IBM has appointed current president Sam Palmisano as chief executive from 1 March, succeeding Lou Gerstner whose contract expires on that date when he reaches 60.
A long time IBM employee, 50 year-old Palmisano had been widely expected to take over.
"I feel very fortunate to succeed Lou Gerstner," he said. "Against all odds, he led IBM back from its darkest days. He transformed the company's culture and reignited growth."
And Gerstner was equally complimentary about Palmisano. "Sam's unique mix of strategic vision, passion and discipline, combined with his intimate understanding of IBM, makes him the right person to become IBM's next chief executive," he said.
Palmisano, who will retain the title of president, joined IBM in 1973 as a sales representative and became president in September 2000.
He is credited with leading a redesign of the company's entire server line up, as well as the company's thrust with the Linux operating system.
During his reign as head of IBM Global Services, the business unit's revenues grew nearly 30 per cent to $32.2bn.
"Over the last decade, Sam Palmisano has taken on a number of IBM's most significant challenges, from building the services business to transforming our server line," said Gerstner.
An icon at IBM since 1993, Gerstner watched the company's share price increase more than 800 per cent and its market value grow to around £180bn during his tenure.
Gerstner, who will remain IBM chairman until the end of the year, is widely credited with transforming IBM from a flagging computer maker into a competitive global enterprise, focusing on services and technology.
Big Blue also announced that vice chairman John Thompson will retire from the company and board on 1 September.
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