It was 15 years ago today that a computer – a conglomeration of transistors, memory, and storage media – could beat a world-class chess player. Called Deep Blue, the machine was part of a mission that culminated in IBM’s creation of a supercomputer that beat chess master Garry Kasparov two wins to one. While the concept is delightfully antiquated today (after all, IBM now makes a computer that can beat us all in Jeopardy and our phones can understand us to an extent unimagined even a decade ago), it was an important turning point in the climb down into the uncanny valley.

Deep Blue, in short, made computers personable.

You can read more about Deep Blue here but the computer won its games in 1997, just at the cusp of the dot-com revolution. Until that time, computing was the purview of a certain group of hard core geeks. The concept of a “game playing” computer that could beat human players was still fanciful at best and even though the video games industry was well entrenched, there was still nothing to encourage the average person to see PCs as anything other than a way to print out spreadsheets. Then, quite suddenly, computing became cool.

Deep Blue was more than just a brute force chess-playing machine. It was the true triumph of hardware over humanity and paved the way for us to implicitly trust our computers, for better or worse. Deep Blue also opened up other vistas including genetic analysis, new biotechnologies, improved AI, and, ultimately, the rise and preponderance of the networked world.

It’s easy to see this computer as a gaming machine. It wasn’t. It was the first machine that scared us enough to learn all we could about computing. It was our turn of the century wake up call.

Happy birthday, Deep Blue.

Editor’s note: Dave Chase is the CEO of Avado.com, a patient portal & relationship management company that was a TechCrunch Disrupt finalist. Previously he was a management consultant for Accenture’s healthcare practice and founder of Microsoft’s Health platform business. You can follow him on Twitter @chasedave.

This is the second part in a two-part series on strategic investors in healthcare.

Healthcare IT departments have focused much of their attention on the $19 billion portion of the stimulus bill that is providing billions of subsidies for the adoption of electronic health records. While this is logical given the available money, it is paying for health IT systems optimized for the “do more, bill more” model of reimbursement that is rapidly being replaced by a value and outcomes based – a 180 shift in focus.

It’s hard to argue with modernizing the record-keeping in healthcare that isn’t far beyond how medicine was recorded in the time of Hippocrates. Thousands of lives are saved as a result of this modernization (e.g., avoiding frequent, deadly prescription errors). On the other hand, most companies benefiting from the stimulus have two massive gaps that will need to be addressed for health systems to thrive in the new environment they are facing.

1. The core of the legacy healthIT systems was optimizing the reimbursement model where the “patient” isn’t much more than a vessel for billing codes. For entirely rational reasons given the legacy reimbursement model, their success was measured by their ability to get as big of a bill as possible out as fast as possible. The shift to a value and outcome based model of reimbursement literally flips provider incentives on their head (e.g., hospital readmissions are penalized rather than rewarded).
2. These systems were designed for a static healthcare system with rigid technology architecture not known for its nimbleness. There is one area of consensus about the future of the U.S. healthcare system — it’s destined to go through radical transformation. Nimble systems will be required to respond to a rapidly changing landscape.

Filling these gaps present an opportunity for investors of all stripes — particularly strategic investors such as those associated with health systems and pharmaceutical companies. It is becoming crystal clear to healthcare providers that what they thought was going to be their 100% solution is really best optimized for just 25% of where healthcare money is spent (hospital-based care). Critically, 75% of healthcare spend is directed towards chronic disease. Legacy healthIT have their strength in automating internal workflows of hospitals and other clinical settings. In those high intensity settings, healthcare providers make the decisions that drive the patient health outcomes. With chronic disease, it’s an entirely different story. The decisions a person (or their family) make drive the health outcomes. For example, does the patient fill a prescription and take it properly (more than half don’t)? Traditional healthIT does virtually nothing to ensure that people make the necessary lifestyle choices to optimize their health.

“Getting patients to adopt healthy behaviors represents a tremendous economic opportunity for life sciences companies and health care systems.” Ernst & Young Perspectives 2012

Manufacturing vs. Service Orientation – The Difference Between Throwing Rocks or Birds at a Target 

Healthcare providers who have demonstrated the most impressive positive results with challenging patient populations recognize that there are two main care approaches. Many leading hospitals have adopted a manufacturing-based model borrowed from Toyota. In contrast, with chronic disease, a service-based approach is necessary to effect behavioral change. In a manufacturing setting, with enough practice a machine will do what it is intended to do and doesn’t have a mind of its own. However, as anyone who has been in a service-based business knows, human interaction frequently leads to the best outcomes if there is any complexity.

The following is an analogy from Dr. Douglas Eby who is a leader in one of the health systems that has the most impressive results in a very tough environment (click here and see video at the end of the article for more). Think about throwing a rock at a target. Similar to a manufacturing scenario, with enough practice a well trained professional can hone their skills and hit the target most of the time. Now imagine rather than throwing a rock, you are throwing a bird at a target. Perhaps you can impact 10-20% of whether that bird hits the target. However, the other 80-90% is going to be driven by understanding the bird’s motivations. Perhaps putting food or the bird’s babies at the target would be necessary to drive the bird’s behavior.

Like the bird example, doctors push patients toward a desired health target. However, only those healthcare providers that have systems and processes optimized for engaging patients have had significant success with chronic conditions.

Rapid Iteration Imperative  for Disruptive Innovation in Care Delivery

“Necessity is the mother of Invention”  - Aesop

As highlighted in The Rise of Nimble Medicine , the healthcare providers driving breakthrough results aren’t tweaking an existing model. Rather, they have developed new models that are repeatedly tested and optimized. As one who has implemented traditional healthIT systems at healthcare providers ranging from small rural facilities to large inner-city hospitals, the process is very involved with months of planning before go-live. During that process, there is a boatload of process planning and re-engineering before configuring the system to reflect what has been decided. The process is weighted 80-90% toward pre go-live with 10-20% focused on post go-live to deal with go-live issues and further training.
Contrast that with highly dynamic environments where the pre and post live weighting needs to be flipped on its head (i.e., 20% planning, 80% analyzing, refining, testing, etc.). While some areas of healthcare will be stable, the most critical area to manage is where the greatest costs reside — chronic disease. Best practices have begun to emerge, however one can expect rapid iteration to address the various areas of chronic disease management. Some of the legacy systems such as Epic have strengths in its ability to address different workflows after significant customization (this is why even small to medium sized health systems spend north of $100 million on their implementations. However, healthcare providers report that if they need to reorder workflow, the system has to be reconfigured with significant time and expense involved.

Eric Page of Amplify Health has shared his experience doubling the national average for outcomes related to sleep disorders. Page described their experience as one that involved repeated testing and re-ordering of steps in the process. Changes were made day by day. I expect that rapid iteration will become the norm for the leaders of the next generation of healthcare delivery as they hone their craft.

