Reportedly IBM was able to persuade the EC that mainframes are simply part of the overall server market, not a market of their own, despite a cartload of evidence that mainframe users are trapped and can’t migrate off the exorbitantly expensive beasts without rival alternatives made viable by an enforced and policed easing of IBM’s iron grip sorta like what happened back in the 1980s and 90s.

Having adopted IBM’s position, the EC reportedly asked the trio to withdraw their complaints.

It looks like the decision will kill off the Hercules open source mainframe emulator project that lets mainframe operating systems and their apps run on cheap x86 and Itanium machines using Windows, Linux, Mac or Solaris as the host environment. TurboHercules SAS, the company Hercules creator Roger Bowler set up to commercialize the widgetry, says it’s repositioning and looking for new opportunities to chase.

Under a deal with IBM that hasn’t been plumbed, Neon is withdrawing its zPrime software from the market as its contracts with mainframe users brave enough to deploy it expire. zPrime runs pricy mainframe workloads on cheaper IBM specialty processors and threatened to deprive IBM of millions of dollars.

T3’s antitrust suit against IBM in the states hit a sandbar on a technicality and T3 recently dropped its appeal.

It’s unclear if the EC is pursuing the investigation into the IBM mainframe monopoly that it undertook on its own or if the Justice Department’s almost two-year-old probe of the monopoly is really active although, according to an IBM regulatory filing, it’s still on-going and has asked for documents from its T3 litigation. Of course IBM’s pet outside law firm Cravath, Swain just hired America’s antitrust chief.

On its own last July the EC started looking at charges of IBM’s alleged discriminatory behavior toward competing suppliers of mainframe maintenance services. It reportedly hindered their access to spare parts.

Microsoft invested in both TurboHercules and T3 (as well as Platform Solutions Inc (PSI), which complained to the EC, filed suit in the US and got acquired by IBM).

Microsoft’s involvement let IBM contend it was the victim of a Microsoft conspiracy. Microsoft said it was supporting greater openness in the mainframe market.

Meanwhile, QSGI Inc has filed an antitrust suit against IBM for making it impossible for QSGI to resell used mainframe computers up against QSGI competitor IBM Global Financing, forcing it to exit the mainframe remarketing business at a loss and forcing users to pay “uncompetitive prices.”

It’s charging IBM and IBM Global Financing under the Florida Antitrust Act of 1980 seeking dmages.

Its lawyer says “IBM and its IGF division have worked together to monopolize the used mainframe market and destroy all competition in that market.”

IBM needs to step on the gas if it’s going to produce $7 billion-a-year in cloud revenues by 2015 like it promised.

Its new infrastructure-as-a-service gamble of course won’t just compete with Amazon. It’s directed at all the major cloud purveyors like Rackspace, GoGrid, OpSource and Terremark.

The thing it’s going to be hawking is the pay-per-use, multi-tenant IBM SmartCloud, which will come in two versions: Enterprise, which is available now, and the more functional, more secure Enterprise +, which is set to roll out later this year.

IBM sees the Enterprise version, which apparently replaces or expands its existing Red Hat cloudware-based Development and Test Cloud, as being largely for development and testing, which has historically been Amazon’s strength.

Enterprise +, now in pilot, is for production deployment of enterprise applications in a public, private or hybrid cloud and is supposed to let users pick fancier levels of security and isolation; availability and performance; platforms; management and ease of deployment; and payment and billing that suit them best.

Pricing is expected to be higher than Amazon’s although Enterprise is advertised as being 30% cheaper than using conventional environments.

Besides LotusLive, TivoliLive, Sterling Commerce, IBM Converged Communication Services and other IBM widgetry, IBM means for Enterprise + to run IBM SAP Managed Application Services in Q3. The SAP stuff is supposed to capable of cutting the installation of Oracle or DB2 to 12 minutes down from a day, clone a database in 20 minutes instead of two or three days and install an OS in 30 minutes not a day.

IBM’s own GUI-based Workload Developer software will be used to accelerate cloud deployments: provision all the middleware and application components across multiple servers or hypervisors, instead of configuring each one separately, configure databases, set up security and monitor the stuff.

