monday shopping report by "analyzing terabytes of raw data from 500 retailers nationwide," the company said.

And, as a tech firm that sells software, tech infrastructure and consulting services to businesses, IBM's analysis of this data is a bit of a marketing opportunity for the company founded in 1911.

"Retailers that adopted a smarter approach to commerce, one that allowed them to swiftly adjust to the shifting shopping habits of their customers, whether in-store, online or via their mobile device, were able to fully benefit from this day and the entire holiday weekend," said John Squire, the chief strategy officer of IBM's "Smarter Commerce" team, in a statement.

So, how did Cyber Monday compare with Black Friday, the Friday after Thanksgiving? IBM has some data on that too, reporting that it found Cyber Monday brought in 29.3% more online sales than Black Friday did (though many shoppers on Black Friday were in brick-and-mortar stores and not online).

According to a few other Black Friday reports, that day was a shopping sales record too. 

Most people who purchased items online on Cyber Monday and Black Friday did so using Apple's i-devices, which "continued to rank one and two for mobile device retail traffic" with 4.1% of shopper Web-surfing taking place on the iPhone and 3.3% on the iPad, IBM said.

Android came in third with a solid 3.2% of Cyber Monday and Black Friday Web traffic, the report said.

"Shoppers using the iPad also continued to drive more retail purchases than any other device with conversion rates reaching 5.2 percent compared to 4.6 percent," on other devices, IBM said.

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-- Nathan Olivarez-Giles

Twitter.com/nateog

Photo: Cyber Monday specials on Target's website. Credit: Stan Honda / AFP/Getty Images

IBM CEO Sam Palmisano to retire, Virginia M. Rometty to take over

IBM Corp. Chief Executive Sam Palmisano is leaving his post running the 100-year-old tech firm at the end of this year.

Taking over for Palmisano as of Jan. 1, 2012, will be Virginia "Ginni" M. Rometty, IBM's senior vice president of sales, marketing and strategy.

The New York tech giant announced the leadership change Monday, with none of the hoopla that followed major CEO shuffles from earlier in the year such as Larry Page taking over from Eric Schmidt at Google, Apple transitioning from Steve Jobs to Tim Cook at Apple, Carol Bartz being fired from Yahoo without a permanent replacement and Meg Whitman being named HP's new chief after the ouster of Leo Apotheker.

Palmisano, who became IBM's CEO in 2002 and board chairman in 2003, will keep his spot as chairman and Rometty will join the board.

"Ginni Rometty has successfully led several of IBM's most important businesses over the past decade -- from the formation of IBM Global Business Services to the build-out of our Growth Markets Unit," Palmisano said in a statement. "But she is more than a superb operational executive. With every leadership role, she has strengthened our ability to integrate IBM's capabilities for our clients. She has spurred us to keep pace with the needs and aspirations of our clients by deepening our expertise and industry knowledge."

Rometty will direct IBM as it looks to grow its cloud computing and analytics businesses, as well as the commercialization of technology behind its Jeopardy-winning super-computer Watson.

Palmisano described Rometty, 54, as the "ideal CEO to lead IBM into its second century."

Rometty joined IBM in 1981 as a systems engineer and holds a computer science and electrical engineering degree from Northwestern University, according to her company bio.

In her current role, Rometty has been responsible for the "revenue, profit and client satisfaction in the 170 global markets in which IBM does business" and has also overseen "IBM's global strategy, marketing and communications functions."

"There is no greater privilege in business than to be asked to lead IBM, especially at this moment," Rometty said in a statement. "Sam had the courage to transform the company based on his belief that computing technology, our industry, even world economies would shift in historic ways. All of that has come to pass. Today, IBM's strategies and business model are correct."

The soon-to-be-CEO also praised Palmisano by saying he "taught us, above all, that we must never stop reinventing IBM."

And reinvent Palmisano did, pushing IBM out of the personal computer business, which was sold to Lenovo, and ending the company's production of printers and hard drives. 

Rometty will be the first woman to serve as IBM's CEO and, as pointed out by Jon Fortt of CNBC on Twitter, she will join Ursula Burns at Xerox and Whitman at HP as females running massive tech firms.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: IBM Chairman, President and CEO Samuel J. Palmisano, left, and Virginia "Ginni" Rometty at IBM's corporate headquarters in Armonk, N.Y. Credit: Jon Iwata for IBM

Google buys more than 1,000 patents from IBM, again

Google has purchased more than 1,000 patents from IBM in its ongoing effort to build up its IP portfolio and defend its Android operating system against lawsuits from rivals.