In a piece for the New Yorker, Dr. Atul Gawande outlined how, early in the 1900s, more than40% of household income went to paying for food and food production consumed roughly half the workforce. Beginning in Texas, a wide array of new methods of food production were tested. After many pilots, tests and information dissemination, food now accounts for 8% of household budgets and 2% of the workforce. As a wide array of small innovations ultimately led to the transformation of farming, so too is a rapidly building wave of innovative new care and payment models leading to similar breakthroughs in healthcare. I call this Nimble Medicine.

Human Centered Design Trumps Procedure Centered Design

“Listen to your patient, he is telling you the diagnosis” William Osler, M.D.

Health systems have begun with modest efforts to weave in patients into the care process. Amazingly, simple secure messaging has been held up as a great breakthrough in medicine. That a technology (email) that has been around for 40 years is held up as a breakthrough, in and of itself, is a statement. I liken the limited efforts to invite the patient into the process to sipping from a muddy puddle of water in the Sahara Desert — it’s a welcome improvement but far from arriving at the promised land. Healthcare organizations that will thrive (not just survive) recognize that a tweak to systems (both healthIT and business process) that were designed around the patient as billing vessel will fail miserably. As we’ve seen in many areas, tweaks to an architecture designed around a different model never succeed in the new paradigm.  If they did, AOL and Yahoo would be the leaders in social media and Siebel would be leader in CRM. Before long, you will see the equivalents of Facebook and Salesforce.com emerge in healthcare.

Healthcare Soon to be Driven by Deflationary Economics

All men are prepared to accomplish the incredible if their ideals are threatened. -Maya Angelou

Behind virtually every business model in healthcare delivery has been an assumption of real estate bubble like perpetual healthcare inflation. It’s not hard to predict that deflationary economics will drive healthcare in the future given the government budget crises from Main Street to DC that are largely driven by healthcare costs. While one expert warns of health care bubble another calls the upcoming period The End of the Third Bubble (PDF). Unsurprisingly, those who thrived after past bubble bursts were those with lower costs structures and systems that were nimble.

The diagram below is one of the drivers for why employers such as IBM have aggressively changed their healthcare buying approach.

Cost-cutting isn’t limited to the government. Why? It is employers who foot most of the ever-expanding healthcare tab and are starting to flex their muscle. For example, IBM has shifted from thinking about healthcare as an employee benefit to a large cost driver that will impact their profitability. IBM recently made a decision as to where to locate 4,000 new hires based on their analysis of where they received the best value from their healthcare expenditure. Consequently, they determined that Dubuque, Iowa was the best location to expand their employment. With wide cost differentials, it’s conceivable that CFOs and CEOs will believe that their fiduciary responsibility to shareholders will necessitate the kind of analysis IBM acted upon. If they don’t, they are liable to get lambasted by Wall Street.

This kind of analysis is a scary prospect for communities that are high cost locations for healthcare. It may shift how communities think about economic development. Having a great ROI for healthcare may be of greater benefit than a tax break. Conversely, communities with expensive healthcare have what amounts to a healthcare “tax” that will push businesses away.
Many health systems operating at a loss or a razor thin margin, may wonder how they can deal with these changes. Smart healthcare providers are taking painful lessons from the failings of another industry that consisted of local monopolies and oligopolies that seemed protected by capital infrastructure barriers to entry — the newspaper industry. The few newspaper organizations that have thrived realized that it can still be profitable to operate on a lower cost structure. With the majority of hospitals operating as non-profit, mission-based organizations, they should have a relatively easier time making the transition. Non-profit organizations don’t have to explain to public markets why a flat or declining top line revenue figure can be a good thing (assuming they get costs optimized for the new normal). As an example, already forward-looking organizations have already bucked conventional wisdom thinking they need to acquire practices to develop an accountable organization. I have seen both non-profit and for-profit health systems recognize it is more capital efficient to create strong physician networks via open software solutions than acquiring practices and mandating a closed system.

The New Normal
Given where most revenue comes for a health system, their optimization has been focused on hospital-based care. Even there, the new reimbursement framework takes into account what happens after a patient leaves the hospital. That is, there will be large and ongoing penalties for hospital re-admissions. In the old world, hospitals have been rewarded when someone was readmitted. Consequently, there was little focus on addressing post discharge patient engagement…until now.

However, the biggest changes are coming with the shift from a reactive to proactive model when it comes to chronic disease management. In the old reimbursement model, health systems waited for someone to present themselves at the hospital and that was viewed as more revenue to add to the coffers. Going forward, health systems will be accountable for people even when they leave the facility, and so will face an entirely new set of information technology demands. It’s why you see some hospitals going around floors with iPads ensuring patients about to leave have a scheduled visit with a doctor after they leave. The healthcare providers understand that is one of the best ways to avoid re-admissions.

To get a feel for the scale of change, you can look at the change from a reactive, hospital-centric model to a proactive, human-centered model that took place in Denmark. These figures were provided by IBM’s Director of Healthcare Transformation that has been actively involved in Denmark as well as leading a large employer coalition actively driving the reimbursement model changes. The following are a few examples from what happened before and after their change in Denmark:

• Before, 84% of people died at the hospital. Today, 90% die at home which is greatly preferred by most people. This is enabled, in part, by video conferencing, remote monitoring, etc.
• Before they had 157 hospitals. Today they are down to 21 (with corresponding reductions in hospital days).
• 80% healthcare encounters are asynchronous which better fits people’s schedules for non-emergent item.

To sum it up, to support the array of new demands, healthtech will need to be human-centric, affordable and nimble. These aren’t the adjectives typically applied to traditional healthIT systems. Just as we have observed the military frequently spending money on capital built for the last war such as aircraft carriers and other slow moving military tools. Over time, the military learned that it was as much or more important to focus on the hearts and minds of those they were trying to work with and that remote intelligence tools have been highly effective at winning battles. When it comes to managing chronic disease, winning the “hearts and minds” of patients and remotely monitoring health are similar skills not factored into systems developed for the legacy reimbursement model.

Therein lies opportunity for healthcare investors to look to innovative approaches from startups experienced in engaging consumers. Strategic investors, in particular, have extremely high motivation as their traditional businesses get disrupted. As we saw with the shift from analog to digital media and landlines to cellular technology, entire new categories of software emerged that trumped tweaks to legacy systems. The early customers and partners of the new categories of software were the ones that were able to manage the industry shift. The shift from the “do more, bill more” reimbursement model to the value and outcome based reimbursement model in an industry larger than any other creates an opportunity strategic investors seek to capitalize upon.

Another week, another IBM acquisition. Big Blue has announced the purchase of Tealeaf Technology, which provides customer experience analytics software that helps organizations access information about consumer web experiences. Financial details were not disclosed.

Basically, Tealeaf’s software captures and records what each customer is doing and seeing in real-time on every page and across all site visits, down to the page-by-page, browser-level experience. By capturing every single customer’s visit, as well as the reaction of the site in response to the customer’s requests, Tealeaf captures both the quantitative and qualitative details of every single interaction. This data is then used towards optimizing the customer experience.

