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The New Color of Tech Envy: IBM Blue

IBM's storied history took a dramatic turn when Big Blue got out of the personal computer industry.

At the time, and I covered that story, there was a sinking feeling that IBM's relevance was at risk.

The company was trying to reinvent itself, but into what?

And how successful would it be?

Short answer: Very.

And now, the IBM model is turning into something of a playbook for other massive tech companies looking to come up with a new, more efficient, streamlined way of banking profits. On the eve of IBM's quarterly earnings, it's a good opportunity to see what's happening here, and whether these other companies stand the same chance at success that IBM has achieved.

Consider Xerox's recent merger of ACS. Or HP's acquisition of EDS. Or Dell's purchase of Perot Systems.

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All of these massive deals have one critical thing in common: Big hardware trying to transform into big services instead. IBM though will argue that these deals also feature another common theme: that they're largely labor-centric, US-based and offer comparatively lower end services.

Consider the IBM model, going back to when CEO Sam Palmisano took over as the company's chairman and CEO in 2003: 80 acquisitions since then designed to automate services, augment software assets, and grow margins.

While so many key competitors in the business like HP and Dell and others are Johnny-come-latelys to this services party, IBM has been there for years, learning the hard lessons and then applying them to the new model.

Catch-up in the industry comes at a heavy cost so it'll be interesting to see whether HP's Mark Hurd and Michael Dell will try to re-invent the wheel with their own strategies, or adopt the IBM methodology which IBM has already done so well.

Which leads me to the company's earnings report after the bell tonight.

The Street is looking for $2.38 a share on $23.4 billion in revenue. Keep an eye on gross margins, expected to be around 45.5 percent. Services margins have jumped in 17 of the past 18 quarters; watch the company's hardware business, particularly any growth in servers, profits on the software side too.

On a unit by unit basis, the Street anticipates $9.32 billion in Technology Services revenue; $4.42 billion in Business Services; Systems/Technology should print $3.86 billion in revenue; $5.11 billion in Software revenue.

As far as guidance is concerned, remember that IBM no longer offers quarterly outlooks, but the company did raise EPS expectations to $9.70 earlier this year, and that might bump up with tonight's report if the trends everyone is watching as far as stabilized and even increased IT spending continue.

If the increase in full-year EPS doesn't happen, that might indicate a slowdown in IT spending, and that doesn't bode well for how IBM shares will trade on this news.

There's a fair amount of pressure on IBM to keep this tech rally going, so it will all come down to what the company is seeing on a macro-economic basis around the world. Cautious optimism may finally give way to something a little more stable. And that's got to be good not just for IBM, but broader tech.

Questions? Comments? TechCheck@cnbc.com