IBM CEO Sam Palmisano will hand over the reins to global sales chief Virginia Rometty from 2012, ending a reign of nearly a decade during which he helped transform Big Blue from a PC hardware company into a global services behemoth.

The move sets up Rometty, 54, as a rival to Hewlett-Packard Co CEO Meg Whitman for the unofficial title of most powerful woman in technology, mirroring a long-running, sometimes bitter rivalry between the two companies.

In his nine years as IBM's leader, Palmisano has exited low-margin businesses including PCs, printers and hard drives. He expanded the company's offerings in services, consulting and software.

Rometty most recently served as senior vice president of global sales for IBM after leading its global services business, where IBM is the world's biggest provider of technology services.

She will take the new post effective January 1.

Palmisano, 60, will hold onto his current position as chairman.

(Reporting by Jim Finkle; Editing by Gary Hill)