IBM News on Ulitzer

IBM System z CTO and resident spook Mark Anzani recently sent an IBM mainframe customer a letter meant to scare it into seeing the boogeyman under its bed and make sure it doesn't use Neon Enterprise Software's zPrime technology to reduce its mainframe costs.

The customer wants to buy IBM's Specialty Engines for its mainframes, the so-called zIIP and zAAP processors that IBM created to accelerate and run DB2 and Java on. IBM doesn't want to fill the order unless the customer promises in writing not to use the chips to run the workloads that the zPrime software can offload to the things. It will save the customer millions of dollars in CP cycles and IBM doesn't like that.

Neon claims zPrime can offload more than half a mainframe's workloads to the specialty processors, including IMB, DB2, CICS, TSO/ISPF and batch workloads, cutting 20% of a user's annual hardware and software costs under conventional use pricing because the chips incur no usage charges. The savings would extend to third-party software.

The letter, which is here and isn't very long, says:

"As we have reason to be concerned you intend to utilize Specialty Engines to process unauthorized workload (workload beyond that for which the Specialty Engine was created and marketed by IBM), which would constitute a breach of the license, we will fulfill the specialty engines per your order only if you provide reasonable assurances you will comply with our agreements. Please confirm that you will operate these engines in compliance with your existing agreements with IBM, and specifically including that you will not run any workload on these specialty engines other than those workloads expressly designated by IBM as eligible and authorized to run on these processors."

The customer forwarded the letter to Neon, which only released zPrime on June 30.

Neon CEO Lacy Edwards had heard that IBM was asking users verbally for such an undertaking but this was the first time he had seen it written down.

He said it means that IBM wants to close the glaring loophole that it left opened, and that Neon is exploiting, by changing the terms of the existing contract its customers signed after the fact.

As mainframe users know, this is not the first time that IBM has changed hallowed terms and conditions to ensure its mainframe cash flow.

Since ending its undertaking with the European Commission and consent decree with the Justice Department a decade ago, IBM has forced users to upgrade to its newer mainframe operating systems; ceased maintaining anything but 64-bit hardware; stopped providing the critical interface information it used to supply to plug-compatible manufacturers (PCMs); and has in general erected insurmountable barriers for anyone to enter the IBM-compatible mainframe market.

For instance, when a start-up called Platform Solutions Inc (PSI) threatened to take away some of IBM's mainframe business with its Amdahl-derived, z/OS-running Itanium system, IBM changed its sacred, long-standing RAND patent policy and dropped the words "or equivalent" from its z/OS license so the operating system could only run on its proprietary System z machines.

But getting back to the problem at hand, Anzani's latest letter pointed the customer to a posted copy of the IBM License Agreement for Machine Code that he said governs the use of Specialty Engines and two product announcements letters also on IBM's web site that he said summarize the eligible workloads.

Lawyers for both Neon and the mainframe customer reviewed Anzani's letter, the IBM License Agreement for Machine Code and the product announcements and concluded that IBM's bluffing.

There's nothing in any of the documents quoted by the IBM CTO that restricts what a user can run on the specialty processors. The IBM license, the lawyers told Edwards, has no bearing on Neon; zPrime isn't in violation.

The lawyers are so certain of their position that one of them reportedly told the mainframe customer it might as well go ahead and give IBM the assurances it wants because it won't impact its use of zPrime. It can keep on using it.

The customer reportedly isn't going to do that however. Instead it's planning on having a showdown with IBM and going belly-to-belly with the titan. What will happen is anybody's guess. There's a big gap between saying you're not scared of IBM and spitting in its Big Blue eye.

IBM's an old hand at the art of intimidation. A generation ago ex-IBMer Gene Amdahl, who dared to go into competition with IBM with his own mainframe company, coined the term "FUD" to describe the fear, uncertainty and doubt that IBM used to dominate the industry. Thirty-five years later and nothing much has changed.

Neon users to a man are currently afraid to admit publicly that they have zPrime in their shop for fear of the repercussions such a confession could have even if they know that stripping away the veil of secrecy will lessen IBM's hold over them.