For example, Tealeaf can identify what campaigns or interactions triggered a customer session to end prematurely and result in a non-conversion. Another example of Tealeaf’s technology in action is an online travel agency finding that when visitors misspell a vacation package name and receive zero search results, nearly 100 percent of the visitors leave the site without completing a booking.

IBM says the acquisition is part of enhancing its smarter commerce initiative. Tealeaf’s technology will add analytics for clients who want real-time and automated insights into online customer buying experiences across online and mobile devices. As a result, IBM says that organizations can gain actionable insight that allows them to improve customer support, transform site usability, tailor marketing campaigns and increase online conversion rates.

Tealeaf has over 450 customers worldwide including 30 of the Fortune 100 companies, including Dell, Wells Fargo, Air Canada, GEICO, Orbitz, Crate & Barrel, Neiman Marcus, Expedia, Zappos, ING Direct, Best Buy, DirecTV, McKesson and StubHub. The company has raised $12 million from Bay Partners, Matrix Partners and Foundation Capital.

Big Blue is betting on commerce software as a whole. IBM, which has invested more than $3 billion in building out its smarter commerce group of products, says Tealeaf will be integrated into IBM’s Enterprise Marketing and Management Group, which includes previously acquired assets from Coremetrics, Unica and DemandTec. IBM says its Smarter Commerce initiative, which aims to help companies respond to shifting customer buying patterns, is a $20 billion market opportunity, particularly in the software space.

It wasn’t that long ago that I complained about cloud fragmentation issues. There were some interesting observations in the comments on that post. Now word comes that the Linux Foundation is hosting CloudOpen, a “new conference to advance openness in the cloud.”

Most of the major players are already committed to participating at CloudOpen: Canonical, Citrix, Dell, Eucalyptus, HP, IBM, Intel, OpenStack, Red Hat and SUSE. From the press release: “Designed for software developers and IT managers responsible for deploying and developing cloud solutions, CloudOpen will feature technical content that includes … big data strategies and open cloud platforms and tools. This conference will also cover open source best practices and how they relate to topics such as company data and APIs.”

This is what the Linux Foundation does best: provide a vendor-neutral common ground for collaboration on advancing the state of the art in Linux and open source technologies. “This conference is built on one belief: open works,” said Amanda McPherson, vice president of marketing and developer services at The Linux Foundation. “We know this from experience and know that the cloud demands it in order to be successful for the long term.”

My first question upon hearing about CloudOpen was: what took you guys so long? “We are getting to the point now that real decisions are being made by customers and vendors,” McPherson told me. “We feel now is the best time for us to provide this neutral forum and also advance the conversation.” She told me that the Linux Foundation evaluates three questions when they see an opportunity to serve the Linux community:

1. Is it being done by someone else?
2. Are we uniquely suited to provide the service?
3. Do we have the resources or can we easily obtain the resources to support it?

The press release seems to focus on companies and projects offering Infrastructure-as-a-Service (Iaas) solutions, so I was curious if the Platform-as-a-Service (Paas) crowd was invited to the discussion. “Both are absolutely invited. We expect vendors representing both offerings to participate,” McPherson confirmed. She went further to say that CloudOpen wasn’t exclusive to Linux Foundation members, but that “it’s definitely open to others and we expect many non members to be involved.”

CloudOpen is taking place August 29-31, concurrently with LinuxCon North America in lovely San Diego, Calif. The early bird price to register for CloudOpen is $400, and gives you full access to all of the LinuxCon North America event, as well. Compared to other Linux and open source conferences, that’s a very reasonable price.

I expect to cover LinuxCon North America, and I’m really looking forward to the CloudOpen conversations.

On the heels of acquiring sales data analytics company Varicent last week, Big Blue is making another buy in the data space today— Vivisimo. Financial terms were not disclosed.

Vivisimo, which has raised $6 million in funding, launched as a spin-off from Carnegie Mellon and applies clustering technology to enterprise search. Vivisimo provides enterprises with search software that helps organizations access and analyze big data across the enterprise. Vivisimo products are available for standalone search applications or as OEM versions embedded within partner applications and solutions. The software automates the discovery of data and helps employees navigate it with a single view across the enterprise.

Big Blue says the combination of IBM’s big data analytics capabilities with Vivisimo software will help “further IBM’s efforts to automate the flow of data into business analytics applications, helping clients better understand consumer behavior, manage customer churn and network performance, detect fraud in real-time, and perform data-intensive marketing campaigns.”

IBM says it will incorporate Vivisimo’s technology into its big data platform.”The winners in the era of big data will be those who unlock their information assets to drive innovation, make real-time decisions, and gain actionable insights to be more competitive,” explains Arvind Krishna, general manager, Information Management, IBM Software Group.

Vivisimo has more than 140 customers in industries such as government, life sciences, manufacturing, electronics, consumer goods and financial services. Clients include Airbus, U.S. Air Force, Social Security Administration, Defense Intelligence Agency, U.S. Navy, Procter & Gamble, Bupa, and LexisNexis among others.

IBM, whose big data platform is based on open source Apache Hadoop, says it is expanding its big data platform to run on other distributions of Hadoop, beginning with Cloudera. Cloudera Hadoop clients can now use IBM’s big data platform to perform analytics and build software applications.

It’s no secret that IBM is bullish on big data and analytics. As The New York Times recently reported, IBM has spent $14 billion purchasing analytics companies as part of its Big Data initiative. And considering the company’s acquisitive nature and deep pockets, we can expect more purchase in the big data arena in the near future.

IBM just reported mixed first quarter earnings for 2012. GAAP earnings came in at $2.61, up 13 percent with non-GAAP earnings at $2.78, up 15 percent. Revenue was flat for the quarter coming in at $24.7 billion, up 1 percent adjusting for currency. Analysts expected $2.66 a share and $24.82 billion in revenue.

Net income for the quarter came in at $3.1 billion, up 7 percent from last year. “In the first quarter, we drove strong profit and earnings per share growth. We delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives,” said IBM CEO Ginni Rometty. “Our investments in growth market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company’s ongoing margin expansion.

In terms of geographic area, the Americas’ first-quarter revenues were $10.5 billion, an increase of 1 percent. Revenues from Europe/Middle East/Africa were $7.6 billion, down 2 percent. Asia-Pacific revenues increased 4 percent. OEM revenues were $509 million, down 17 percent compared with the 2011 first quarter. Revenues in the BRIC countries — Brazil, Russia, India and China — increased 10 percent

The company said that cloud revenue doubled first-quarter 2011 revenue. Revenues from the Software segment were $5.6 billion, an increase of 5 percent compared with the first quarter of 2011. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $3.5 billion, an increase of 7 percent. Global Technology Services segment revenues increased 2 percent. Global Business Services segment revenues were down 2 percent to $4.6 billion.

