Original URL: https://www.theregister.com/2007/02/16/psi_ibm_hp/
Start-up throws Liberty, Integrity and HP at IBM's lawyers
Let our mainframes go
Posted in Systems, 16th February 2007 02:35 GMT
Analysis A quick stroll through Platform Solutions Inc.'s (PSI) data center reveals why IBM has sued the start-up. There's a hulking HP Superdome system with a tiny PSI label on it, and this box promises to do much of a mainframe's work for a fraction of the cost.
IBM and PSI have spent most of their public facing time pointing to IBM's Nov. 2006 lawsuit against PSI, and PSI's Jan. 2007 countersuit against IBM. The majority of Big Blue's gripes center on breach of contract and patent infringement claims, while PSI charges IBM with anti-trust violations and unfair competition. The involvement of HP doesn't tend to come up from either side.
It appears, however, that PSI's close relationship with HP might be the real driving force behind the IBM/PSI squabble.
PSI had made it possible to run IBM's mainframe operating system and mainframe applications on top of an Itanium-based server. Such a system could come from any Itanium vendor - Hitachi, Fujitsu, HP and others. But, as it turns out, PSI has the closest relationship with HP.
With PSI at its side, HP would gain a direct link to IBM's mainframe customer base. This could prove fruitful in the short-term, as IBM plans to end support for older 32-bit systems and software in March. Customers looking to upgrade their aging systems would have nowhere else to turn but IBM if not for the presence of the HP/PSI combination.
The PSI lawsuit reveals that at least one Itanium vendor - HP, we're looking at you - realized the potential sales at hand. The start-up claims that IBM's original lawsuit "interfered with the prospective sale of PSI to another large technology firm"- a move that caused "hundreds of millions of dollars in damages."
HP VP Mark Hudson declined to comment on the IBM and PSI litigation or whether it had interest in buying PSI.
Back Channels
PSI emerged from the swamp created by Fujitsu and Hitachi's decision to exit the mainframe market in the late 1990s instead of venturing forward to compete with IBM on the 64-bit system front.
A group of engineers who worked at Amdahl and then Fujitsu had been exploring a project code-named Stingray to bring mainframe software onto Itanium. When Fujitsu killed its mainframe operations, the engineers sensed an opportunity to pursue the Itanium plan on their own.
Due to repeated Itanium delays and some funding constraints, PSI took a while to get going. Eventually, however, the company got on board with the release of Intel's Madison flavor of Itanium in 2003.
For awhile, PSI and IBM enjoyed something approaching a working relationship. PSI secured a license to IBM's mainframe z/OS operating system. It also believed the path was clear to have IBM support customers running mainframe applications on a Itanium-based system running PSI's firmware.
"That's true," said Linda Zider, an EVP at PSI, during an interview with us. "It was a normal business relationship. IBM was supporting us with licenses, and they knew we had the Amdahl intellectual property. It is only recently that things have not worked so smoothly."
And how.
PSI has struggled to get its gear out the door, most recently due to the delays behind Intel's dual-core "Montecito" version of Itanic. But HP started slotting that chip into its Superdome systems late last year, and PSI hit the ground selling.
PSI claims that it offers the only real alternative to IBM's mainframe business and that it can save customers a ton of cash. "We compete very well with the z9 business class systems from IBM and very well with the lower-end enterprise class systems," Zider said.
As computer legend has it, Amdahl sales folk used to leave branded coffee mugs with customers so the IBM sales reps would know the competition was in town. The mugs became known as the "million dollar coffee cups" due to the amount a customer could save during negotiations with IBM.
Amdahl and Fujitsu managed to claim close to 25 per cent of the mainframe market, during their hey-day, but no such competition exists today. Instead, IBM has built up a multi-billion dollar empire full of hardware, software and services sales.
"The million dollar coffee cup is worth a lot more today than it was then," Zider said.
Beyond cost, PSI claims a performance advantage over IBM since it runs on speedy Itanium chips. The PSI-branded boxes add variety as well, running z/OS, WIndows, Linux and soon HP-UX.
IBM is clearly concerned by the combination of PSI's software and Itanium-based hardware. The last thing IBM wants is Intel's 64-bit chip marching into the lucrative core of the mainframe market.
And so, in late 2006, IBM nailed PSI with a lawsuit and decided it would not support customers running PSI's software.
"PSI seeks to usurp the value of IBM's investment," IBM said in the lawsuit. "PSI has developed and is bringing to market and offering for sale computer systems ('emulator systems') that seek to imitate IBM's computers and that PSI claims will run IBM's copyrighted operating systems and other software programs on computers other than the ones for which the IBM software was written.
"PSI has license that is has violated by doing the emulation. IBM looks to terminate the license. PSI also infringes on IBM's patents."
IBM found a whopping total of five patents that PSI allegedly violates. PSI denies such claims.
PSI struck back in a most expected fashion, bringing anti-trust charges against IBM.
IBM sufferred through anti-trust remedies around its mainframe business in the past, although rulings against it were shelved in 2001, when all the mainframe competitors exited the market. At the time, the Department of Justice stated,
"If, after the Decree terminates, IBM engages in any anticompetitive activity that would violate the antitrust laws, it would immediately be liable to suit. For example, should IBM engage in anticompetitive tying—be it to parts or operating systems—the United States could bring an action for injunctive relief both to stop the illegal conduct and to get other, broader prophylactic relief."
By refusing to support customers using PSI-branded hardware, IBM violates the DOJ orders, according to PSI.
"IBM's action has impaired our business," said PSI vice president Christian Reilly.
Ultimately, PSI claims that IBM's actions hurt customers and hurt the vibrance of the mainframe market. Customers will be more inclined to stick with mainframes and be more enthusiastic about the aging technology if they see choice in the market, particularly choice based on a modern chip such as Itanium.
Maybe so, maybe not
While PSI talks a good, heart-warming story, the company's claims sound hollow to one analyst, especially with PSI going after the lower-end 400 MIPS and below market.
"As I've said on many occasions, if you give a small company a big machine for free, the software charges will bankrupt it," said Phil Payne of Isham Research. "You can now get medium-sized zArchitecture-capable machines - second-hand z800s - for $30,000 or so. The reason they're so cheap is that the software is so expensive."
Beyond that, "PSI isn't manufacturing systems. They're buying not especially cheap HP Superdomes and at the quantity they'll be buying, they'll not getting much discount.
"And the market is, over time, rejecting both IBM's mainframe architecture and Itanium."
Pretty Sly Inc.
Any chances PSI has at cutting into the mainframe market have obviously been hampered by the IBM lawsuit and forced the start-up into some crafty actions.
For example, a news statement this week made its way to mainframe customers announcing a deal between mainframe systems integrator T3 and PSI. T3 has secured four new customer shipments in the "past 60 days" - just about the amount of time since IBM first filed its lawsuit against PSI. The so-called Liberty Servers are, of course, HP's Itanium-based Integrity servers with PSI's firmware.
And one of the new customers happens to be the University of Alabama - the longtime home of the IBM mainframe mailing list.
To top it all off, the author of the T3 news statement - according to the properties tags in the document - is not a T3 representative but instead "christianr," who we're quite sure is PSI's VP Christian Reilly.
It seems clear that PSI won't back down from IBM without a serious fight. You can't help but wonder how such a battle would go with HP firmly backing PSI's stance in court. How could a combined PSI/HP lose with Liberty, Integrity, truth, justice and the American Way on their side? ®