Welcome!

Log Management Authors: Kevin Benedict, Dana Gardner, Pat Romanski, Elizabeth White, Liz McMillan

Related Topics: Log Management, Linux Containers, Eclipse

Log Management: 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
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. 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 ...
SYS-CON Events announced today that MobiDev will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobile software company with over 200 develope...
SoftLayer operates a global cloud infrastructure platform built for Internet scale. With a global footprint of data centers and network points of presence, SoftLayer provides infrastructure as a service to leading-edge customers ranging from Web startups to global enterprises. SoftLayer's modular architecture, full-featured API, and sophisticated automation provide unparalleled performance and control. Its flexible unified platform seamlessly spans physical and virtual devices linked via a world...
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
SYS-CON Events announced today TechTarget has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. TechTarget is the Web’s leading destination for serious technology buyers researching and making enterprise technology decisions. Its extensive global networ...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
As cloud and storage projections continue to rise, the number of organizations moving to the cloud is escalating and it is clear cloud storage is here to stay. However, is it secure? Data is the lifeblood for government entities, countries, cloud service providers and enterprises alike and losing or exposing that data can have disastrous results. There are new concepts for data storage on the horizon that will deliver secure solutions for storing and moving sensitive data around the world. ...
SYS-CON Events announced today Object Management Group® has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device. For more information, please visit https://www.mangoapps.com/.
The essence of data analysis involves setting up data pipelines that consist of several operations that are chained together – starting from data collection, data quality checks, data integration, data analysis and data visualization (including the setting up of interaction paths in that visualization). In our opinion, the challenges stem from the technology diversity at each stage of the data pipeline as well as the lack of process around the analysis.
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
Designing IoT applications is complex, but deploying them in a scalable fashion is even more complex. A scalable, API first IaaS cloud is a good start, but in order to understand the various components specific to deploying IoT applications, one needs to understand the architecture of these applications and figure out how to scale these components independently. In his session at @ThingsExpo, Nara Rajagopalan is CEO of Accelerite, will discuss the fundamental architecture of IoT applications, ...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
SYS-CON Events announced today that Tintri Inc., a leading producer of VM-aware storage (VAS) for virtualization and cloud environments, will exhibit at the 18th International CloudExpo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
In his session at 18th Cloud Expo, Bruce Swann, Senior Product Marketing Manager at Adobe, will discuss how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects). Bruce Swann has more than 15 years of experience working with digital marketing disciplines like web analytics, social med...
SYS-CON Events announced today that EastBanc Technologies will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. EastBanc Technologies has been working at the frontier of technology since 1999. Today, the firm provides full-lifecycle software development delivering flexible technology solutions that seamlessly integrate with existing systems – whether on premise or cloud. EastBanc Technologies partners with p...
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...