IBM is coming armed to the party with 45 companies such as Lockheed Martin, Citigroup, State Street, ADP and North Carolina State University organized into a first-of-its-kind Cloud Standard Customer Council (CSCC) under the aegis of the Object Management Group (OMG).

Besides IBM the founders include Rackspace, Software AG, CA Technologies and Kaavo.

The idea is to make the cloud mainstream. It will prioritize interoperability issues such as management, reference architectures, hybrid clouds, security and compliance and come up with user-driven requirements.

It’s gonna tick Microsoft and Amazon off no end that it’s waving around that Open Cloud Manifesto that IBM is understood to have ghost-written a couple of years ago that they rejected as too Blue.

Anyway, apparently the CSCC means to produce standards roadmaps and white papers and interface with the Distributed Management Task Force, the Organization for the Advancement of Structured Information Standards (OASIS) and the Open Group, where IBM recently deposited a Reference Architecture for Cloud Computing.

Membership is free to users; vendors can join as sponsors. See www.cloud-council.org.

That, it figures, is two euros or $2.70 out of the pocket of every man, woman and child in the European Union since consumers ultimately wind up paying the price of IBM’s generosity.

DBS came to make the calculation in case it decides to complain to the European Commission about IBM.

The EC opened a monopoly maintenance investigation of IBM last summer on complaints from other ISVs. The Justice Department is also conducting a similar probe.

The Swiss software and consulting house is a mainframe DB2 specialist that has gotten roughed up lately by IBM in its zeal to squeeze every dime out of its mainframe monopoly even if it means riding roughshod over would-be competitors.

In September of 2009 DBS released a software utility called IRS for DB2 that increases the authorized DB2 workloads users can run on their mainframes’ zIIP specialty processors (SPs).

It saves them a lot of money in licensing fees, money they actually thought they were already saving.

See, IBM doesn’t charge its usually hefty monthly license fees for running DB2, Java and XML workloads on SPs. It’s a device Big Blue concocted to dissuade users from abandoning mainframes for cheaper-to-run modern computers; zIIPs, like zAAP SPs, are just mainframe central processors (CPs) renamed and sold at a lower price.

IBM has always been hazy about the “portion” – its word – of zIIP-qualified workloads that DB2 sends to zIIPs to execute, but it put no contractual limits on the number of DB2 Distributed Relational Database Architecture (DRDA) workloads that could be offloaded.

Every piece of software that uses the zIIP offload interface can decide what portion or percentage of its workload is redirected to the zIIP. Third-party products that have to compete against other products naturally want as much of their workloads offloaded as possible to make them cheaper to run.

Not DB2. DB2 is the only RDBMS running on z/OS. It doesn’t have to compete. And, as far as DBS knows, it’s the only software to limit its offloaded workloads.

DBS figured out that IBM only routed 55% of the legitimate DB2 workloads to the zIIPs, not 100% – even though the user-owned SPs had the capacity to handle more and the mainframes’ CPs were overworked.

The scheme insured that IBM raked in maybe an extra $1.5 billion a year in licensing fees worldwide, conservatively speaking.

It was because of a little artificial limit hard-coded into DB2 that IBM never quite got around to telling its customers about. Its existence only officially surfaced last May when IBM happened to mention it in a software patch.

So, to address the imbalance, DBS created IRS for DB2 – IRS is short for Install, Run, Save – which upped the so-called legal generosity factor to 95% and smoothed out the peaks and wait times that IBM had artificially created.

All DBS did was use information that IBM had on its web site for system programmers, information that happens not to be there anymore. And, contrary to IBM’s contention that DBS uses the zIIP offload interface, the company says it doesn’t and that IBM knows it; IRS for DB2 runs on CPs, not SPs.

Anyway, IBM – which recently described its so-called generosity factory as a business decision, obviously meaning it gives away just enough to keep its customers from bolting to other platforms – didn’t take the revenue-denying innovation any too well.

Last May its mainframe software VP Dan Wardman, head of DB2 and IMS, put IBM’s position on IRS for DB2 in writing for European customers: “Any other DRDA processing beyond the portion determined by DB2 that is diverted to a zIIP would not be eligible workload.”

