Research & Resources

IBM and the mainframe market

2010-04-30T05:06:00Z

(VOX) by Federico Etro, University of Milan, Bicocca

Is another IT giant abusing its market position? This column describes the case of IBM – a near-monopolist in the mainframe market – being accused of preventing firm entry by tying its mainframe operating system with its hardware and withholding information for interoperability. The similarities with the Microsoft case suggest that the European Commission’s Director-General for Competition will not go easy.

After the end of the Microsoft saga, another important antitrust case may soon emerge in the “New Economy”, this time around a well known but largely undisturbed monopolistic position, that of IBM in the mainframe market. (For an evaluation of the Microsoft case, see Komninos and Czapracka 2010.)

Even if the mainframe represents a relatively small percentage of server shipments, a rigid demand for mainframes by corporate and government customers worldwide and technological peculiarities on the supply side make the mainframe market a largely separate and self-contained market, which provides products that are not substitutable with standard Linux, UNIX or Windows servers. For half a century – and not without large merits – IBM has been the leader of this market. But in recent years, by refusing to license its software for use on other mainframe computers and refusing to provide information and licenses to ensure interoperability with its architecture, IBM’s mainframe computers and operating systems have reached a position of near-monopoly, owning almost the entire installed base for IBM-compatible mainframes and losing any substantial entry pressure. It is calculated that around 90% of mainframe applications use native IBM mainframe operating systems and run on IBM hardware.

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The Arcati Mainframe Yearbook 2010

2010-02-01T16:47:00Z

(www.arcati.com) Published by Mark Lillycrop

The independent annual guide for users of IBM mainframe systems.

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Why Choice Matters for Mainframe Customers

2009-12-03T18:45:31Z

OpenMainframe.org Position Paper

The recent news that the US Department of Justice is investigating the IBM mainframe market has resulted in numerous stories and blog posts both for and against the investigation. However, many of the arguments have not addressed the most important question: what do mainframe customers want?

This paper addresses the key issues that impact the users of mainframe technology and why the resolution of these issues is critically important to mainframe customers.

Download the position paper PDF (147K)

Refusals To License And Installed-Base Opportunism In The Mainframe Computer Industry: The Investigation Of IBM

2009-11-27T18:53:00Z

(The American Antitrust Institute) Professor Andrew Chin

In Refusals to License and Installed-Base Opportunism in the Mainframe Computer Industry: The Investigation of IBM, Prof. Chin, an AAI Advisory Board member and Associate Professor at the University of North Carolina Law School, explores the history of DOJ's efforts to deal with the mainframe industry and IBM, including T3's antitrust complaint and DOJ's recently announced investigation.

Click here to read Professor Chin's paper

Click here to read IBM's response

Click here to read Professor Chin's response to IBM

NEON zPrime Business and Legal Answer Book

2009-09-02T00:17:00Z

NEON Enterprise Software zPrime Business and Legal Answer Book Flash demonstration

Click here to view the demo

Mainframe Monopoly

2009-03-30T18:39:56Z

(CCIA Issue Report)

IBM’s record of run-ins with antitrust authorities predates even the electronic computer itself, stretching as far back as the days of its dominant mechanical punch card systems.

Consent decrees and other legal actions in the 1950s, 1960s, and 1970s were important chapters in the evolution of high-tech markets. In fact, it was only when IBM was prevented from tying its hardware to its software that independent software makers flourished and the modern computer industry as we know it was born.

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Click to read CCIA's "Understanding IBM's Mainframe Monopoly"

Understanding IBM's Mainframe Monopoly

2009-03-26T01:09:09Z

OpenMainframe.org Research Report (Revised March 25, 2009)

Initially open systems were established around technology based on the UNIX operating system from AT&T. Instead of having a proprietary operating system for one manufacturer’s platform, UNIX was ported to multiple platforms and quickly emerged as a standard operating system that offered portability of application code and IT skills across systems from multiple manufacturers such as Sun, IBM, NCR, AT&T, DEC, Hewlett-Packard and others.

As personal computer technology became powerful enough to run server-based, multi-user applications, operating systems emerged to allow the execution of business applications – although on a smaller scale than what was possible on a mainframe or UNIX mini-computer. UNIX was ported to the Intel platform and other network-oriented server operating systems from Novell and Microsoft came to market in the 1990s. The popular Open Source Linux operating system came to life and also gradually emerged as a viable option for certain classes of server computing.

