While Microsoft chases Yahoo, Eric Schmidt, Google's CEO and chairman is seeking a stronger relationship with IBM, something in which Big Blue's chairman and CEO, Sam Palmisano, appears very interested.

Schmidt, who spoke at the IBM's PartnerWorld conference, later shared the stage at the Nokia Theater in Los Angeles with Palmisano, to discuss cloud computing, globalization and other issues.

The two CEOs bantered like old golf buddies, praising each other's organizations and rarely giving moderator Pankaj Ghemawat, a professor of global strategy at the IESE Business School in Barcelona, a chance to ask questions.

Google and IBM collaborated last year on a compute cloud-type system -- a platform for delivering scalable IT capabilities as a service -- and then turned it over for universities to use. It was a pilot project, but it was clear from today that the two firms will be doing more.

Google wants enterprise customers for its applications, which are delivered as services via compute clouds. What it needs to help make that happen is IBM.

In response to a question about IBM from this reporter after his talk, Schmidt said IBM is one of the "key planks of the strategy" for reaching enterprise customers. "Customers like to buy from strong sales forces that provide real quality service, and IBM is the best at that," he said.

For his part, Palmisano offered a Google-like view of the universe when told his business partner audience that the "PC is receding in influence," and is being replaced by network infrastructures.

To that point, IBM this week said it will offer an iTunes-like application delivery model for small and mid-sized businesses. Its Blue Business Platform will deliver complete and integrated software from either IBM or participating independent software vendors.

Its "Global Application Marketplace" will include applications and services, delivered via an online catalog directly to a user's server, as well as Web 2.0-like peer ratings of the products. IBM officials see it as a direct challenge to Microsoft in that market.

And there may be other, less tangible benefits to Google-IBM cooperation.

Frank Gens, an IDC analyst, said the two firms likely want to pool engineering talent on developing a cloud computing platform, as well as putting both their brands behind it. And combining Google's "cool" with IBM's enterprise credibility could boost acceptance of the cloud business platform.

Today, IBM is developing Blue Cloud, a system that will enable enterprises to build cloud-type system as a means to deliver services via a cloud internally, or to external users. It's due to release details of the system in the next month or two.

Palmisano said he believes he and Schmidt share a common view of the future, which includes commitment to standards and open architectures.

IBM and Google, said Schmidt are similar in many respects, with "engineering-oriented cultures" and support for collaboration.

Palmisano said maintaining a strong research and development effort is critical for IBM, otherwise his "scientists would leave -- they would go to Google."