IBM’s lawyers can take the day off!

IBM’s dark-suited legal team can relax a little following the news that three organisations have agreed to drop antitrust complaints filed against IBM in Europe and the USA. The companies involved are T3 Technologies, NEON Enterprise Software, and TurboHercules.

Back in October 2009, the US Department of Justice (DoJ) started investigating IBM’s mainframe monopoly following complaints from T3. Back in 2000, T3 launched its tServer low-end mainframe based on the FLEX-ES technology from Fundamental Software Inc (FSI). IBM is saying T3 withdrew its appeal for a ruling in the US courts in May this year. IBM also says T3 has withdrawn its European Commission complaint, alleging antitrust behaviour by IBM.

IBM also says that NEON has dropped its European Commission complaint. This makes sense because in June NEON agreed (in the sense that a person with their arm twisted agrees) to stop reselling and distributing its zPrime product and requested customers to remove and destroy their copies. zPrime was controversial since it first appeared in July 2009 because it allowed mainframe users to run workloads on specialty processors rather than on the main processor. IBM’s revenue stream is based on main processor workloads. So you can see why users would welcome such a product (and the consequent savings they would make) and why IBM would not. As a consequence claims and counter claims flew back and forth between the two companies until the resolution in early June. Since then, NEON’s IMS products have been acquired by BMC.

Finally, TurboHercules has dropped complaints about IBM with the EU. TurboHercules, a French company, was set up in 2009 by Roger Bowler, who created the open source Hercules mainframe hardware emulator. TurboHercules allows mainframe operating systems and applications to run on x64 and Itanium processors running Windows, Linux, Mac OS, or Solaris as the host environment for Hercules. The organisation was part funded by Microsoft (obviously, no lover of mainframe technology).

But it’s not all good news for IBM. It’s still the subject of antitrust probes by the US DoJ and the European Commission. So, those lawyers can’t take off too many days!

And on a completely different topic: don’t forget it’s the Virtual IMS user group meeting on Tuesday with Scott Quillicy, CEO and Founder of SQData talking about IMS replication for high-availability. There are more details at www.fundi.com/virtualims.

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.

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.

OpenMainframe.Org

I must admit that until the Arcati Mainframe Yearbook 2010 was published, I was only dimly aware of OpenMainframe.org (their Web site, not surprisingly, is at openmainframe.org). They sponsored the Yearbook, and so I thought I’d find out more about them.

Their Web site explains that OpenMainframe.org is a forum for exchanging news, views, and information related to creating an open market for IBM-compatible mainframe solutions. And I guess they would put the stress on the word “compatible”.

It goes on to explain that the Web site was built by a community of individuals and companies sharing a common interest in promoting a fair, open, and diverse marketplace for mainframe solutions. There’s a big thank you to T3 Technologies (which describes itself as effectively out of business due to the direct actions of IBM – you may remember its tServer mainframe, based on FLEX-ES, was a great success) Microsoft Corporation (not a fan of IBM), the Computer & Communications Industry Association (CCIA says it promotes open markets, open systems, open networks, and full, fair, and open competition), Peerstone Research (which advises customers on buying decisions), TurboHercules (which describes itself as the first commercial entity exclusively dedicated to Hercules, the well-known open source software implementation of the IBM mainframe architecture) and others.

This group of IBM-alternativists informs us that it believes IT customers can benefit from lower costs, increased innovation, broader choice, and better customer service when markets are truly open and multiple vendors compete for business. A sentiment that it’s hard to disagree with – unless, I suppose, you’re an IBM accountant!

The site lists a large number of laudable beliefs, including:
•    IBM mainframe system software, middleware, and intellectual property should be available to all solution providers and customers for licensed use on alternative hardware platforms under reasonable and non-discriminatory terms.
•    In order to promote interoperability, compatibility, and an open market for mainframe solutions, IBM should be required to publish interface and protocol information for mainframe technologies.
•    Given the strategic value of IBM-compatible mainframe systems for businesses and governments worldwide, multiple vendors should be allowed to participate in an open market for the supply of mainframe hardware, software, and services without interference from IBM. An open market will encourage price competition, differentiated innovation, and broader solution choices to meet the needs of customers.

I’ve got to say, that it’s a long time since I was at a site with an Amdahl mainframe or even a Hitachi one. Whatever happened to these Plug-Compatible Mainframes (PCMs). And IBM has squashed the life out of mainframe software emulation systems from organizations such as Platform Solutions and Fundamental Software. OpenMainframe.org is keen to see some kind of alternative to a monolithic IBM – hence the support for (and from) TurboHercules.

I’ve become a member. I’m a strong supporter of IBM, but I can also see the benefits from competition. I talk to people who wouldn’t even consider a mainframe solution at the moment – without understanding the benefits – who might think differently if there were a cheaper way of bringing them into the mainframe fold.

If you feel the same – and they list IBM’s assault on NEON’s zPrime as just one example of IBM’s tactic of crushing threats – then why not join as well?