The patents are widespread in what they cover, applying to mobile technology, user authentication, file system management, circuit board design and technologies relating to desktop and server PCs, according to the SEO by the Sea blog, which first reported the purchase. The patents are detailed online by the U.S. Patent and Trademark Office.

Google and IBM did not disclose how much was paid for the patents, but this isn't the first time that the two tech firms have done IP business together.

In July, Google purchased more than 1,000 other patents from IBM after it lost an auction to buy about 6,000 mobile patents from bankrupt Canadian firm Nortel Networks in April. The Nortel patents were purchased by a team of Google competitors that included Apple, Microsoft and Research in Motion for  $4.5 billion.

Last month, Google agreed to buy Motorola Mobility for $12.5 billion in a move that will not only land the tech giant a hardware company, but also allow it to tap into the thousands of patents Motorola owns.

Google is currently in a patent lawsuit with Oracle over Android use of the programming language Java, and last month it publicly traded shots with Microsoft, arguing about patents via Twitter and in blog posts.

Federal regulators will need to approve Google's takeover of Motorola before the Mountain View, Calif., company can claim rights to any of the smartphone and tablet maker's patents, but if that deal is cleared it could be "represent the beginning of the end of the patent wars," analysts at the Cowen research group said in an email on Thursday.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: A Google logo at Google's headquarters in Mountain View, Calif. Credit: Kimihiro Hoshino / AFP/Getty Images

IBM's Watson supercomputer to give instant medical diagnoses

Instant diagnosis?

That’s the idea behind a new partnership between insurance giant WellPoint Inc. and IBM.

WellPoint, the nation’s largest insurer by membership, is tapping IBM's Watson supercomputer to diagnose medical illnesses and to recommend treatment options for patients within seconds in a new system that will debut at several cancer cancers early next year.

Executives at the two companies say that Watson, best known for defeating “Jeopardy!” quiz champions on the popular television game show this year, can sift through millions of pages of data and produce diagnoses virtually on the spot.

WellPoint said the computer system will not supplant doctors but instead provide them with instant information to make better decisions to improve the quality of care and save money.

The company, with 34.2 million members in 14 states, also said Watson will not be used to make decisions about reimbursing patients or doctors for the cost of treatments.

“Physicians really need tools to get better quality answers,” said Lori Beer, a WellPoint executive vice president in charge of the initiative. “We see this as a tool to help them be more successful in driving better outcomes for our members. We’re not trying to replace the physician.”

Beer said that WellPoint and doctors involved in the project will each supply patient information for the computer system. The data will be supplemented by medical journals, textbooks and other sources.

Watson will be able to analyze 1 million books, or roughly 200 million pages of information, and provide responses in less than three seconds, according to leaders of the project.

That’s important, they say, given the challenge faced by doctors to keep up with an explosion of medical information.

“Watson has tremendous potential for applications that improve the efficiency of care and reduce wait times for diagnosis and treatment by enabling clinicians with access to the best clinical data the moment they need it,” IBM executive Manoj Saxena said in a statement.

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-- Duke Helfand

Photo: The IBM supercomputer known as Watson competes against two contestants on the game show “Jeopardy!” Credit: Carol Kaelson / Associated Press

 

IBM turns 100 years old

This post has been corrected. See the note at the bottom for details.

International Business Machines Corp., more commonly known as IBM, turned 100 years old on Thursday.

Surviving a century is impressive for a human being; it's astonishing for a tech company that got its start a mere three years after the Ford Model T began production. 

IBM dates back to June 16, 1911, when three small companies -- which made scales, a tabulating machine, punch-clocks for work and a recording device, among other gadgets -- merged to form the Computing-Tabulating-Recording Co. The name IBM came along in 1924.

At the helm in the early years was Thomas Watson Sr., an exacting businessman who lent the company his slogan -- "Think" -- which he originally adopted as a sales manager at National Cash Register Co, according to the IBM website.

