IBM v EU

Just as IBM was basking in the success of its zEnterprise mainframe-in-a-box, along comes the European Union regulators to take it to task for not allowing its operating system to run on other hardware, and not being fair to spare-part vendors.

The European Commission has already warmed up for its probe into IBM’s workings by taking action against Intel and Microsoft. EU antitrust laws ensure that big organizations deal carefully with small competitors. The EU can issue a range of fines and sanctions should it believe a dominant organization in the market place is abusing its position. IBM’s legal team are used to this kind of battle. Back in 1956 the US Department of Justice reached a consent decree with IBM that, in effect, created a market for used mainframes and mainframe parts. In 1984 the EU agreed with IBM that competing mainframe companies would have access to the mainframe platform.

As we’ve mentioned before, the first complaint comes from T3 and TurboHercules saying that IBM ties its mainframe operating system to its mainframe hardware – and thereby destroys the emulation market. The second investigation was initiated by the Commission alleging discriminatory behaviour towards competing suppliers of maintenance services – spare parts to you and I.

How does IBM respond? The company said that it intends to cooperate with any EU inquiries, while denying there was any merit to the complainants’ claims. It then alleged that the accusations were being fuelled by business rivals. Microsoft is a minority stakeholder in T3. IBM went on to suggest some of its larger competitors want “to mimic aspects of IBM mainframes without making the substantial investments IBM has made and continues to make”. IBM declared these competitors, “are violating IBM’s intellectual property rights”. It continued: “IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies”.

It will be interesting to see what comes out this. Bear in mind there’s the NEON zPrime case waiting in the wings as well.

In its on-going watch on successful companies, the Commission has also launched a preliminary anti-monopoly investigation into Google, examining its power in the online search and digital advertising markets.

What is fair?

Is it fair to treat all people equally? This isn’t the start of some philosophical discussion, just the starting point for this blog. So, if you agree, it’s not fair to treat all people equally (remember how the prodigal son was treated), then can it be fair to treat all organizations equally? And, if different organizations should be treated differently, who is to decide what is fair and what criteria they should use for deciding what’s fair?

Part of the answer is that these decisions are usually left to the courts. And so, Neon Enterprise Software, which is currently embroiled in a legal dispute with IBM in the US courts, is filing a complaint with the European Commission alleging “ongoing anti-competitive and abusive conduct” by IBM.

Neon originally filed a lawsuit in December 2009 accusing IBM of intimidating potential customers away from its zPrime software. zPrime, as you’ll recall, allowed businesses to run workloads on specialty processors (zIIP and zAAP) – giving money to NEON. That saved organizations running those workloads on their central processors and the associated usage charges – money that would have gone to IBM. In January, IBM filed a countersuit against Neon, suggesting an attempt to hijack IBM’s intellectual property. They suggested it was like stealing cable TV.

The European Commission is already familiar with anti-IBM cases. T3 Technologies, which was a clone mainframe distributor, has filed a complaint in Europe. And TurboHercules, with its commercial version of the open source Hercules mainframe emulator, has similarly filed a complaint. Microsoft faced the EU from about 2003 to 2009 – you may remember suddenly having a choice of browsers being made available on your PC.

So is IBM acting fairly? Are these other organizations being fair? We’ll wait and see what the courts say, but I wonder what you think?

Interestingly this week NEON offered zPrime for IMS for just 1 dollar to customers. You can find the announcement at www.neon.com/neon/news_070110_1.shtm.

On a completely different note, IBM has a new White Paper entitled “Enterprise and Web 2.0 Application Support in a Modern Mainframe Environment”. It can be found at http://images.tmcnet.com/tmc/whitepapers/documents/whitepapers/2010/2629-enterprise-web-20-application-support-from-ibm.pdf. It discusses how IBM WebSphere Portal allows mainframers to make applications available on the Web.

IBM WebSphere Portal Enable for IBM z/OS leverages z/OS resources (eg RACF and z/OS Workload Manager technology) and the White Paper discusses how to add Web-facing workloads. By using WebSphere Portal, organizations provide added value to their customers and employees while at the same time enjoying the advantages of mainframe performance, scalability, and quality of service.

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...