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zPrime cost-cutting mainframeware gets traction

Neon chuffed, talking to DOJ and Brussels

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In a somewhat odd and almost certainly fruitless move that definitely will not stand up in court, IBM is apparently pointing customers who have mainframe software contracts to a website that was created after their contracts were signed and after zPrime came to market that stipulates what software can run on the zIIPs and zAAPs. At press time, El Reg was not able to identify the precise pages that Edwards says IBM is showing mainframe shops, but some information can be found on the zIIP and zAAP pages relating to their intended workloads.

Edwards says that Neon has contacted or been contacted by 1,500 mainframe shops, and that once the IBM sales rep catches wind that the customer is thinking about zPrime, the letters from IBM start. While 1,500 may not seem like a big number, consider this. IBM has confirmed that there are about 10,000 mainframe footprints in the world, and Edwards says that these machines are installed at maybe 6,000 to 7,000 unique customers. Moreover, Edwards reckons that about 2,000 of those mainframe shops "pay the freight" for the rest of the base.

Neon has 50 organizations that have put zPrime through the paces since July, showing that they can move around 90 per cent of IMS database and 80 per cent of DB2 database application processing, 90 per cent of batch application processing, 75 per cent of TSO/ISPF processing, and 45 per cent of CICS processing to specialty engines - thereby lowering the count of standard mainframe engines and software licenses needed to do the work. So far, it has 14 companies using it in production, and another 200 that are doing evaluations or are getting lined up to do them.

zPrime could have a dramatic impact on IBM's mainframe sales and profits in the coming quarters and years.

"The fact is, customers are getting heavily gouged," declares Edwards, who says that he has been to see the Department of Justice and antitrust regulators in the European Commission in Brussels, both of which are currently investigating IBM's behavior in the mainframe market that is, for all intents and purposes, a monopoly.

"If you look at the prices of mainframe hardware and software since the consent decree expired, it is just off the charts compared to other architectures. The abusiveness of the mainframe monopoly is just obnoxious. Everybody that could get off the mainframe is off, and for those applications that are left, customers don't have any options."

In the summer, when zPrime was just announced, Neon had not yet come up with a pricing mechanism for the tool. Edwards says that Neon is creating a price based on the size of the processors and the nature of the workload involved. When the math is done, Neon is looking at the two-year savings a customer can get and charging somewhere between 10 and 20 per cent of that figure on an annual basis.

In a relatively small mainframe shop, it might cost $250,000 a year to license zPrime, and it could cost $8m to $10m per year on a big box. But the savings can be substantial. On one large deal that Neon is working on, the company calculates that using zPrime to defer hardware upgrades, cut maintenance fees, and lower software rental fees could save that prospective customer $100m over a two-year period.

That's real money, and you have to figure that IBM, and therefore its lawyers, must be hopping mad. ®

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