IBM buys Platform Solutions, secures mainframe monopoly.
IBM has just announced that it has bough privately held Platform Solutions Inc.
As part of this acquisition, both IBM and PSI dropped their respective claims against each other.
Wow. PSI claimed that
IBM has committed extensive anticompetitive practices, including the following:
- Tying its mainframe operating systems to its mainframe computers by conditioning sales of its operating systems on the purchase or continued use of only those IBM-compatible mainframe computers that are manufactured by IBM;
- Refusing to supply its operating systems to end-user customers who choose to purchase PSI’s IBM-compatible mainframe computer systems;
- Restricting PSI’s access to interface information and specifications needed to remain compatible with IBM’s operating systems;
- Unreasonably discontinuing its long-standing practice of licensing any applicable intellectual property rights on reasonable and non-discriminatory terms;
- Disseminating Fear, Uncertainty and Doubt concerning the reliability, compatibility and viability of PSI’s products; and
- Interfering with PSI’s ability to complete fundamental transactions with its business partners.
PSI's website [currently] has a FAQ section with this Q&A
Q: What impact has the IBM suit had on PSI’s existing customers?
A: IBM’s anticompetitive business practices have affected our company, but PSI’s Open Mainframe computers have been well received by customers who value us as the only alternative supplier in the marketplace.
It would appear that IBM's strategy has been effective then, removing their only competitor in the marketplace. I guess this also explains why specious ECIS have been totally silent on this issue despite PSI filing a complaint with the European Commission alleging that "IBM abused its market dominance by refusing to share information related to its high-performance mainframe computers". IBM has prior form here so one might expect some interest from M. Vinje et al.
Still there's some interesting analysis here from Amdahl's one time European Commercial Analyst, Phil Payne whose bio says he's
"Worked for every mainframe company (ICL, ITEL, NAS/HDS, BASF/Comparex, Amdahl) in the UK, Germany and the USA except IBM, who've recently fallen out with me".
Updates.
PSI has now posted a press release.
CCIA (!) notes that "IBM has ceased licensing patents necessary for other companies’ hardware to interoperate with IBM’s operating system" (smc: from this to this) and
The multi-billion dollar market for mainframes is too important to be under the exclusive control of one company, especially when the technology exists to allow cheaper, more scalable computer systems to compete with IBM’s machines. Mainframes are critically important to virtually ever industry in the world. Indeed, the backbone of the world’s financial markets is built on mainframe computers.
- Over 80% of the world’s corporate and government data resides on mainframes
- According to IBM, $5 trillion worth of business assets are housed on IBM mainframes
- Nearly 95% of Fortune 1000 companies use IBM’s Information Management System (IMS) for their critical data management needs
- More than 50 billion transactions are running through IMS databases on a daily basis involving financial ATM sessions, healthcare record access, tax accounts and other critical information.
Scott Ferguson notes in this eWeek story that
The mainframe business had proved profitable to IBM in the first quarter of 2008. IBM’s System z mainframe business grew 10.4 percent year-over-year with revenues of $1.1 billion in the first quarter, according to IDC. IBM is also looking to evolve its mainframe as a tool for consolidating large data centers and for virtualization.
eWeek also has a quote from CCIA's Ed Black:-
"This is a Black Hole acquisition," CCIA President Ed Black wrote in a statement. "It sucks the life out of the market and destroys the matter. It is transforming a market with latent potential for competition and innovation into a sector with little prospects for anything but complete domination by IBM."
Ed may be right, The Register's story "IBM rids world of mainframe up-start PSI, inherits Itanium server biz" reports that
HP attempted to acquire PSI for close to $200m, but the deal fell through, according to PSI, when IBM's lawyers arrived at PSI's door in 2006 with a patent infringement lawsuit, accusing the company of five IP-related offenses and breaching a licensing agreement for IBM software.
There's a real policy issue here, one which touches on arguments that many made when arguing against OpenXML, and yet their silence is deafening.