In the beginning, IBM also produced meat and cheese slicers, along with machines that read data stored on punch cards -- forerunners of the computer. By the 1930s, IBM punch cards were keeping track of millions of Americans for the newly minted Social Security program.

The company boomed in the years following World War II, focusing on mainframe computers, which powered whole offices. It introduced the floppy disk in 1971, developed the bar code and was at the forefront of personal computing.

IBM stumbled in 1981, when it introduced a personal computer but decided not to buy the software that powered the machine -- made by a fledgling company called Microsoft.

In the last decade, the company has focused on providing technology services to companies. It also built the Watson computer that beat human rivals Ken Jennings and Brad Rutter on the TV trivia show "Jeopardy!"

IBM is due to surpass $100 billion in annual sales this year and currently ranks 18th on the Forbes 500 list of top American companies. 

For the record, 6:07 p.m. June 16: A previous version of this post said that IBM invented the first bar code. In 1951, IBM hired Norman Joseph Woodland, who applied for the first bar code technology patent with his partner Bernard Silver while working at Drexel University in 1949. Woodland received the patent for the bar code in 1952, after he joined IBM.

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Photo: IBM's logo for its 100th birthday. Credit: IBM

Influential investor says Microsoft's Ballmer should step aside

Microsoft Corp. chief Steve Ballmer should surrender the throne, a well-known hedge fund investor said in New York on Wednesday.

David Einhorn, the manager of the Greenlight Capital fund, said Ballmer, who has been at Microsoft since 1980 and was the first business manager hired by Bill Gates, should "give someone else a chance."

"His continued presence is the biggest overhang on Microsoft's stock," Einhorn said at an investment conference, according to a report from Reuters.  Ballmer has been Microsoft's chief executive since Gates handed him the reins in 2000.

Einhorn and his fund are substantial investors in Microsoft, owning close to 9 million shares of the company, or approximatly 0.11% of its shares.

Although Microsoft continues to reap huge profits from sales of its Office and Windows software that runs on hundreds of millions of computers around the world, the company's stock has remained notoriously static, hovering between about $25 and $30 a share for much of the last decade.

Last year, Apple Inc., a longtime Microsoft rival and once a tiny upstart in comparison, became larger than Microsoft in terms of market value.  And on Tuesday, IBM -- also a rival that Microsoft famously overtook in the PC business in the 1990s -- caught and passed Microsoft by market value.  (Microsoft, which has seen a 2.5% increase in stock price Thursday, is back in front of IBM for now).

Microsoft has been playing catch-up in several markets, including search with Bing, its competitor to Google, and its Windows Phone.  The company announced a new version of the phone's software earlier this week.

Updated, 1:43 p.m.: Reuters is reporting that the Microsoft board of directors still backs Ballmer, according to "a source close to the board.  The report did not offer any other detail.

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Apple surpasses Google as world's most valuable brand, report says

Apple surpassed Google to become the world's most valuable brand last year, largely on the success of the iPad, according to the annual Millward Brown BrandZ rankings.

Apple's brand value, as projected in the rankings, rose 84% over the last year to $153.3 billion. Google's brand value decreased 2% to $111.5 billion, bringing an end to its four-year run at No. 1, Millward Brown said in the rankings report.

The 100 most valuable brands, combined, jumped in worth 17% from last year to $2.4 trillion, the report said.

Four of the five top-ranked companies were in technology, with IBM coming in third, fast-food giant McDonald's fourth and Microsoft fifth.

Apple rose to the top, from third place last year, because the Cupertino, Calif., firm "loudly discovered an empty space in the computing category that it filled with a new device -- the iPad," the report said.

"In the last quarter of 2010, Apple sold more iPads than Mac computers. The iPad, which quickly met competition from other tablet makers like Samsung, helped Apple pass Dell and HP in total portable computer sales. An Apple cloud would further strengthen the brand as a trinity of platform, content and device."

In the 2010 rankings, IBM was ranked second, Microsoft fourth, Coca-Cola fifth and McDonald's sixth.

Amazon.com -- the online-retail and cloud-services giant and maker of the Kindle e-reader -- edged up to No. 14 this year from No. 15 last year.