The company ended the quarter with $12.3 billion of cash on hand.

The quarter has been mixed for IBM. While the company revealed layoffs in February, IBM has spent some cash in the first quarter on acquisitions, buying Worklight for $70 million and Green Hat. Big Blue also sold 750 patents related to networking, software and other technologies to Facebook.

IBM actually raised expectations for full-year 2012 GAAP diluted earnings per share to at least $14.27 from at least $14.16; and operating (non-GAAP) diluted earnings per share to at least $15.00 from at least $14.85.

During the earnings call today, IBM said that it spent $1.5 billion on acquiring five companies in the quarter.

Big Blue has made a purchase today—IBM has acquired Varicent Software, a company that creates a sales analytics software. Financial terms of the deal were not disclosed.

Varicent, which has raised $35 million in funding, analyzes sales data from businesses to help organizations to streamline compensation processes for employees, improve sales performance, and more. Varicent’s software automates and analyzes sales data across a number of sectors of an organization including the finance, sales, human resources and IT departments and can uncover trends that could lead to better sales and revenue for a company.

The company’s software is used by over 200 banks, insurance companies, retailers, information technology and telecommunications providers. Clients include SugarCRM, Reliance Standard Life Insurance, Silverpop, Tribune, and AAA Northern California. Varicent offers a software catered to larger enterprises as well as a product that focuses on smaller teams. In February, Varicent reported that 2011 revenue grew by 42%, marking the company’s best year ever in terms of sales and client acquisition.

This acquisition ties into IBM’s focus on providing in-depth analytics offerings to businesses.
IBM says that business analytics revenue for the company will reach $16 billion by 2015. The company has made a number of acquisitions in the business analytics area, including Algorithmics, Clarity Systems, Open Pages, Cognos and SPSS. And HP has made similar bets on analytics acquisitions.

From the release: The acquisition advances IBM’s efforts to drive analytics capabilities into the hands of front line employees, particularly in the area of sales where many organizations still rely on silos of data and antiquated spreadsheets to manage this vital area of their business.

Interestingly, Janet Perna a former Senior Executive from IBM, sits on Varicent’s board.

Other recent IBM purchases include Worklight, Green Hat, and Emptoris.

Eileen Burbidge (@eileentso) is a partner at Passion Capital, a premier early-stage venture capital fund in London. She was formerly the investment director for Ambient Sound Investments and a products director at Skype and Yahoo! after 10 years in Silicon Valley in roles at Sun, Apple, Openwave and PalmSource. She has also created an online petition calling on IBM and Ms. Rometty to pull their sponsorship of the Masters here.

People like to kick up a fuss about sexism in tech and how this contributes to a lack of women in the field, whether that’s through badly promoted “perks” at hackathons, over-abundance of alcohol at events or scantily clad women in promo videos, etc.

But do you want to know why there’s sexism in tech? Because it comes from society at large, and even at the very top, we allow it to happen.

Traditionally, the Augusta National Golf Club has bestowed honorary green jackets representing membership to the club upon the CEOs of its three main television sponsors for the U.S. Masters – except for this year. Virginia Rometty is the current CEO of IBM, and so far has not been given membership – like every other CEO before her, solely because she is a woman.

I appreciate that as a private club it has a prerogative to decide, and am certain that I wouldn’t be able to influence a clearly outdated organization to change its views.

But I would have expected more from IBM — and of us as a tech community to declare this as unacceptable.

So the following thoughts are not directed at the board of Augusta National. These thoughts are directed at Ms. Rometty, chief executive of IBM. I ask simply in an open letter “Why have you not pulled your company’s sponsorship?” And more specifically “Why do you allow them to disrespect you in this way?”

IBM is one of the grandest and most established tech companies in history. Founded more than 100 years ago, as of December 2011 it was the third largest publicly traded tech company in the world by market cap.

It counts more than 400,000 employees worldwide in over 170 countries, has 10 research labs, and among other things invented the ATM (cash point), the floppy disk and hard disk drive.

Its history is full of achievements as a progressive employer and leadership in worker equality. It started offering training classes for female systems services professionals in 1935. It hired its first black salesman in 1946 – 18 years before the Civil Rights Act. Its first equal opportunity employment policy letter was released in 1952 – one year before the US Supreme Court decision in Brown vs. Board of Education. In 1953 when negotiating to open two factories in southern States, then company President Thomas Watson openly established that IBM would absolutely not have segregated workforces, against those governors’ wishes.

It was also the only tech company in 2004 to be ranked in Working Mother Magazine’s Top 10 places to work, and provides same-sex partners with health benefits of employees which is partly why the Human Rights Campaign has scored it 100 percent on its index of gay-friendliness since 2003. Two of its thirteen board members are women (which is a better proportion than Apple and obviously Facebook with zero).

So why does it continue to sponsor a golf tournament held at a private club which does not allow female membership? Why is it sponsoring this year’s tournament when, in contrast to IBM CEOs before her who have been awarded honorary membership, Ms. Rometty is not receiving the same respect and courtesy due to her gender alone?

Date: April 7, 2012
Subject: Why do you permit Augusta National Golf Club to disrespect you?

Dear Ms. Rometty,

Even though I have not had the pleasure of even meeting you, I was pleased when you were appointed CEO in January – expressly because your predecessor and still Chairman Sam Palmisano established that this was because you “earned it; zero to do with any progressive social policies” which is fantastic. I was pleased to see it established that you earned your new position and were given the recognition for your contributions to the company – and expressly not hindered because of your gender. I don’t believe myself to have ever been hindered by my gender in my career, and I’d like there to be more public examples of this.

With all of this and the fact that I have a great deal of respect for you established, I simply want to ask you why you and your company continue to sponsor the U.S. Masters golf tournament at Augusta National Country Club.

In addition to your company’s tremendous history of leadership in establishing gender and social equality in its workforce, your appointment as CEO continued to demonstrate IBM as a merit-led corporation. However, your company’s sponsorship of this tournament – and refusal to comment publicly on its membership policies is disappointing. Your silence is deafening.

It suggests that you feel the commercial benefits of sponsoring this tournament outweigh the matters gender equality and self-respect. Even if you “don’t care much” about golf personally (it has been reported that you do occasionally play), the fact that you will be the first in a long string of IBM CEOs to not be awarded an honorary membership – strictly due to your gender – and are seemingly OK with this, is deflating.

I suspect one reason you have achieved a lot throughout your career and will continue to do so is because you speak your mind and follow your convictions. I can also appreciate that you don’t need to do anything for the “women in tech” cause, for other women, or just to be a role model. You should obviously do things firstly for yourself or your shareholders, and to that end, I can also imagine that you may not see it as a part of your corporate responsibility to deal with matters that do not have direct impact on shareholder and employee value. I would like to point out that this does. Your shareholders – and surely at least 50% of your workforce (if not more) would welcome your statement on the situation, even an implicit one made by choosing not to sponsor this tournament any longer, and to instead focus your company’s resources and marketing budget on other events.

