Still, IBM's reputation as a research powerhouse was starting to slip ever so slightly. While the company had twice as many IT-related patents last year as Microsoft Corp., according to independent research firm The Patent Board, Microsoft's patents were judged to have more industry impact.
More importantly, all the action seemed to be shifting to Web 2.0, where younger, more nimble companies, including Google Inc., were leading the way. One IBM scientist recalled going to a research conference last year and standing by bemusedly while Google researchers were peppered with post-lecture questions and swarmed by eager job-seeking graduate students.
Dan Wardman, vice president of information management and mainframe software and manager at IBM's Silicon Valley Lab in San Jose, said he doesn't keep track of what Google researchers are up to. But the longtime IBM veteran, who manages about 2,200 researchers and engineers, said IBM has made deep changes to its research culture in the last several years.
The fruits of those changes were on display Wednesday at an event for journalists and analysts called "Made in IBM Labs Day" that showcased several dozen research projects cooking in the research lab.
While some of the projects are in areas more traditional to IBM, such as content management, data mining or storage management, most were newfangled, sexier applications that would not look out of place in the portfolio of a Sand Hill Road-based venture capitalist.
Min Yin, a researcher at IBM's Almaden Research Center, also in San Jose, showed off software called FonePal that hopes to solve the problem of callers seeking customer service getting lost in "touch-tone hell." Callers who register their phone number with an instant messaging ID can view a Web page-like version of the phone menu on their computer screen while they are on the phone. That allows them to quickly skim all of the choices and navigate through a phone or PC keyboard. That cuts down on routing time and errors, Yin said, and improves customer satisfaction.
Steve Watt, a researcher based at IBM's facility in Austin, demonstrated a "mashup" or custom, Web-based application called QEDWiki, which stands for quick, easily developed wiki. It allows a nontechnical employee -- think a business analyst -- to quickly combine various data sources, such as RSS feeds, sales results, weather forecasts, and generate Excel-like results that can be graphically represented on a Google map.
Another project, called Innovation Factory, was custom-built for an IBM client, Sprint Nextel Corp., to create a Web-based space for rapidly building and prototyping new services and products. Still another, called Fringe, mines a company's internal employee directory along with e-mails and other data available on corporate intranets for data it can use to create an automatic dossier on a person's activities, as well as his relationships, and the strength of those relationships, with other employees.
IBM also showed off a demo, created in conjunction with retailer Circuit City Stores Inc., of a possible 3-D store that could be plunked down in a virtual world like Second Life and sell goods to visitors.
Besides IBM's encouragement of Web 2.0-type projects, the research division is working hard overall to make the culture less stuffily academic and more customer focused.
"When I joined IBM in the 1970s, we weren't allowed to know how much a product cost or who used it. We had to ask for special permission if we wanted to talk to customers," Wardman said. Now, about half of the Silicon Valley Lab's researchers are "directly engaged" with customers, helping them while also obtaining crucial feedback to focus their efforts when they return to the lab.
"Today, we are all about outside-in design, not inside-out design," Wardman said.
Last year, IBM sent its researchers on more than 10,000 customer engagements, a 55 percent increase from the previous year.
One IBM customer, eBay Inc., said IBM researchers have helped the online auctioneer optimize its 15,000 servers and keep up with its breakneck growth.
"We give each other a hard time," said Jeremy King, vice president of engineering and application architecture at eBay. "We push them for new technology, but then we show them what problems are emerging from the customer side."
Wardman said having top researchers aligned closely with customers is a return to the way IBM worked back in the 1960s, when it not only supplied the mainframe computer to NASA for the Apollo moon landing, but routinely sent its top engineers to work on site.
IBM is doing still more. It is incorporating open-source development methods, encouraging cross-propagation through internal events like last September's InnovationJam, and even started to flatten organizational hierarchies, though not as far as Google has notoriously done.