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-- Nathan Olivarez-Giles

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Photo: An Apple computer on Google's company campus in Mountain View, Calif., last year. Credit: Robert Galbraith / Reuters

IBM settles SEC lawsuit alleging bribery in China, South Korea

IBM Corp. has agreed to pay $10 million to settle a civil suit brought by the Securities and Exchange Commission accusing its employees of showering cash, gifts and trips on Chinese and South Korean government officials to procure government contracts.

From 1998 to 2003, employees at a Korean subsidiary of IBM and a joint venture for selling personal computers paid about $207,000 in cash to South Korean officials, along with "improper gifts and payments of travel and entertainment expenses," according to a complaint filed by the SEC.

And from at least 2004 to early 2009, more than 100 employees at two wholly-owned IBM subsidiaries in China participated in a "widespread practice" of plying officials with gifts, trips and other treats and goodies, the complaint alleged.

In one instance described in the court documents, a manager at IBM-Korea would meet in a parking lot near a government official's apartment to hand over cash stuffed in envelopes; over the course of two years, $21,000 was slipped under the table in that arrangement alone in exchange for government contracts to supply mainframe computers and storage equipment.

The SEC alleged that IBM failed to implement proper monitoring systems to ensure complaince with the Foreign Corrupt Practices Act, which prohibits American companies from bribing foreign officials.

Despite IBM corporate policies forbidding bribes, the complaint said, "deficient internal controls allowed employees of IBM's subsidiaries and joint ventures to use local business partners and travel agents as conduits for bribes or other improper payments...over long periods of time."

IBM did not admit to or deny the charges, according to the court documents.

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Photo: Visitors crowd the IBM stand at the CeBIT IT fair on March 2, 2011, in Hanover, in central Germany. Credit: Johannes Eisele/AFP/Getty Images.

IBM's Watson on 'Jeopardy': The machine has won

The machine has won.

Watson defeated the two biggest "Jeopardy" winners of all time: Ken Jennings and Brad Rutter.

The IBM computer finished the final round of competition on Wednesday night with $77,147 in winnings over Jennings' $24,000 and Rutter's $21,600.

Jennings holds the record for number of consecutive Jeopardy matches won, with 74. Rutter has won more money than anyone else on Jeopardy.

The two men competed against each other in a 2005 tournament that resulted in a Rutter victory.

Since Watson won, IBM is awarded $1 million -- all of it going to charities World Vision (an anti-poverty group) and World Community Grid (which builds computer grids to address social issues such as water shortages).

Jennings, who won a $300,000 prize for second place, and Rutter, who was awarded $200,000, will each donate half their winnings to charities of their choosing.

The three-episode showdown, which began Monday, was filled with minutes of featurettes in which IBM engineers spoke about how they built Watson and how its question-answering technology could be tailored to its enterprise clients such as hospitals, transportation departments, help desks and law firms.

Academics have applauded IBM as having created a potentially breakthrough system to analyze unstructured data. And some readers, who left their comments on previous Technology Blog posts this week, complained about the three-day run, calling it essentially an infomercial for IBM.

Watson isn't the first IBM computer to defeat a human in competition. In 1997, the chess-playing IBM computer called Deep Blue beat champion Garry Kasparov.

Watson entered Wednesday night's finale with a $20,000 lead over Rutter and Jennings far behind, making Jennings' comeback for second place a bit of a surprise given that he was in last place during the first two episodes.

On Tuesday, Watson blew a Final Jeopardy question submitting "Toronto?????" in response to "Its largest airport is named for a World War II hero; its second largest, for a World War II battle." The correct answer was "What is Chicago?"

But on Wednesday night, Watson got the Final Jeopardy question right -- along with Jennings and Rutter.

Each of the three submitted "Who is Bram Stoker?" to the prod of "William Wilkinson’s 'An Account of the Principalities of Wallachia and Moldavia' inspired this author’s most famous novel."

Jennings, on his video screen below the words "Who is Stoker?" wrote “I for one welcome our new computer overlords."

During the credits, Jennings jokingly thrust his hands at the computer monitor that represented Watson in the competition as if to strangle a person by the neck.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: Ken Jennings, left, and Brad Rutter, right, pose after the episode of "Jeopardy!" that aired Wednesday, Feb. 16, 2011, when Watson, the IBM computer, beat the veteran champs with a total of $77, 147 over two exhibition matches. Credit: AP Photo/Jeopardy Productions Inc.