IBM said it elected Virginia Rometty as president and CEO, succeeding Samuel Palmisano, 60, who will retire after 10 years in the post. Rometty will become the first woman in 101 years to lead IBM.

Rometty, 54, is now Senior VP and group executive for sales, marketing and strategy. She will assume her new position Jan. 1, when she also will become a member of the Armonk, N.Y.-based company's board of directors.

A systems engineer, Rometty graduated from Northwestern University with a degrees in computer sciences and electrical engineering. She has been with IBM since 1981.

In her new role, Rometty will become one of the top women executives in technology, as well as among the Fortune 500. Hewlett-Packard, the only larger tech company, last month elected Meg Whitman as its second female CEO. Whitman, though, lacks a technical background. She has degrees in economics as well as an MBA.

Other women tech CEOs are few and far between. At Oracle, Safta Catz is one of three co-presidents. Sheryl Sandberg is COO of Facebook. Carol Bartz was CEO of Yahoo until she was fired last month.

Indeed, even at IBM, Rometty is one of only two women among the top tier of management. The other is Linda Sandford, the senior VP for enterprise computing.

Like Palmisano, Romety made her way up the ladder at IBM through the services organization, which now constitutes the majority of revenue. She was Senior VP for IBM Global Business Services at the time when the company bought PricewaterhouseCoopers Consulting.

She also had been IBM's general manager for global services for the Americas as well as IBM's global insurance and finance sector.

I know the board agrees with me that Ginni is the ideal CEO to lead IBM into its second century, Palmisano said.

There had been speculation Palmisano might announce his retirement when IBM reported its third-quarter results Oct. 17. Instead, it was put off until Tuesday, when the directors met.

Palmisano, while stepping down as CEO, will remain Chairman of the No. 2 computer services company.

The board also elected David Farr, 56, CEO of Emerson Electric, as a director on Jan. 1.

IBM shares closed at $180.36 Tuesday, giving the company a market capitalization of $251.9 billion. The shares have gained 23 percent this year.