I humbly submit that you should take a stand for what your company represents and how it represents itself. By being one of three major television sponsors, you endorse this tournament, its host venue and its current membership policies – along with its snub to you personally and professionally. I wish you would make a statement and clarify your own views about this.

I put to you a question that was asked of Augusta National’s chairman Billy Payne: What do you say to your granddaughters? And extend that to: What are you saying to your female employees? Beyond those groups, what do you say to your sons or grandsons when they ask why you didn’t say anything?

Unlike other IBM and major CEOs before you there is no indication that you will be granted honorary membership at Augusta National – on the sole basis of being a woman. Out of respect for yourself, women like you, women like me, women who work in your organization, and men and women to come, please establish that this is no longer acceptable in 2012.

Respectfully yours,
Eileen Burbidge

Facebook has confirmed it is buying up a boatload of patents from IBM — 750 in all — that will help the company shore up against potential legal attacks from Yahoo and other companies claiming the huge social network infringes on their intellectual property.

But for the past couple of years, Facebook has already been taking steps to build up its patent portfolio through the acquisition of patents from a host of other players, from large IT companies, to a patent troll and a defunct social network. And a few surprises. A closer look at this gives some clues as to why it’s so important for Facebook to acquire patents rather than try to build up the portfolio itself.

Of the 60 patents that Facebook now owns that are listed with the U.S. Patent and Trademark Office — among a list of 160 in all, counting both applications for and assigned patents — there are 15 from Facebook itself; and nine patents from HP, 11 originally from Philips Electronics (but sold to IPG and then sold by IPG to Facebook), three from UK telecoms operator BT, nine from patent holder Walker Digital, one from Divan Industries, one from Applied Industries and 11 from Friendster — the pioneering social network that died a Facebook death and eventually got sold to Malaysian company MOL, which turned it into a gaming network. These were reportedly bought for $40 million in 2010.

The patents cover a wide range of areas. Some are very much in the wheelhouse of what we know as Facebook today — managing social relationships, newsfeeds and contacts, for example. Some are about technical processes that happen behind the scenes.

And some seem to cover functions that Facebook doesn’t really offer today. One relates to playlists for music or other media (“Method and apparatus for priority-based jukebox queuing”, patent number 6421651). Others seem to have a distinct e-commerce bent (“Systems and methods wherein a buyer purchases products in a plurality of product categories”, 7188080; “Method, computer product and apparatus for facilitating the provision of opinions to a shopper from a panel of peers”, 7526440).

(At first, I wondered if this pointed to areas where Facebook wants to potentially offer services — a marketplace seems to make perfect sense, for example. One, possibly ligitation-minded, patent lawyer gives me another opinion: “One thing we teach new companies is not to buy patents in their domain but in competitors’ domains where they can do most harm in lawsuit,” he says. “My expected competitor [eg] is Google, so I buy in areas like search, computing centers, and e-commerce to hurt them.”)

Indeed, the U.S. Patent Office also lists another 100 patent applications that have yet to be either approved or formally rejected. Many of these have been initiated by Facebook itself.

Yet there are also some that Facebook has picked up while they are still pending. These include four more patents originally owned by Friendster and one more e-commerce patent from Walker. And surprisingly, one from the energy and services giant Halliburton, related to data centers (“Cooling computing devices in a data center with ambient air cooled using heat from the computing devices”).

Digging into some of the back-and-forth around pending applications also gives a glimpse as to why it’s so important for Facebook to acquire patents rather than try to build up the portfolio itself.

It can take years to get a patent approved, and in the case of social media and gaming the process can take even longer, typically up to six to eight years or more from the time the application gets filed. And it’s hard to get patents approved in this area. (One, for example, filed by Facebook for “Facilitating Interaction Among Users of a Social Network,” was originally filed in July 2010, and just last week had a “non-final rejection” of all of its claims. Facebook can still modify and resubmit.)

Meanwhile, the potentials for lawsuits appear to be building up.

“Facebook is really the new kid on the block and they need to gird and prepare themselves with IP because the bigger kids have it,” a patent lawyer explained to me. “They have definitely been very proactive, though. Someone at that company understands that the key to a good defense is a good offense.”

So is 60 the definitive number of patents that Facebook owns today? Not necessarily: this is the number listed by the U.S. Patent Office but the patent lawyer tells us that there could be more that it has simply not registered. “There’s no requirement to record every patent with the USPTO,” he said. “It’s only something you do if and when you want to enforce it.” Although he does point out that it’s generally good practice not to stockpile patents.

IBM may not be the only one among B2B companies offering more social features to its clients, but it is definitely trying to make sure it stays in game: today it announced that it would extend the social media features it offers through IBM Connections — roughly, the company’s enterprise equivalent of a social network for work colleagues and contacts that has been around since 2007 — to include integration with Microsoft Outlook email, courtesy of a partnership with Israel-based enterprise startup harmon.ie.

The new service will see IBM Connections appear as a sidebar for those who use Outlook. That will give people the ability to do things like access SharePoint documents, see who is online and message them while still remaining in the email application.

(And to draw a line between what IBM is doing in enterprise with what’s happening in the consumer market, this is somewhat equivalent to Facebook offering a desktop messaging app to use when you’re not directly on its site.)

IBM says the new feature is being offered as an add-on (not automatically) to all businesses already using IBM Connections, with some of the current customers including TD Bank, Cemex, Electrolux and BASF.

The move is a mark of how IBM is trying to draw in users of third-party software to use more of its new social networking features — a newish area of business for the company, but one that it would like to see grow rather than get cannibalized by smaller and faster-moving startups (such as, ironically, harmon.ie itself):

“Just because a company chooses to use another email platform does not mean they should miss out on becoming a social business,” said Jeffrey Schick, VP of social software for IBM.

Email use among consumers has declined as a result of the rise of Facebook and Twitter, but in the workplace, it remains the primary mode of communication: more than 80 percent of business users ranked email as the most important “collaboration tool” in a recent survey from Forrester Research.

That makes it an important service to loop into IBM’s Connections service to encourage adoption: “To have a truly social strategy you have to be inclusive of all enterprise users,” said Yaacov Cohen, CEO of harmon.ie. “Email is the lowest common denominator.”

Harmon.ie and IBM would not say how many users are on the IBM Connections network, but on its own the Israeli-based startup has already picked up one million users of its social email product: 500,000 who use a pared-down free version of the software and another 500,000 who pay for a premium edition.

[Image: Ladybugbkt on Flickr]

Barring a change of heart or a wild, consumer-driven financial upturn, it looks as if Dell is out of the consumer PC business and is turning its Sauron-like eye towards the enterprise – the one place where people upgrade their PCs at least once a year. According to PCPro, Dell will is “dramatically changing” their entire business with a focus away from “shiny boxes” and more focus on barebones server and fleet hardware.

