IBM responds to EU mainframe investigation

IBM has issued a statement following the extension of the EU competitions authority investigation into its mainframe business.


Here is IBM’s response to the investigation:


Not long ago, numerous high tech pundits and IBM competitors declared the mainframe server dead — a dinosaur, extinct. At that time, many companies were abandoning mainframe servers, and others were developing distributed alternatives to centralized computing. In the face of these predictions and fundamental marketplace changes, IBM made a critical decision: to invest billions of dollars in its mainframe technology to bring unprecedented levels of speed, reliability and security to the enterprise market. These investments reinvigorated the mainframe server as a vital competitor in a highly dynamic marketplace.

Today’s computer server market is clearly dominated by Intel-based servers from HP, Dell, Oracle and many others, as well as Unix servers. 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. That is in sharp contrast to Intel-based servers, which represented more than 96% of all server shipments and nearly 55% of total server revenues in 2009, according to IDC. The first quarter 2010 server share reports from IDC and Gartner show this trend continuing, with mainframe server revenue declining and Intel-based servers growing. 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.

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.

IBM intends to cooperate fully with any inquiries from the European Union. 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.

Are these really baseless allegations? The new zEnterprise hardware certainly looks impressive. But the value of mainframe computing is not just in the hardware, it is about the whole ecosystem?

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