Welcome!

Log Management Authors: David H Deans, Carmen Gonzalez, Eric Robertson, Liz McMillan, Pat Romanski

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
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
"delaPlex is a software development company. We do team-based outsourcing development," explained Mark Rivers, COO and Co-founder of delaPlex Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
SYS-CON Events announced today that Technologic Systems Inc., an embedded systems solutions company, will exhibit at SYS-CON's @ThingsExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Technologic Systems is an embedded systems company with headquarters in Fountain Hills, Arizona. They have been in business for 32 years, helping more than 8,000 OEM customers and building over a hundred COTS products that have never been discontinued. Technologic Systems’ pr...
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
SYS-CON Events announced today that Loom Systems will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2015, Loom Systems delivers an advanced AI solution to predict and prevent problems in the digital business. Loom stands alone in the industry as an AI analysis platform requiring no prior math knowledge from operators, leveraging the existing staff to succeed in the digital era. With offices in S...
SYS-CON Events announced today that HTBase will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. HTBase (Gartner 2016 Cool Vendor) delivers a Composable IT infrastructure solution architected for agility and increased efficiency. It turns compute, storage, and fabric into fluid pools of resources that are easily composed and re-composed to meet each application’s needs. With HTBase, companies can quickly prov...
SYS-CON Events announced today that T-Mobile will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. As America's Un-carrier, T-Mobile US, Inc., is redefining the way consumers and businesses buy wireless services through leading product and service innovation. The Company's advanced nationwide 4G LTE network delivers outstanding wireless experiences to 67.4 million customers who are unwilling to compromise on ...
SYS-CON Events announced today that Cloud Academy will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud computing technologies. Ge...
SYS-CON Events announced today that CrowdReviews.com has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. CrowdReviews.com is a transparent online platform for determining which products and services are the best based on the opinion of the crowd. The crowd consists of Internet users that have experienced products and services first-hand and have an interest in letting other potential buyers...
SYS-CON Events announced today that Infranics will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Since 2000, Infranics has developed SysMaster Suite, which is required for the stable and efficient management of ICT infrastructure. The ICT management solution developed and provided by Infranics continues to add intelligence to the ICT infrastructure through the IMC (Infra Management Cycle) based on mathemat...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
SYS-CON Events announced today that SD Times | BZ Media has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. BZ Media LLC is a high-tech media company that produces technical conferences and expositions, and publishes a magazine, newsletters and websites in the software development, SharePoint, mobile development and commercial UAV markets.
SYS-CON Events announced today that Cloudistics, an on-premises cloud computing company, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Cloudistics delivers a complete public cloud experience with composable on-premises infrastructures to medium and large enterprises. Its software-defined technology natively converges network, storage, compute, virtualization, and management into a ...
Now that the world has connected “things,” we need to build these devices as truly intelligent in order to create instantaneous and precise results. This means you have to do as much of the processing at the point of entry as you can: at the edge. The killer use cases for IoT are becoming manifest through AI engines on edge devices. An autonomous car has this dual edge/cloud analytics model, producing precise, real-time results. In his session at @ThingsExpo, John Crupi, Vice President and Eng...
There are 66 million network cameras capturing terabytes of data. How did factories in Japan improve physical security at the facilities and improve employee productivity? Edge Computing reduces possible kilobytes of data collected per second to only a few kilobytes of data transmitted to the public cloud every day. Data is aggregated and analyzed close to sensors so only intelligent results need to be transmitted to the cloud. Non-essential data is recycled to optimize storage.
"I think that everyone recognizes that for IoT to really realize its full potential and value that it is about creating ecosystems and marketplaces and that no single vendor is able to support what is required," explained Esmeralda Swartz, VP, Marketing Enterprise and Cloud at Ericsson, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Microservices are a very exciting architectural approach that many organizations are looking to as a way to accelerate innovation. Microservices promise to allow teams to move away from monolithic "ball of mud" systems, but the reality is that, in the vast majority of organizations, different projects and technologies will continue to be developed at different speeds. How to handle the dependencies between these disparate systems with different iteration cycles? Consider the "canoncial problem" ...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.