Welcome!

You will be redirected in 30 seconds or close now.

ColdFusion Authors: Yakov Fain, Jeremy Geelan, Maureen O'Gara, Nancy Y. Nee, Tad Anderson

Related Topics: ColdFusion, IBM Cloud, Containers Expo Blog

ColdFusion: Article

T3 Sues IBM To Break its Mainframe Monopoly

Its 47-page suit filed in district court in New York the other day says IBM has been squeezing out any competition

T3 Technologies Inc., once the world's second-largest mainframe systems integrator, has sued IBM for destroying its business, charging it, for starters, with tying, monopoly maintenance and leveraging, denying access to an essential facility and restraint of trade.

It has asked the court for permission to join the massive, very similar antitrust suit that mainframe wannabe Platform Solution Inc. (PSI) filed against IBM earlier this year.

T3, a PSI reseller, wants a jury trial, treble damages, IBM's anticompetitive practices permanently enjoined and the court to order IBM to license its mainframe patents, which it says are an essential facility, on reasonable and non-discriminatory terms.

Its 47-page suit filed in district court in New York the other day says that since IBM's consent decree with the United States government was phased out in 2001 IBM has been systemically squeezing out any competition to its mainframe monopoly and that it has reneged on its undertaking to the government to keep its mainframe operating system available on RAND licensing terms after the decree expired.

It accuses IBM of conning the market into standardizing on IBM mainframe architecture by freely and broadly disseminating its hardware and software specifications and then pulling the rug out from under it by refusing previously guaranteed licenses.

"IBM's policy of RAND licensing and system openness was integral to its success, public image and reputation," it says. "Consumers have been deceived into purchasing IBM's products based on its reputation and representations of openness and fairness."

T3 is particularly incensed that "IBM postures itself as a champion of 'open systems and standards,'" demanding that competitors like Microsoft provide reasonable and non-discriminatory access to interoperability information but won't do it itself. It's a fraud and a hypocrite, it says.

And T3 points out that the market is completely captive to IBM. There are no reasonable PCM substitutes; the TCO of an IBM z/990 is 30%-60% cheaper than combining 30 Sun or Linux boxes to do the same task. And upwards of a trillion dollars worth of mainframe software, mostly written in COBOL, can't be rewritten and run on other machines.

Its suit reminds the court that when the DOJ agreed to dissolve IBM's consent decree the DOJ warned that "should IBM engage in anticompetitive tying - be it to parts or operating system - the United States could bring an action for injunction relief…" and that "IBM would be liable to a host of potential private treble damage actions."

QSGI, a buyer, refurbisher and reseller of IBM zSeries mainframes, also said IBM is forcing it out of business during its Q3 conference call with Wall Street a few weeks ago.

It blamed IBM's use of "actionable anticompetitive business practices" that "have impacted the entire industry for remarketing of these zSeries mainframe systems."

T3 says money is behind IBM's monopoly protection. "If the downward trend in price per MIPS between 1960 and 2000 had continued from 2000 to 2006, the price per MIPS should now be approximately $165 - but today it is more than six times that amount at approximately $1,000." As a result, the largest systems today cost closer to $18 million rather than $3 million.

According to the story T3 told the court, it used to resell low-end sub-50 MIPS IBM mainframes mostly to SMBs and state and local governments while IBM concentrated on the Fortune 500, that is it did until IBM eliminated all its sub-60 MIPS products in 1999. T3 claims the move forced small users to buy bigger, pricier machines than they needed.

So without that IBM product to sell, T3 started selling its own Intel-based tServer in 2000.

With software from Fundamental Software Inc. (FSI) the tServer could run IBM's 31-bit mainframe operating system. It was a cheaper sub-80MIPS stand-in for IBM mainframes - and since Amdahl and Hitachi had just exited the mainframe market - T3 was the only alternative to IBM's larger machines.

The FSI software was created under a patent license from IBM and IBM's PC unit even created a product out of it that T3 was going to resell until IBM discontinued the product six months later.