To be fair, the statement could portend far less than we should expect. Dell has been among the walking dead in PC hardware for most of this decade, producing little of interest (the Adamo was their big consumer play and presumably Alienware will remain a consumer-facing company) but there’s still money to be made in selling commodity hardware for a few percentage points over cost. I doubt the outcry will be as vociferous as it was when HP threatened to pull its consumer business, mostly because Dell has no products of any interest to the enthusiast. The anger at HP was more about their destruction of Palm rather than the possibility that we wouldn’t be able to by a handsome, staid PC in a black/grey case.

As MG points out, the only company to truly pull off this move was IBM. They sold their consumer hardware wholesale to a partner who could do their brand justice and they are thriving under the radar, producing interesting research and machines like Watson, the Jeopardy playing super-computer. I doubt Dell could build a super computer, but they can put together a mean RAID array.

We haven’t heard back from Dell yet about what this decision means to the company, but rather than assume all Dell consumer hardware is going away I suspect we’ll see more focus on enterprise desktops and laptops and less of an emphasis on the low-margin, low-cost netbook, entry-level PC, and tablet/convertible lines. This also means a move away from brick and mortar sales, a place where no one is making money. Maybe this really is the post-PC era?

Editor’s note: This guest post was written by Dave Chase, the CEO of Avado.com, a patient portal & relationship management company that was a TechCrunch Disrupt finalist. Previously he was a management consultant for Accenture’s healthcare practice and founder of Microsoft’s Health platform business. You can follow him on Twitter @chasedave.

Pharmaceutical companies are in trouble with ongoing patent cliffs with a clear choice facing them. They can follow the path of the railroad industry which is the path most are on right now. Alternatively, they can follow the path IBM took when its future was similarly bleak. IBM demonstrated how it’s possible for a large company to shift from a product-centric culture to a customer and service centered company. It’s clear that pharma companies will succeed or fail based not on how many drugs they sell, but on how well their offerings improve health outcomes.

The marketing myopia of the railroad industry is well documented in the world of business yet industry after industry makes the same mistake. Railroad companies thought they were in the “railroad” business, rather than the “transportation” business. As a consequence, they missed out on countless opportunities to pursue growth in the auto industry. In contrast, IBM was able to use their existential threat to reinvent themselves over a critical 10 year period. The result: A 10x increase in their stock value. In contrast, most pharmaceutical companies aren’t spending enough time thinking like IBM. Looking at the 10-year stock charts of these organizations you see flat or declining stock prices. This is a clear indication that they haven’t reinvented themselves.

The Key Question Pharma Must Answer

Does the pharmaceutical company see themselves in the drug business or the disease management business? Or, where possible, in the disease prevention business? This is the critical questions to survive and thrive. Many of these diseases lend themselves to the use applications (mobile & web) or biometric devices. This is going to drive a greatly expanded focus on non-traditional partnerships.

An example of how a pharmaceutical company could transition from being product centric to being customer centric is doing something like the company, Ambucor.  Ambucor provides Ambulatory Electrocardiographic and Remote Device Monitoring services for cardiologists. Pharma companies already have deep relationships with cardiologists. Imagine them buying or partnering with a company like Ambucor to sell that service. This would provide a more complete offering where their heart-related drugs may or may not play a role, just as IBM products may or may not play a role in their services.

Lessons from IBM
Most pharma companies are where computer makers were in the late 80′s: the handwriting on the wall is clear but pharma is still mainly focused on milking the cash cows just as DEC, Data General, Wang were in the 80′s. It was only when IBM brought in Lou Gerstner having recognized the threat, were they able to drive wrenching changes. During his 10 years, the stock price of this mature company grew nearly 10x — a stark contrast to the stock price of most pharma companies over the last 10 years.

While IBM’s transition looks brilliant, and without pain in hindsight, that was far from the case. At the time it was extremely controversial. Most business magazines characterized IBM as a dinosaur. At the same time, conventional wisdom was that Gerstner needed to break up IBM to drive shareholder value, not a massive transformation. Turning over half of their workforce created additional heat for Gerstner. However, at the end of it, IBM came away much stronger in contrast to their competitors such as DEC.

Once pharma companies redefine themselves in the disease management/prevention business, they will recognize that they are far behind the market leaders. While they wait for the future to be defined by others, non-traditional competitors are taking action. Just look at Aetna. They have aggressively bought an array of companies including mobile startups such as iTriage. Pharma may wake up and realize they are late to the party and the most interesting companies already have found their dance partner.

Leveraging Pharma Strengths to Provide a Complete Solution
Just as IBM has a number of strengths it could leverage into its reinvention process, Pharma also has strengths such as:

• Provider Relationships: Through its Medical Affairs and Sales organizations, Pharma has many relationships and a keen understanding of the healthcare landscape (though provider access has waned). They know proper ways to work with healthcare professionals for research as well as the reimbursement environment for particular conditions.
• Clinical Trials Management: Pharma has a critical competence in managing clinical trials with an array of patients and the necessary requirements to have research findings that can pass muster with the FDA and/or health plans.
• Information Technology Management: The IT departments of many pharma companies are sophisticated given the importance of security, research database management and the like.
• Long-term view: Pharma hasn’t been afraid to make long-term bets utilizing its deep pockets. Fortunately, most technology bets require dramatically less resource than what they are used to.

With increasing requirements to run healthcare services more efficiently and providers who don’t necessarily possess the skills to address new reimbursement outcomes requirements, I believe technology-enabled services are going to become more common. Purveyors of technology-enabled services aren’t selling technology. They are selling an outcome. A straightforward example on the business side is ZocDoc — they sell a fuller docket of patient appointments for doctors rather than technology. An example from the clinical side (Ambucor) was mentioned above. The cardiologist maintains their patient relationship while expanding the services they can offer through this turnkey service. There are other out-of-the-box ideas that can reap rewards, but I expect most will be services provided directly to healthcare providers.

The list below contains examples of technology-enabled services pharma can provide if they were to focus on disease management or prevention. One of the non-obvious benefits of operating a multi-tenant SaaS business is the insights that can be gleaned through the broad dataset from many customers hosted in one place. For example, ZocDoc will have supply and demand insights no one else has for healthcare services by helping consumers find open appointment slots. It’s not hard to imagine the insights that could be learned from the examples below.

