The recession is over, IBM is in profit!

Well, half right at least! IBM has reported its first quarter results for 2010 saying that profits are up 13 percent to $2.6 billion and sales are up 5 percent at $22.9 billion. As a consequence, IBM has raised its profit guidance for the year by 20 cents to $11.20 per share.

The UK managed an 8 percent increase in revenues. The Americas had 6 percent growth. Europe, as a whole, provided revenue growth of 5 percent. And Asia/Pacific provided 4 percent revenue growth.

In terms of hardware – provided by the Systems and Technology Group – sales were up by 5 percent. However, System z mainframe sales fell by 17 percent. This can be explained by the fact the new z11 mainframes are due later this year and people will be holding of purchasing until those new mainframes become available. Trouble-makers may suggest that hardware sales are down because people are running their mainframe applications on TurboHercules boxes!

Software grew by 10.6 percent to just over $5 billion. Sales of Tivoli management software increased by 23 percent. WebSphere middleware sales climbed by 13 percent. Income from Rational development tools was up by 7 percent. Disappointingly, but perhaps not surprisingly, Lotus software increased by only 1 percent.

Global Services was responsible for $13.7 billion of sales resulting in a 4 percent increase.

But life isn’t all good news for IBM with that antitrust claim from the European Commission brought by TurboHercules. It was only a couple of weeks ago that I was talking about the 10th birthday of Linux on a mainframe – and Linux is open source software. IBM seems unable to make up its mind whether it is the king of open source (Linux) or the arch-enemy of Intellectual Property rights in the open source community (TurboHercules). IBM claims that its battle with TurboHercules in Europe is a result of the hidden hand of Microsoft pulling the strings.

I’m pleased to see IBM making a profit. I earn my living by working with people who work on IBM mainframes. However, recently, I have had a strange nagging doubt. What if you could run mainframe software on a reasonably beefy x86 box with some kind of emulator like TurboHercules? What if the whole mainframe hardware strategy that IBM has been driving for all these years is little more than a house of cards? If that were the case, then no wonder IBM is doing its best to get rid of any company offering low-entry access to mainframe software. I wonder...

IBM-Oracle face-off

Having upset the open source community by legal action against TurboHercules, and worried its own customers and made life very interesting for third-party software vendors by counter-suing NEON Enterprise Software, IBM has now taken a swipe at the Oracle-Sun alliance by more the more conventional method of offering its own hardware and software to compete with their product.

IBM recently announced a new range of integrated systems for large-scale data analysis, which is clearly an attack on Oracle’s Exadata platform. Exadata first appeared in 2008, when Oracle partnered with Hewlett-Packard for the hardware. The 2009 V2 was meant to run on Sun servers. Exadata is an OLTP (OnLine Transaction Processing) database machine that Oracle claims is the world’s fastest machine for data warehousing and OLTP. By “world’s fastest” they, of course, mean faster than any IBM offering! As well as Oracle’s database and storage server software, it used Sun servers and FlashFire solid-state technology.

IBM’s response includes the pureScale application system plus Smart Analytics for System z and x86 machines. IBM is saying things like “deep compression” to reduce storage needs and an ability to handle “enormous amounts” of data. The pureScale application system comprises Power7 servers, WebSphere Application Server (WAS), and DB2 pureScale software. The Smart Analytics offering integrates Cognos BI and InfoSphere data warehousing software to handle business intelligence needs.

The mainframe Smart Analytics System 9600 is based on a System z10 Business Class (BC) mainframe with two logical partitions in a base configuration. There are six versions – the base 9600 has z/VM to manage the partitions and runs z/OS in one partition and Linux in another. The z/OS partition comes with DB2 and DB2 Utilities Suite for managing and tuning the database. The Linux part has Cognos 8 analytics and InfoSphere Warehouse.

Now in my opinion, this is a much better way of doing business – competition rather than litigation. Ordinary people – you and me, I mean – can then choose which they’d prefer, and go out and buy it (or rent it, or any of the other business models). With litigation, customers might be afraid that the products they have bought may become unlawful, or the company they bought from may be forced to cease trading, or they get so locked up in the court case that no further development of the product takes place. Now the cynical amongst you might suggest that that’s exactly what IBM hoped to get out of bringing in the lawyers. Maybe we really are returning to a climate of FUD (Fear, Uncertainty, and Doubt). Let’s hope not!

So sue me!

OK, I don’t really mean me. It’s just that IBM seems to have been particularly litigious recently, and in many ways seems to have returned to its bunker mentality of old rather than the caring all-embracing modern self that we were just getting used to. Two particularly high-profile cases are IBM versus TurboHercules and IBM versus NEON Enterprise Software.

TurboHercules, you’ll remember, sells services around the open source Hercules project – there was an interesting article about it in the recent Arcati Mainframe Yearbook 2010 (www.arcati.com/newyearbook10). Hercules basically emulates a System z mainframe on a PC. IBM has rattled its corporate sabre saying that it has “substantial concerns” about the Hercules project infringing its patents.

The Internet is abuzz with people rushing to mount their high horses to condemn IBM for alleged double standards. Last time, I was talking about 10 years of Linux – the well-known open source software – on mainframes, and here they are attacking another open source project. Well, they are probably right. I’m no apologist for IBM. I personally feel that these alternative entry points to mainframes are a good thing. But I can also see IBM’s point of view: they are a business, and they don’t get any income from the Hercules project. Some bean counter somewhere is going to flag this as a bad thing! And someone else looking at revenue income is going to view this as a hole through which they are losing money.

So, Hercules has filed an antitrust motion in the European Union asking for IBM to unbundle its mainframe operating system from its hardware. IBM claims the motion is unfounded and offers the metaphor that a software emulation business is just like selling cheap knock-offs of brand-name clothing.

Neon Enterprise Software, you’ll recall, produced zPrime, which allows “ordinary” mainframe work to be run on specialty processors – thus saving the users money because only work running on the main General Purpose Processor (GPP) is chargeable (although, of course, the specialty processors must be paid for). IBM sent out letters suggesting that people using zPrime would be breaking the terms of their contract with IBM. NEON sued claiming IBM was illegally using its powerful position in the marketplace to hurt sales of zPrime. IBM then countersued claiming that zPrime violates their (IBM’s) copyrights (that word again).

Grasping for metaphorical language again, IBM suggests that NEON’s business model is “no different than that of a crafty technician who promises, for a fee, to rig your cable box so you can watch premium TV channels without paying the cable company. Even if it could be accomplished technically, it is neither lawful nor ethical." Again, the blogosphere is full of people listing their “why I hate my cable provider” stories.

So, it’s a good year to be a lawyer. A good year for people writing metaphors for IBM. And probably a bad year for mainframers and would-be mainframers. And, in terms of publicity, a bad year for IBM.