Anyway, T3 sold 600 of its tServers worldwide to accounts like the US Air Force for AWAC and nuclear weapons control applications.

Then the consent decree was dissolved and less than a year later, the suit says, IBM VP of North American mainframe channel sales Richard Cummings and IBM VP of US mainframe channel sales told T3 president Steven Friedman that IBM didn't like T3 selling those tServers even if IBM didn't offer products with similar power or pricing.

And if T3 didn't stop selling them, they allegedly said, IBM would prohibit T3 from selling its mainframes. T3 refused and IBM canceled its sales contract at the end of 2002.

But T3's tServer business was good and revenues increased. It was selling 100-150 machines a year and FSI's technology improved so it could scale to 100 MIPS.

Then, in 2004, IBM discontinued the 31-bit OS on which the tServer was based and contrary to its usual practice ceased to support all its older mainframe operating systems. The z/OS became its only mainframe operating system.

IBM also announced that z/OS would only be supported on 64-bit hardware and it refused to license FSI the IP underneath z/OS so FSI could make its software compatible and run it on alternate 64-bit hardware.

Left without a product again, T3 tried selling PSI servers, which run z/OS, z/VSE, OS/390 and VSE in 31- or 64-bit technologies - as well as Windows, Linux and Unix - and scale up to 260 MIPS.

IBM ran hot and cold in license discussions with PSI for a few years and it ultimately refused to license the start-up its older OS/390-related patents or z/OS discontinuing a decades-long practice. IBM even took down the web site where it represented that it licenses its patents on a non-discriminatory basis.

It refused to license z/OS to users unless they bought IBM hardware and it refused to provide PSI with the critical interface information that IBM used to provide, stuff that's needed to develop a compatible mainframe operating system. It also demanded proprietary information from PSI without promising not to use it as a precondition to further negotiations.

And then when they started marketing the systems anyway IBM allegedly told T3 customers that using the PSI Liberty Servers would result in a loss of reliability, availability and serviceability (RAS) and that IBM is "committed to putting PSI out of business."

T3 calculates the market-wide cost of IBM's "exclusionary campaign" in the billions of dollars passed on to the consumer. It wants damages based on lost profits and loss business opportunities.

It repeats IDC calculation that the market for systems up to 350 MIPS approaches 1,000 systems a year worth $500 million in sales.

For more information about Kidaro's virtualization solutions, please contact Nazli Ekim at SS PR, (646) 278 6014 -office (917) 355 9650 -cell [email protected].


More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (1)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
Every organization is facing their own Digital Transformation as they attempt to stay ahead of the competition, or worse, just keep up. Each new opportunity, whether embracing machine learning, IoT, or a cloud migration, seems to bring new development, deployment, and management models. The results are more diverse and federated computing models than any time in our history.
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
IoT is rapidly becoming mainstream as more and more investments are made into the platforms and technology. As this movement continues to expand and gain momentum it creates a massive wall of noise that can be difficult to sift through. Unfortunately, this inevitably makes IoT less approachable for people to get started with and can hamper efforts to integrate this key technology into your own portfolio. There are so many connected products already in place today with many hundreds more on the h...
The standardization of container runtimes and images has sparked the creation of an almost overwhelming number of new open source projects that build on and otherwise work with these specifications. Of course, there's Kubernetes, which orchestrates and manages collections of containers. It was one of the first and best-known examples of projects that make containers truly useful for production use. However, more recently, the container ecosystem has truly exploded. A service mesh like Istio addr...
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Charles Araujo is an industry analyst, internationally recognized authority on the Digital Enterprise and author of The Quantum Age of IT: Why Everything You Know About IT is About to Change. As Principal Analyst with Intellyx, he writes, speaks and advises organizations on how to navigate through this time of disruption. He is also the founder of The Institute for Digital Transformation and a sought after keynote speaker. He has been a regular contributor to both InformationWeek and CIO Insight...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...