Gen Xs and Ys, most of whom don't know what real fear is, have flipply applied the term to Microsoft. Microsoft never made grown men afraid the way IBM has.

IBM has sent the first monthly bills to customers that are in production with zPrime and they're a lot lower than they used to be. Edwards has had reports that IBM is now demanding to do audits and suspending annual Enterprise License Agreement (ELA) negotiations. It's threatening, he said, to send bills that cover its shortfall and customers are reportedly telling IBM it has no right to do that.

On July 10, a few days after Neon went to market, Anzani wrote a letter to all mainframe customers suggesting zPrime wasn't legal and warning them "regarding any claimed ability to reduce IBM Program license charges by off-loading workloads to Specialty Engines beyond the eligible workload identified by IBM. IBM's applicable pricing terms governing Eligible Workloads on zIIPs and zAAPs will not apply to zIIPs and zAAPs running anything other than IBM-specified eligible workloads. Therefore, customers should not anticipate any reduction (and may actually experience an increase) in the IBM Program License Charges associated with non-Eligible Workloads which may be off-loaded to IBM Specialty Engines, since the non-Eligible Workload running will cause the software running on the Specialty Engine to be chargeable. IBM cannot comment on the potential impact on the software charges from other third-party software providers." (See here for the whole letter.)

What's really odd about this situation is IBM's brass is in the face of a fresh antitrust investigation by the Justice Department, since it seems what it's doing is a clear case of abusing its monopoly, price gouging and requiring customers of its operating system to use only IBM hardware, a serious antitrust no-no and something IBM is specifically forbidden to do under the lingering terms of its now-dissolved 1956 consent decree with the United States government.

IBM's actions are reminiscent of behavior that has landed other tech giants in antitrust hot water.

Intel just paid AMD $1.25 billion so it wouldn't have to face the threat of treble damages in the antitrust suit that AMD brought against it - and that was after getting hit with a $1.45 billion antitrust fine from the European Commission. It still may have to face action by the US Federal Trade Commission, the sister agency to the Justice Department's Antitrust Division.

And one can argue that Microsoft incurred the wrath of the European Commission for less and paid handsomely for it.

Ironically, IBM demanded Microsoft provide reasonable and non-discriminatory interoperability access to its technology but won't do that itself.

Edwards says IBM's schoolyard bullying merely compensates Blue for its own deep-seated insecurity and that zPrime has got IBM spooked. Since IBM can't hit Neon with the patent claims it made against PSI before IBM buried the upstart by buying it, zPrime is the mainframe establishment's best chance at changing its future, he contends.

IBM's posturing didn't stop Neon from upgrading zPrime a few days ago.

Version 1.2 is supposed to simplify and streamline the offloading of programs and applications to specialty processors, while providing greater control in selecting which application workloads are shifted to the things.

Neon says a new Enablement Console lets users select the applications and programs they want to move for processing on zIIPs and zAAPs during the critical and costly peak periods.

And a Language Environment (LE) Initialization Exit automatically enables all LE-compliant applications, which means almost all the legacy mainframe applications around.

Richard Ptak, principal analyst at Ptak, Noel and Associates, says using zPrime doesn't sacrifice functionality or disrupt mainframe environments in any way,

Neon currently claims 14 companies are now in production with zPrime and that since the software was announced nearly 50 organizations around the world - including some of the world's largest corporations - have tested, documented and validated its cost savings.

On average, it says, these companies have been able to offload 90% of their Information Management System (IMS) application processing; 90% of their batch application processing; 80% of their DB2 application processing; 75 % of their TSO/ISPF application processing; and 45% of their Customer Information Control System (CICS) applications.

Edwards says, "This incredibly rapid adoption reflects how much companies - and how many of them - want to reduce the high costs of mainframe computing."

This piece appeared first on OpenMainframe.org at http://openmainframe.org/featured-articles/ibm-turns-the-screws-on-zprime.html.