Click here to close now.




















Welcome!

Log Management Authors: Liz McMillan, Elizabeth White, Pat Romanski, Adrian Bridgwater, Dana Gardner

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
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Opening Keynote at 16th Cloud Expo, Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, d...
In his keynote at 16th Cloud Expo, Rodney Rogers, CEO of Virtustream, discussed the evolution of the company from inception to its recent acquisition by EMC – including personal insights, lessons learned (and some WTF moments) along the way. Learn how Virtustream’s unique approach of combining the economics and elasticity of the consumer cloud model with proper performance, application automation and security into a platform became a breakout success with enterprise customers and a natural fit for the EMC Federation.
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of profound change in the industry.
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affect their organization.
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
For IoT to grow as quickly as analyst firms’ project, a lot is going to fall on developers to quickly bring applications to market. But the lack of a standard development platform threatens to slow growth and make application development more time consuming and costly, much like we’ve seen in the mobile space. In his session at @ThingsExpo, Mike Weiner, Product Manager of the Omega DevCloud with KORE Telematics Inc., discussed the evolving requirements for developers as IoT matures and conducted a live demonstration of how quickly application development can happen when the need to comply wit...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at @ThingsExpo, James Kirkland, Red Hat's Chief Architect for the Internet of Things and Intelligent Systems, described how to revolutionize your archit...
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world and it starts with business models and monetization strategies.
Converging digital disruptions is creating a major sea change - Cisco calls this the Internet of Everything (IoE). IoE is the network connection of People, Process, Data and Things, fueled by Cloud, Mobile, Social, Analytics and Security, and it represents a $19Trillion value-at-stake over the next 10 years. In her keynote at @ThingsExpo, Manjula Talreja, VP of Cisco Consulting Services, discussed IoE and the enormous opportunities it provides to public and private firms alike. She will share what businesses must do to thrive in the IoE economy, citing examples from several industry sectors.
There will be 150 billion connected devices by 2020. New digital businesses have already disrupted value chains across every industry. APIs are at the center of the digital business. You need to understand what assets you have that can be exposed digitally, what their digital value chain is, and how to create an effective business model around that value chain to compete in this economy. No enterprise can be complacent and not engage in the digital economy. Learn how to be the disruptor and not the disruptee.
Akana has released Envision, an enhanced API analytics platform that helps enterprises mine critical insights across their digital eco-systems, understand their customers and partners and offer value-added personalized services. “In today’s digital economy, data-driven insights are proving to be a key differentiator for businesses. Understanding the data that is being tunneled through their APIs and how it can be used to optimize their business and operations is of paramount importance,” said Alistair Farquharson, CTO of Akana.
Business as usual for IT is evolving into a "Make or Buy" decision on a service-by-service conversation with input from the LOBs. How does your organization move forward with cloud? In his general session at 16th Cloud Expo, Paul Maravei, Regional Sales Manager, Hybrid Cloud and Managed Services at Cisco, discusses how Cisco and its partners offer a market-leading portfolio and ecosystem of cloud infrastructure and application services that allow you to uniquely and securely combine cloud business applications and services across multiple cloud delivery models.
The enterprise market will drive IoT device adoption over the next five years. In his session at @ThingsExpo, John Greenough, an analyst at BI Intelligence, division of Business Insider, analyzed how companies will adopt IoT products and the associated cost of adopting those products. John Greenough is the lead analyst covering the Internet of Things for BI Intelligence- Business Insider’s paid research service. Numerous IoT companies have cited his analysis of the IoT. Prior to joining BI Intelligence, he worked analyzing bank technology for Corporate Insight and The Clearing House Payment...
"Optimal Design is a technology integration and product development firm that specializes in connecting devices to the cloud," stated Joe Wascow, Co-Founder & CMO of Optimal Design, in this SYS-CON.tv interview at @ThingsExpo, held June 9-11, 2015, at the Javits Center in New York City.
SYS-CON Events announced today that CommVault has been named “Bronze Sponsor” of SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. A singular vision – a belief in a better way to address current and future data management needs – guides CommVault in the development of Singular Information Management® solutions for high-performance data protection, universal availability and simplified management of data on complex storage networks. CommVault's exclusive single-platform architecture gives companies unp...
Electric Cloud and Arynga have announced a product integration partnership that will bring Continuous Delivery solutions to the automotive Internet-of-Things (IoT) market. The joint solution will help automotive manufacturers, OEMs and system integrators adopt DevOps automation and Continuous Delivery practices that reduce software build and release cycle times within the complex and specific parameters of embedded and IoT software systems.
"ciqada is a combined platform of hardware modules and server products that lets people take their existing devices or new devices and lets them be accessible over the Internet for their users," noted Geoff Engelstein of ciqada, a division of Mars International, in this SYS-CON.tv interview at @ThingsExpo, held June 9-11, 2015, at the Javits Center in New York City.
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. 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.