IBM Indian Mainframe Business Under Fire

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IBM aims to discredit a study in India that claimed its mainframe business practices could hinder competition in that country’s market

IBM’s mainframe business is under fire again, this time in a study from India.

The 100-page PDF report by ICRIER (Indian Council for Research on International Economic Relations) claims that IBM’s business practices around its mainframe business in India are thwarting competition, an accusation that echoes similar ones made in the United States.

ICRIER noted in the report that many of the applications that run on IBM mainframes are tied to the vendor’s z/OS operating system, creating a lock-in scenario that makes it difficult and costly for users to migrate workloads to other hardware platforms.

The study said IBM’s mainframe business practices aren’t as big a concern in India as they are in the United States because System z’s penetration to date is not that large. However, ICRIER noted that IBM holds a dominant lead in the country’s high-end server market—50 percent market share, compared with 33 percent for Hewlett-Packard and 17 percent for Sun Microsystems—and that it is something to stay aware of. The report called for IBM to unbundle its hardware and software.

As it has done when faced with similar accusations in the United States, IBM fired back, noting that a sponsor of the study was, a group that IBM officials said in a statement “is bought and paid for” by Microsoft.

IBM officials said the study had no credibility, and argued that they have been able to build the mainframe business in the face of competition from x86-based systems over the past decade by spending billions of dollars on innovation. Some of the innovation involved ways to expand the mainframe’s reach, through the development of specialty processors to let the systems run such tasks as Linux and Java workloads, and also by offering less expensive systems for midrange customers.

IBM’s mainframe business has come under scrutiny in recent months. A U.S. District Court in October tossed out a lawsuit filed by T3 Technologies, which builds non-IBM systems that can run mainframe workloads. However, around the same time, the Department of Justice reportedly opened an investigation into the mainframe business.

In December, Neon Enterprise Software filed a lawsuit against IBM, claiming that the vendor’s anticompetitive business practices have hurt Neon’s business. Neon sells zPrime, a software product designed to let IBM mainframe users save money by enabling them to shift more workloads from expensive mainframe central processor onto less costly specialty processors.

IBM filed a countersuit against Neon in January, claiming Neon was enticing customers to violate their licensing contracts with IBM by using zPrime.

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