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EC launches formal probes into IBM's mainframe biz

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The EC reminded everyone that the probes do not imply that it has proof of infringements, but merely that the antitrust regulators are investigating further.

IBM's public relations machine cranked out a lengthy statement about how it had invested billions of dollars in its mainframe business to reinvigorate the platform and that x64 servers are the dominant server platform. The latter bit is important because the definition of a monopoly depends on the definition of a relevant market. IBM was able to wiggle out of its 1956 consent decree, which settled an antitrust lawsuit brought by the US government in 1952 and which governed Big Blue's behavior for decades, in August 1996. The termination of the decree that IBM's lawyers attained was based on the idea that the mainframe and AS/400 were tiny parts of the server business and no longer needed to be regulated; they were, in the legal sense, irrelevant markets. In July 2000, regulations were lifted on the mainframe, and they were removed from the AS/400 proprietary mini a year later.

Of course, IBM has absolute monopolies for its z/OS and i operating systems, which run on System z mainframes and Power Systems midrange gear. But you'll never hear IBM or one of its lawyers admit this.

"The numbers speak for themselves: mainframe server sales today are a tiny fraction of worldwide servers - representing just 0.02% of servers shipped and less than 10% of total server revenues in 2009, according to IT industry analyst firm IDC - and shrinking from 2008," said IBM in its statement.

"Today, the mainframe server is a small niche in the overall, highly-competitive server landscape, but it remains a source of great value for those IBM clients who value its high levels of security and reliability.

"Yet even with all of its substantial innovations, the migration of certain customers and workloads away from mainframe servers to other systems remains common."

No mention of the €8.5bn (about $10bn) in worldwide mainframe hardware and software sales, a very large portion of which drops right to Big Blue's bottom line and fuels those share buybacks and acquisitions.

But IBM's statement made sure to bring up the mainframe conspiracy theory again.

"Certain IBM competitors which have been unable to win in the marketplace through investments in fundamental innovations now want regulators to create for them a market position that they have not earned. The accusations made against IBM by TurboHercules and T3 are being driven by some of IBM's largest competitors - led by Microsoft - who want to further cement the dominance of Wintel servers by attempting to mimic aspects of IBM mainframes without making the substantial investments IBM has made and continues to make. In doing so, they are violating IBM's intellectual property rights."

The only way we can know if this is "true" or not is for the EC to sue IBM for antitrust violations, for IBM to sue anyone making clone mainframe tools for intellectual property violations, and see where the judgments fall.

"IBM intends to cooperate fully with any inquiries from the European Union," the company's statement finished. "But let there be no confusion whatsoever: there is no merit to the claims being made by Microsoft and its satellite proxies. IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies. Competition and intellectual property laws are complementary and designed to promote competition and innovation, and IBM fully supports these policies. But IBM will not allow the fruits of its innovation and investment to be pirated by its competition through baseless allegations." ®

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