• Population Management: Patient-centered Medical Homes and Accountable Care Organizations place demands on providers that many are ill-prepared to address. Keeping track of the portion of their patient population that is up-to-date on vaccines, health checks, etc. and scheduling them for appropriate services is a big challenge. Already pharma pay doctors a significant amount of money to get patients to complete registries. Massively expanding this can not only provide a service to providers but also provide necessary data input for pharma’s research needs.
• Family Medical History: Related to the previous item, Medicare announced its first wellness oriented reimbursement for an annual wellness visit. Relatively few healthcare providers have taken advantage of this. Not only could pharma help them with this proactive new revenue stream, the insights that could be gained would be phenomenal for pharma.
• Rx for apps: Before long, rather than being prescribed a pill, people will be prescribed apps that have established an evidence-base that proves they are effective. Vendors such as Happtique will provide what amounts to an “app formulary” for providers. Not only enabling the prescription of an app but the accompanying app adherence could be a valuable service.
• Remote monitoring: Ambucor is one example. There is a wide range of remote monitoring devices. These span devices, disease and health management. While it can be used for serious diseases, it’s not hard to imagine that health coaches could provide a service to manage wellness programs as personal biometric devices become more pervasive.
• Telehealth: Related to the previous example, more and more services can be provided remotely. Providing the tools and services to manage conditions remotely that aren’t device related is very possible. One of the first areas this is being done in is behavioral health. It will expand.

An interesting byproduct of this approach is it would put pharma on a path to competing with healthIT vendors. Pharma’s own IT departments have focused their skills inward, however, it’s conceivable through strategic realignment and acquisitions that those skills could be pointed externally. This could be a formidable new competitor to traditional healthIT vendors.

There are people reading this who know far more about the Pharma industry than me. I’ve been asked enough times how pharma should reinvent itself that I gave it some thought. The only thing I know for sure is continuing the path that most pharma is on will lead to a continued flat business (and stock price). Where have I missed the boat? What opportunities for reinvention have I missed?

IBM just announced the purchase of WorkLight, an Israeli startup that provides a mobile app development and infrastructure software. IBM says the acquisition will help expand the enterprise mobile capabilities it offers to clients. Financial terms were not disclosed but we’ve heard that the acquisition price is around $70 million, according to Israeli publication Calcalist.

WorkLight, which has raised $18 million in funding, allows organizations develop and deliver HTML5, hybrid and native applications with, and deliver these applications with mobile middleware, security features and integrated data management and analytics. Worklight dramatically reduces time to market, cost and complexity while enabling better customer and employee user experiences across more devices.

Worklight’s customers range in terms of sector and include companies in financial services, retail and healthcare. For example, a bank can create a single application that offers features to enable its customers to securely connect to their account, pay bills and manage their investments, regardless of the device they are using.

IBM says that Worklight will become an “important piece of IBM’s mobility strategy,” offering clients a development platform that helps speed the delivery of existing and new mobile applications to multiple devices and ensures secure connections between smartphone and tablet applications with enterprise IT systems.

IBM’s goal is to provide an end-to-end solution that allows enterprises to build and connect mobile apps, manage security on these apps and devices, provide analytics for mobile data, and more. In addition to Worklight, IBM today is also unveiling IBM Endpoint Manager for Mobile Devices, a new software system that will enable corporate users to manage and secure their mobile devices these applications are running on.

The acquisition of Worklight is expected to close in the first quarter of 2012. Worklight will sit within IBM’s Software Group.

IBM just released fourth quarter and fiscal year 2011 earnings today. Non-GAAP earnings came in at $4.71, up 11 percent; GAAP earnings per share were $4.62 per share (up 11 percent) for the quarter. Net income for the quarter was $5.5 billion, up 4 percent for the quarter, with revenue coming in at $29.5 billion, up 2 percent from the previous year. Analysts expected earnings of $4.62 a share on revenue of $29.7 billion. So basically, sales missed but profits beat expectations.

Revenues from the Software segment were $7.6 billion, an increase of 9 percent. But revenues from IBM’s hardware systems and technology segment totaled $5.8 billion for the quarter, down 8 percent from the fourth quarter of 2010.

“We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow,” said Ginni Rometty, IBM president and chief executive officer. “We delivered outstanding results in all four of our strategic initiatives for the quarter and the year, as we continued to realize the benefit of our long-term investments in growth markets, business analytics, Smarter Planet solutions and cloud. We are well on track toward our long-term roadmap for operating earnings per share of at least $20 in 2015.”

Net income for 2011 in total was $15.9 billion compared with $14.8 billion in the year-ago period, an increase of 7 percent. Revenues were $106.9 billion, an increase of 7 percent, compared with $99.9 billion in 2010.

Quarterly revenues from the company’s growth markets increased 7 percent and tevenues in the BRIC countries — Brazil, Russia, India and China — increased 10 percent, says IBM. The company ended 2011 with $11.9 billion of cash on hand.

In the fourth quarter, IBM named Rometty as the company’s new CEO and president, replacing Samuel J. Palmisano, who remained as chairman of the board. The company’s fourth quarter acquisitions included DemandTec, and Emptoris.

In its first acquisition of 2012, IBM has announced the purchase of cloud-based software testing platform Green Hat. Financial terms of the deal were not disclosed.

Founded in 1996, Green Hat allows developers to test software applications prior to delivery in the cloud. Developers can test TIBCO, webMethods, IBM WebSphere MQ, SOA, BPM, SOAP, REST and Cloud applications with the company’s platform as well as Virtualize unavailable applications and test application performance.

Green Hat, says IBM, creates a virtual environment that simulates a wide range of IT infrastructure problems and issues, without the constraints of hardware or software services because the platform is based in the cloud. The virtual test environment can be set up in a matter of minutes versus weeks, and for a fraction of the cost for developers.

According to IBM, software testing represents more than 50 percent of overall development costs, and testing teams often spend upwards of 30 percent of their time managing the complexity of the test environment. Green Hat will join IBM’s Rational Software business, and will help Big Blue’s enterprise clients manage software development costs, test cycle times and risk.

Green Hat customers include British Airways, H&M, T-Mobile, JP Morgan, Goldman Sachs and Virgin Mobile.

It looks like consumers in the U.S. were shopping online alongside opening presents this year. According to IBM’s Coremetrics retail data, online sales on Christmas Day grew by 16.4 percent from last year.

Similar to trends seen over the Thanksgiving holidays, more shoppers were flocking to mobile devices to complete purchases. IBM says that 18.3 percent of all online sessions on retailers’ sites were initiated from a mobile device, up from 8.4 percent in 2010 (an increase of 117.8 percent).

Sales completed from mobile devices grew, reaching 14.4 percent versus 5.3 percent on Christmas Day 2010, representing an increase of 172.9 percent. In terms of specific mobile devices, the iPad led all mobile device traffic to retailers at 7 percent, followed by the iPhone at 6.4 percent and Android at 5 percent.

The day after Christmas also brought increased online sales, says IBM. E-commerce sales for December 26 were up 10 percent and 18.7 percent of all online sessions on a retailer’s site were initiated from a mobile device. And 13.8 of total sales came from mobile devices.

The holiday shopping season is still not over, as many online retailers are offering discounts post-Christmas and around New Years. We’ll see how online retail spending performs over the next week, but all signs are pointing to record sales this year.

