Click here to close now.

Welcome!

HP Authors: Elizabeth White, Dana Gardner, Liz McMillan, Unitiv Blog, Adrian Bridgwater

Related Topics: HP, Linux, Eclipse

HP: Article

Neon Sues IBM for Antitrust

Neon figures it has nothing left to lose since IBM has already cost it these potential accounts

Texas ISV Neon Enterprise Software, accepting that it's in a fight to the death with IBM over mainframes, ripped the kid gloves off, amended its pre-Christmas suit against its giant nemesis for tortious interference, business disparagement and unfair competition and charged Blue with antitrust violations.

It cited both the Sherman Antitrust Act and the Clayton Antitrust Act, charging IBM with monopoly maintenance and conditioning sales to mainframe users on their promise not to buy from a competitor.

If proved, IBM may have to disgorge a billion dollars or more of its profits on software licensing fees on a Lanham Act charge and pay hundreds of millions of dollars more in damages. And those damages could also be trebled.

Neon names would-be customers it claims it lost to IBM intimidation because that's what the Supreme Court says an antitrust action needs to succeed - the recitation of chapter and verse.

Neon figures it has nothing left to lose since IBM has already cost it these potential accounts.

It says that IBM threatened retaliation against Honda, FedEx, Daimler-Benz US, Swisscom, Sainbury's, HuK Coburg, Home Depot and Experian if they used its zPrime technology, the software that can offload legacy workloads onto so-called mainframe specialty processors that the users buy from IBM saving them perhaps billions of dollars in notoriously punitive monthly IBM mainframe licensing fees.

Neon says IBM threatened to sue these users, jack up their mainframes fees, or curtail its maintenance and support. In the process it allegedly disparaged and misrepresented Neon's technology as "illegal" to protect its mainframe monopoly.

Neon claims it lost sales to HEB Grocery Stores and Highmark, the insurance company, to IBM defamation. In its countersuit IBM called Neon a theft, comparing it to 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." It has reportedly said the same to customers.

The suit says IBM also threatened to cancel its partner contract with a German reseller if it handled zPrime.

Honda was interested in zPrime when it first came out last summer. The suit says the auto maker was told "IBM would look to make an example of the first companies that bought zPrime."

The suit quotes Experian, the US credit reporting bureau, telling Neon, "Just so you know, Experian will not be pursuing a formal contract with Neon because of potential IBM billing issues which could arise from utilizing Neon's zPrime software. At this time, Experian does not wish to risk this type of distraction from IBM. Due to your efforts, we have proven Neon's technology is sound and functions as designed. Plus, we have demonstrated Neon is a great company and maybe someday in the future we will consider zPrime or other DB2 utilities."

Neon's amended suit describes a big American bank with sizeable mainframe operations clinging to the idea of using zPrime to save money in the midst of the financial downturn last year despite IBM's threats that it "could affect the bank's level of service." The bank only backed away, as it told Neon, after IBM threatened "to change the pricing structure and charge for software across the board and charge them for IFLs [IBM's Integrated Facility for Linux specialty engine processor, which is not affected by zPrime] as well."

The bank, believed to be Wells Fargo, also told Neon it was concerned about being sued and that IBM "is aware of all the parties using zPrime and they will potentially be named in a lawsuit from IBM."

IBM claims that users are contractually restricted from running anything but authorized workloads on the $125,000 apiece zAAP and zIIP specialty processors that Neon makes use of.

Big Blue is purple with rage because it doesn't charge for the use of these processors, which are exactly the same as the so-called central processors that usually run the legacy workloads and make IBM a fortune.

IBM invented these so-called SPs to run XML and Java programs and accelerate DB2 apps on its big iron so it wouldn't lose mainframe business to commodity servers. Now - in addition to a loss of its hefty software licensing fees - it could also lose a substantial amount of money because zPrime customers wouldn't have to buy as many very expensive million-dollar central processors when they start running out of workload capacity. They could shift the workloads to the SPs.

In response to IBM's "deceptive" contract claims, Neon says neither IBM nor any of its customers can produce any workload-restricting paperwork and that IBM is bluffing. The best IBM can come up with is its "unilateral intent" and IBM in fact originally represented that the "interface to the zIIPs are open, and other vendors are open to leverage it."