It appeared that healthy market forces were in play and customers were benefiting – however not all vendors in the business server market were playing by the rules.

IBM saw the potential for volume business server computing using Linux, UNIX and Windows-based systems (LUW servers) but it also saw the huge profits that could be extracted from customers locked in the old world of proprietary systems.

While the IBM mainframe was increasingly less appealing for new customers’ needs, existing mainframe customers found themselves locked into the application interfaces on the mainframe and found it difficult to move to other more modern, lower-cost platforms. And yet, these customers needed additional computing resources so were forced to continue to buy IBM mainframes for this class of proprietary legacy applications.

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The Arcati Mainframe Yearbook 2009

2009-01-02T00:13:56Z

(www.arcati.com) Published by Mark Lillycrop

..."Despite the recession, our annual mainframe user survey found respondents in bullish mood, with the System z continuing to play a central role in IT strategy. The percentage of sites whose zOS systems participate in Web services and SOA environments increased from 48% last year to 53% this year. Moreover, the survey found that 67% and 66% of sites are Web-enabling DB2 and CICS respectively, with a smaller 34% Web-enabling IMS. Pricing, of course, remains a very significant issue in the mainframe environment."

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IBM Mainframe Emulation: Reloaded

2008-12-22T18:02:35Z

In the April/May 2007 issue of z/Journal, the article "The State of IBM Mainframe Emulation" detailed several software emulation approaches for smaller IBM mainframe customers. These products let customers run existing mainframe operating systems and applications on non-mainframe hardware.

The article also discussed some ongoing legal actions surrounding these offerings. These issues meant that the mainframe emulation world was in a state of flux, with accompanying Fear, Uncertainty and Doubt (FUD) for smaller mainframe customers.

This article provides an update on these products. Significant events have transpired, with a mix of good news, bad news, and the unknown.

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Technology review of mainframe computer systems and their alternatives

2008-12-19T22:23:11Z

By Walter F. Tichy, Professor
Faculty of Computer Science
University of Karlsruhe
Karlsruhe, Germany

Mainframe computers, more accurately described as IBM-compatible mainframes, are used by many of the largest companies and government institutions worldwide to store and process critical information. For the purposes of this paper, when we refer to a mainframe, we are describing a computer system capable of running IBM’s proprietary mainframe operating system software such as z/OS, z/VSE or TPF. This definition includes not only mainframe systems from IBM such as System z but also “IBM plug-compatible mainframes” from companies such as Amdahl or Hitachi. IBM estimates that almost ninety five percent of Fortune 1000 companies use IBM’s System z mainframe and that more than 80% of corporate data reside on mainframes. Over 200 billion lines of COBOL applications are in use on mainframes, and more are being added continuously. Many of these applications are custom-built and represent a huge investment for mainframe users. The collective value of mainframe applications written in the COBOL programming language is estimated to be between $1 trillion and $5 trillion, which is worth more than the stock market value of the largest public corporations. Virtually all large businesses and governments have mainframe applications, including vertical applications for the finance sector, public sector, healthcare or manufacturing. IBM claims that “without the IBM mainframe, the global financial system would collapse.” Mainframes are often involved behind the scenes with everyday tasks such as completing ATM transactions or making airline ticket reservations. In addition, mainframes are used to store sensitive consumer, corporate and government information such as health records, financial information and government data. The superior reliability and security characteristics of mainframes drove much of the early adoption of these system for some of the world's most critical IT functions.

After the producers of plug-compatible mainframes exited the market in the late 1990s, IBM became the only supplier of mainframes – a situation that still exists today. Linux, UNIX and Windows systems are lower-cost alternatives that could run mainframe applications. However, IBM refuses to license the intellectual property to make this feasible. In addition, IBM has discontinued licensing its operating system to competitors, stifles interoperability between LUW computers and mainframes, and prevents virtualization solutions that span IBM and non-IBM systems.

As a result of IBM’s actions, there are no longer any competitors in the mainframe market and customers have few viable options for migrating mainframe applications to other more cost-effective platforms. Consequently, customers have been denied the benefits of technological innovation and must instead pay above-market prices for IBM mainframe solutions and premium wages for a dwindling mainframe workforce.

Download the research report PDF (720K)