On the heels of purchasing merchandising software DemandTec for $440 million, Big Blue is continuing the shopping spree to advance its smarter commerce strategy. IBM has just announced the acquisition of Emptoris, a cloud and on-premise analytics software that brings more intelligence to procurement and retail supply chain operations. Financial terms of the deal were not disclosed.

Emptoris’ software helps companies maximize financial performance and optimize commercial risk when it comes to supply chain and inventory management, procurement, sourcing and more in retail environments. For example, a global oil and gas company could use Emptoris to figure out how to source operations across suppliers. Emptoris has more than 350 customers in 75 countries.

IBM says the acquisition furthers its Smarter Commerce initiative, which aims to help companies respond to shifting customer buying patterns. The company believes this is a $20 billion market opportunity, particularly in the software space.

IBM has made a major purchase today in the commerce and retail world—DemandTec, a retail marketing and merchandising software company. IBM is acquiring DemandTec (which listed on the Nasdaq) in an all cash transaction at a price of $13.20 per share, or approximately $440 million.

DemandTec provides retailers and e-commerce companies with tools to transact, interact, and collaborate on core merchandising and marketing activities. DemandTec’s cloud-based analytics software allows businesses to examine different customer buying scenarios, both online and in-store, so retailers can spot trends and shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.

For example, retailers can predict how consumers will respond to a price change before making the change. Or a merchant and supplier can work together to understand how one shopper segment differs from another to create a targeted merchandise plan.

DemandTec’s use of cloud-based price, promotion and other merchandising and marketing analytics helps companies better define the best price points and product mix based on customer buying trends. Essentially, DemandTec uses data analysis and forecasting to make the retail world smarter.

DemandTec customers include Best Buy, ConAgra Foods, Delhaize America, General Mills, H-E-B Grocery Co., The Home Depot, Hormel Foods, Monoprix, PETCO, Safeway, Sara Lee, Target, Walmart, and WH Smith. DemandTec also has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis.

For IBM, the acquisition is all about its smarter commerce initiative. IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone.

IBM’s recent acquisitions include Algorithmics, and Tririga.

As of yesterday afternoon, Cyber Monday online sales were up 18 percent but apparently a surge of activity yesterday evening helped push the day’s e-commerce sales to record amounts. Cyber Monday online sales, according to IBM’s Coremetrics report, were up 33 percent over 2010, and up 29.3 percent over Black Friday.

comScore is reporting that Cyber Monday sales reached a record $1.25 billion, up over 20 percent from last year, to become the heaviest online spending day in history. According to the Wall Street Journal, this is only the second time a billion dollars in online commerce has occurred in one day. For the holiday season-to-date, $15 billion has been spent online, 15 percent increase versus the same days last year.

Overall, 10 million people bought online on Cyber Monday, representing the first time on record that threshold has been reached in a single day. The average online buyer conducted 1.9 online transactions on Cyber Monday for a total of nearly $125 in spending.

IBM says that the average order amount was up 2.6 percent this year from $193.24 to $198.26. The shopping peaks during the day took place at 11:05am PST/2:05pm EST as well as after commuting hours on both the east and west coast.

comScore also reports that half of dollars spent online at U.S. Web sites originated from work computers, up slightly from last year. Buying from home comprised the majority of the remaining share (43.2 percent) while buying at U.S. Web sites from international locations accounted for 6.6 percent of sales.

On Cyber Monday, 10.8 percent of people used a mobile device to visit a retailer’s site, up from 3.9 percent in 2010. Additionally, mobile sales were up as well, reaching 6.6 percent on Cyber Monday versus 2.3 percent in 2010.

Interestingly, more people flocked to mobile devices to shop on Black Friday than Cyber Monday. On Cyber Monday mobile traffic averaged 10.8 percent compared to 14.3 percent on Black Friday. And consumer sales on mobile devices reached 6.6 percent versus 9.8 percent on Black Friday.

Apple’s iPhone and iPad continued to rank one and two for mobile device retail traffic (4.1 percent and 3.3 percent respectively). In fact, shoppers using the iPad drove more retail purchases than any other device with conversion rates reaching 5.2 percent compared to 4.6 percent for the iPhone.

Android came in third with 3.2 percent. Collectively iPhone and iPad accounted for 7.4 percent of all online retail traffic versus 10.2 percent on Black Friday.

Referrals from social networks were only slightly up yesterday from last week. Shoppers referred from Social Networks generated 0.56 percent of all online sales on Cyber Monday versus 0.53 percent on Black Friday. Similar to Black Friday, Facebook led the pack, accounting for 86 percent of all social media traffic.

Discussions on social media sites leading up to Cyber Monday increased in volume by 115 percent compared to 2010. Consumers were mainly sharing tips about using price comparison websites while avoiding cyber scams, Cyber Monday deals for international consumers and Black Friday in-store shopping experiences.

eBay also released its Cyber Monday stats, revealing that consumers in the U.S. spent two and a half times more via eBay Mobile this Cyber Monday than last year. PayPal Mobile announced a six-fold (552 percent) increase in global mobile payment volume compared to Cyber Monday 2010. And GSI Commerce announced a four-fold (374 percent) increase in U.S. mobile sales when compared to 2010.

Shoppers in Athens, GA; Los Angeles and New York spent the most via eBay Mobile on Cyber Monday. For PayPal, there was a more than four-fold (397 percent) increase in the number of customers shopping through PayPal mobile on Cyber Monday 2011 compared to last year. On Cyber Monday 2011, PayPal saw global mobile payment volume more than double (154 percent ) compared to an average Monday. And Cyber Monday 2011 resulted in a 17 percent increase in global mobile payment volume compared to Black Friday 2011.

We also saw record breaking Thanksgiving and Black Friday sales, so the big jump in Cyber Monday sales isn’t completely surprising. More and more retailers pushed lucrative online deals, as well as free shipping offers this year, making shopping online more convenient and wallet-friendly for consumers. And the risk of pepper spray incidents in stores certainly was an incentive for shoppers to purchase from their computers or mobile phones.

Early results for Cyber Monday are looking good for retailers. Cyber Monday 2011 online sales are already up 15 percent for this same time period over Cyber Monday 2010, according to IBM’s Coremetrics retailer data.

IBM says that it expects most online shopping to come from laptops and PCs during the day with mobile shopping activity picking up later in the day, when consumers are purchasing from home.

Currently 12.3 percent of consumers are using a mobile device to visit a retailer’s site and 7.4 percent of consumers are using a mobile to make a purchase. In terms of devices, the iPhone continues to lead all mobile device traffic at 4.88 percent, followed by Android at 3.9 percent and iPad at 3.26 percent.

Black Friday online spending was up over 20 percent, so it’s looking good for Cyber Monday. Last year, Cyber Monday was the heaviest day of online spending ever, with sales exceeding $1 billion. And it’s looking like e-commerce spending will be well over $1 billion.