Neon claims customers own the parts in perpetuity and are perfectly within their rights to use them to run legacy workloads but that IBM is now trying to undo its own oversight - an error it didn't make with its Integrated Facility for Linux specialty engine processor, which is restricted to Linux workloads - by trying to get customers to sign new retroactive agreements that foreclose their right to run zPrime on zAAPs and zIIPs. And if they want new SPs IBM has refused to supply the processors without an undertaking from the customer not to use them for zPrime.

The suit calls this exclusive dealing, an antitrust violation that "forecloses a substantial amount of competition - indeed all competition - in the market for the processing of legacy workloads." It reasons too that IBM's campaign to put new agreements in place proves its contract representations are hollow.

Neon also charges IBM with violating the Clayton Antitrust Act by conditioning product discounts on the customers not using or dealing in zPrime.

No doubt the Justice Department lawyers currently investigating IBM's mainframe unit for antitrust will pay close attention to Neon's amended complaint since it would broaden their case from a hardware complaint to IBM's allegedly illegal defense of the fee-to-use revenue model it's built around the z/OS operating system.

Neon, which has sold other mainframe utilities besides zPrime for the last 15 years, claims that it too is a victim of IBM retaliation and that IBM is out to crush it.

It says IBM has cut off its developer discounts, which jeopardizes its ability to compete; conditioned Neon getting early releases of the z/OS mainframe operating system under an established IBM program on it dropping zPrime; rescinded its credentials to attend critical mainframe conferences on which Neon depends to generate business; and excluded it from user group meetings.

The amended complaint is here.

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 (0)

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.


