When someone carrying a transmitter touches another person carrying a receiver, information is transferred. The data transfer rate is equivalent to that of a 2400-baud modem. However, researchers expect that this will increase to around 400,000 bits per second in the future.
"We've dubbed the technology the Personal Area Network," said David Yaun, IBM's research division media manager. "It's an exciting application and one that has a host of applications."
The theory behind the PAN is simple. The salinity of human bodies means they are good conductors of electricity. The PAN transmitter creates an electrical field that passes a small current through the surface of the body over which data is carried. When two people touch, a connection is made and the current runs from one to the other.
"The current used is very, very small - just one billionth of an amp," Mr Yaun said. "This is far less than the electrical currents already in the body and so is completely safe. In fact, the electrical field you create by combing your hair is more than a thousand times greater than that used for the PAN."
Aside from hi-tech party tricks, IBM predicts PAN technology will have a number of useful applications. "Anything that involves security or identity checking is a potential use for this technology," said Mr Yaun.
Transmitters could be used to allow access to buildings or cars. Users could simply touch a pad and identifying information would be transmitted through the fingers. The same concept could be used in public telephones. Handsets equipped with PAN sensors could recognise users and enable calls to be made without the need for complicated ID numbers or charge cards.
The technology could also allow people to exchange electronic business cards with a handshake. Exchanged information could be stored in an electronic device worn by the user and later downloaded into a personal computer.
"Another use we foresee is the ability to connect all the electronic devices carried by an individual," said Mr Yaun. "Cellular phones, pagers and personal digital assistants (PDAs) could work together and exchange information through the user's body."
For example, a pager could transfer a received number directly to a mobile telephone, allowing the call to be returned at will. Health workers could also benefit by being able to get information on a patient simply by touching them. This could be particularly useful in accidents or situations where rapid treatment was necessary.
The PAN transmitter device is about the size of a pack of playing cards and the receiver slightly larger. "These will be miniaturised with further development," Mr Yaun said. "They need to be much smaller before people will be able to wear them with ease."
Another area needing further development is security. Before PAN technology can be used in everyday situations, it is important to ensure that information is only transmitted when the user wants it to be. "We call it contagious information. You don't want someone who brushes against you on the train to have access to your personal details," said Mr Yaun.
PAN technology is still very much in the testing and development phase. IBM predicts it will require another 18 to 24 months in the labs before any really useful devices emerge. "I think you will see PAN technology in daily life by about 2007," Mr Yaun said.
IBM's PAN technology is just one result of the company's massive research and development programme. During 1996, IBM invested $5bn in research and its labs are staffed by about 2,600 employees. According to Herbert Kircher, the managing director of IBM Deutschland Entwicklung, such investment is necessary to ensure IBM remains at the forefront of technical development.
Mr Kircher, a former director of one of IBM's research labs, predicts technology will become pervasive and an unobtrusive part of people's lives.
"Ensuring a better quality of life rather than simply producing impressive technology will be the ultimate challenge for IT companies in the future," Mr Kircher said