The Future of Tech August 27, 2009, 5:00PM EST

Big Blue's Global Lab

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Saudi Arabia's KAUST is "a magnet for smart people," says CIO Al-Ghaslan Ben Baker/Redux Pictures

Niu Gang is looking to IBM to transform China Telecom technology David Hogsholt/Getty Images

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While most corporate arrangements with university researchers call for the funding to come from the corporation, IBM aims for a minimum of 50% funding by its partners. Also, the goals must be grand—focusing on areas of research IBM considers crucial to its future. For example, IBM is building and jointly operating a new $70 million semiconductor lab for nanotechnology research with ETH Zurich, a state-funded university in Switzerland. IBM hopes the research will help produce the next semiconductor switch—replacing technologies that have held sway for nearly half a century. By participating in this kind of research, countries have the potential to build new industries, and universities can attract the best faculty and students.

Kelly struck his first partnership with the King Abdullah University of Science and Technology in Saudi Arabia. The school, scheduled to open on Sept. 23, is the country's attempt to create a world-class research university from scratch. It's hiring top scholars from all over the world. "Our goal is to kick-start an innovation-based economy," says Ahmad O. Al-Khowaiter, the university's vice-president for economic development. "We need a couple of success stories, and we think this will lead to one."

KAUST agreed to buy an IBM supercomputer, which is an essential tool in the research projects that IBM and the Saudis are targeting. Among other things, the two teams will collaborate on a study of the nearby Red Sea, which they believe will help improve oil and mineral exploration. "[The computer] is a magnet for smart people, and it makes it possible for us to solve big problems," says Majid F. Al-Ghaslan, KAUST's interim chief information officer.

Now, dozens of deals are in the offing around the world. IBM uses a complex algorithm to identify the most promising situations. The factors considered include everything from available talent to government stability and corruption.

Kelly got an update on the latest possibilities during a daylong meeting of lab directors and department heads on July 15. About 30 people gathered in a conference room and listened to Colin Parris, head of the collaboratories development team, present the update. He showed a map of the globe with dots all over it—except for sub-Saharan Africa and South America. Kelly sat near the front of the room with his legs crossed and his chin resting on his hand. "Look, guys. South America. Nothing yet," he said, gesturing at the map. "You've got to get started."

There's certainly plenty of action elsewhere. A dozen potential deals are under discussion in China alone, and one partnership is already off the ground. IBM began working last October with China Telecom (CHA), the government-controlled communications giant, to apply its data analysis technologies to China Telecom's huge database of subscriber and service information. As a test project, China Telecom wanted to be able to understand customer desires so it could craft improved packages of mobile, landline, and broadband services. Using IBM algorithms, researchers are chomping through billions of service records looking for patterns.

Niu Gang, deputy director of China Telecom Technology Research Institute in Shanghai, says the challenges his company faces are similar to those IBM confronted in the 1980s. "[IBM] successfully transformed itself," he says. "We hope technology innovation will help transform us into a brand new company."

For IBM, the alliance offers a pathway into an important market. China Telecom's service data gives IBM scientists a rare opportunity to try out technologies on massive amounts of real-life data and fashion algorithms optimized for the telecom industry. IBM is already using some findings as it works with other telecoms.

IBM looks for a large payoff from each collaboratory. In the case of the Zurich project, the company did not want to bear the expense of building a new clean room for advanced chip research on its own.