@ThingsExpo Stories
The cloud is now a fact of life but generating recurring revenues that are driven by solutions and services on a consumption model have been hard to implement, until now. In their session at 16th Cloud Expo, Ermanno Bonifazi, CEO & Founder of Solgenia, and Ian Khan, Global Strategic Positioning & Brand Manager at Solgenia, will discuss how a top European telco has leveraged the innovative recurring revenue generating capability of the consumption cloud to enable a unique cloud monetization model to drive results.
As organizations shift toward IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. CommVault can ensure protection &E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his session at 16th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Partnerships, will discuss how to cut costs, scale easily, and unleash insight with CommVault Simpana software, the only si...
Analytics is the foundation of smart data and now, with the ability to run Hadoop directly on smart storage systems like Cloudian HyperStore, enterprises will gain huge business advantages in terms of scalability, efficiency and cost savings as they move closer to realizing the potential of the Internet of Things. In his session at 16th Cloud Expo, Paul Turner, technology evangelist and CMO at Cloudian, Inc., will discuss the revolutionary notion that the storage world is transitioning from mere Big Data to smart data. He will argue that today’s hybrid cloud storage solutions, with commodity...
Cloud data governance was previously an avoided function when cloud deployments were relatively small. With the rapid adoption in public cloud – both rogue and sanctioned, it’s not uncommon to find regulated data dumped into public cloud and unprotected. This is why enterprises and cloud providers alike need to embrace a cloud data governance function and map policies, processes and technology controls accordingly. In her session at 15th Cloud Expo, Evelyn de Souza, Data Privacy and Compliance Strategy Leader at Cisco Systems, will focus on how to set up a cloud data governance program and s...
Roberto Medrano, Executive Vice President at SOA Software, had reached 30,000 page views on his home page - http://RobertoMedrano.SYS-CON.com/ - on the SYS-CON family of online magazines, which includes Cloud Computing Journal, Internet of Things Journal, Big Data Journal, and SOA World Magazine. He is a recognized executive in the information technology fields of SOA, internet security, governance, and compliance. He has extensive experience with both start-ups and large companies, having been involved at the beginning of four IT industries: EDA, Open Systems, Computer Security and now SOA.
The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focused on understanding how industrial data can create intelligence for industrial operations. Imagine ...
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
Every innovation or invention was originally a daydream. You like to imagine a “what-if” scenario. And with all the attention being paid to the so-called Internet of Things (IoT) you don’t have to stretch the imagination too much to see how this may impact commercial and homeowners insurance. We’re beyond the point of accepting this as a leap of faith. The groundwork is laid. Now it’s just a matter of time. We can thank the inventors of smart thermostats for developing a practical business application that everyone can relate to. Gone are the salad days of smart home apps, the early chalkb...
Operational Hadoop and the Lambda Architecture for Streaming Data Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing and analyzing streaming data is the Lambda Architecture, representing a model of how to analyze rea...
SYS-CON Events announced today that Vitria Technology, Inc. will exhibit at SYS-CON’s @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Vitria will showcase the company’s new IoT Analytics Platform through live demonstrations at booth #330. Vitria’s IoT Analytics Platform, fully integrated and powered by an operational intelligence engine, enables customers to rapidly build and operationalize advanced analytics to deliver timely business outcomes for use cases across the industrial, enterprise, and consumer segments.
Today’s enterprise is being driven by disruptive competitive and human capital requirements to provide enterprise application access through not only desktops, but also mobile devices. To retrofit existing programs across all these devices using traditional programming methods is very costly and time consuming – often prohibitively so. In his session at @ThingsExpo, Jesse Shiah, CEO, President, and Co-Founder of AgilePoint Inc., discussed how you can create applications that run on all mobile devices as well as laptops and desktops using a visual drag-and-drop application – and eForms-buildi...
Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 16th Cloud Expo at the Javits Center in New York June 9-11 will find fresh new content in a new track called PaaS | Containers & Microservices Containers are not being considered for the first time by the cloud community, but a current era of re-consideration has pushed them to the top of the cloud agenda. With the launch of Docker's initial release in March of 2013, interest was revved up several notches. Then late last...
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Dyn is a cloud-based Internet Performance company. Dyn helps companies monitor, control, and optimize online infrastructure for an exceptional end-user experience. Through a world-class network and unrivaled, objective intelligence into Internet conditions, Dyn ensures traffic gets delivered faster, safer, and more reliably than ever.
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial Cloud.
The explosion of connected devices / sensors is creating an ever-expanding set of new and valuable data. In parallel the emerging capability of Big Data technologies to store, access, analyze, and react to this data is producing changes in business models under the umbrella of the Internet of Things (IoT). In particular within the Insurance industry, IoT appears positioned to enable deep changes by altering relationships between insurers, distributors, and the insured. In his session at @ThingsExpo, Michael Sick, a Senior Manager and Big Data Architect within Ernst and Young's Financial Servi...
Performance is the intersection of power, agility, control, and choice. If you value performance, and more specifically consistent performance, you need to look beyond simple virtualized compute. Many factors need to be considered to create a truly performant environment. In his General Session at 15th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, discussed how to take advantage of a multitude of compute options and platform features to make cloud the cornerstone of your online presence.
Even as cloud and managed services grow increasingly central to business strategy and performance, challenges remain. The biggest sticking point for companies seeking to capitalize on the cloud is data security. Keeping data safe is an issue in any computing environment, and it has been a focus since the earliest days of the cloud revolution. Understandably so: a lot can go wrong when you allow valuable information to live outside the firewall. Recent revelations about government snooping, along with a steady stream of well-publicized data breaches, only add to the uncertainty
The explosion of connected devices / sensors is creating an ever-expanding set of new and valuable data. In parallel the emerging capability of Big Data technologies to store, access, analyze, and react to this data is producing changes in business models under the umbrella of the Internet of Things (IoT). In particular within the Insurance industry, IoT appears positioned to enable deep changes by altering relationships between insurers, distributors, and the insured. In his session at @ThingsExpo, Michael Sick, a Senior Manager and Big Data Architect within Ernst and Young's Financial Servi...
PubNub on Monday has announced that it is partnering with IBM to bring its sophisticated real-time data streaming and messaging capabilities to Bluemix, IBM’s cloud development platform. “Today’s app and connected devices require an always-on connection, but building a secure, scalable solution from the ground up is time consuming, resource intensive, and error-prone,” said Todd Greene, CEO of PubNub. “PubNub enables web, mobile and IoT developers building apps on IBM Bluemix to quickly add scalable realtime functionality with minimal effort and cost.”
Docker is an excellent platform for organizations interested in running microservices. It offers portability and consistency between development and production environments, quick provisioning times, and a simple way to isolate services. In his session at DevOps Summit at 16th Cloud Expo, Shannon Williams, co-founder of Rancher Labs, will walk through these and other benefits of using Docker to run microservices, and provide an overview of RancherOS, a minimalist distribution of Linux designed expressly to run Docker. He will also discuss Rancher, an orchestration and service discovery platf...