Aside from trying to spook users into not using it – because no contracts forbid it – IBM released a software patch called APAR PM12256 meant to make IRS for DB2 useless. It was a clumsy patch that actually increased some people’s licensing fees and set off a little firestorm of opposition among its usually docile, intimidated mainframe clientele.

The APAR changed the generosity factor from a steady 55% of CPU use to 100% of a sometimes unachievable 60% of transactions and zero for the other 40%. It also created a very high variance in effective and predictable zIIP use that in turn created nasty spikes that cost users more.

DBS responded with a new version of IRS for DB2 to deal with the APAR and a new product called Dynamic SQL Balancing Optimizer (DSBO) to deal with the APAR’s disadvantages. This month IBM upped the ante and released two new APARs that again change the way the system works to render DSBO useless and partly correct the problems with the first APAR.

To get around users’ fear of IBM, DBS sells its software on a month-to-month basis. A customer can terminate at any time if the pressure IBM exerts gets to be too much to bear. For the 5,000 euros, or $6,500 it costs a month, the user saves about €15,000-€20,000 (~$20,500-~$27,500) a month.

Depending of their arrangements with IBM, the ROI is immediate for some sites while others see their end-of-year penalty payments cut.

DBS is afraid to talk about the adoption of IRS for DB2 because its customers are afraid of IBM’s reaction. It says its penetration would be over 50% by now in the German-speaking parts of Europe were it not for IBM.

DBS speculates that between IRS for DB2 and Neon Enterprise Software’s IBM-outlawed zPrime widgetry, which offloads and runs traditional DB2, CICS, IMS, TSO/ISPF and batch workloads on SPs, IBM’s juicy monthly licensing fees could be cut by 50%.

By comparison UBS 3.0 tops out at 5 Gb/s and the more common UBS 2.0 can only do 480 Mbps.

As widely bruited, Apple is its earliest adopter, sporting a Thunderbolt port complete with a lightning icon on its new MacBook Pros, where it will do double duty supporting both high-speed I/O and high-definition Mini DisplayPort devices on a single cable.

Apple is believed to have kicked in some know-how about mixing data and display.

The widgetry, which can run multiple protocols simultaneously over a single wire, is supposed to be capable of downloading a full-length high-def 10GB-20GB movie in 30 seconds. Such a feat would require fast disks and most likely implies a boxful of external drives.

Chip groupie Nathan Brookwood called it “an extremely clever approach for out-of-the-box expansion for desktop and notebook computers,” something that doesn’t exist for laptops right now like external graphics cards.

Intel, who will license the IP royalty-free to OEMs, promises speeds will eventually hit 100 Gbps.

The PCI Express side of the Thunderbolt equation is supposed to connect to almost any type of device – multiple ones daisy-chained together with electrical or optical cables – and Intel said the DisplayPort can drive screens with better than 1080p resolution and up to eight audio channels simultaneously.

Among other things Intel imagines faster backups and restores, thinner form factors, more flexible systems designs, cable simplification and spiffier media creation and connectivity.

The mojo, which also works with USB, FireWire and gigabit Ethernet, involves an Intel controller chip and a small display connector suitable for mobile devices.

Intel said it would be supported by Aja, Apogee, Avid, Blackmagic, LaCie, Promise and Western Digital and it figures it will appear in computers, displays, storage devices, cameras, audio/visual devices and docking stations.

The updated MacBooks, which start at $1,199, run on faster new Intel processors and new AMD Radeon graphics chips.

And the only reason that Big Blue would want to do that is if it thinks it may lose the antitrust suit filed against it by Neon Enterprise Software.

See, Neon’s zPrime software lets mainframers use SPs – which are otherwise called zIIPs and zAAPs and are actually just standard mainframe central processors under another name – to offload and run classic mainframe DB2, CICS, IMS, TSO/ISPF and batch workloads free of IBM’s notoriously exorbitant monthly fees.

IBM claims it’s illegal to run those workloads on SPs and that users are contractually limited to running XML and Java programs and accelerating DB2 workloads on the things.

IBM created the widgets so it wouldn’t lose valuable mainframe business to modern distributed systems, which is why it doesn’t charge customers to use them.

Neon claims no such contracts exist anywhere and is currently waiting to hear back from a Texas federal judge if he’s going to grant it a partial summary judgment saying IBM hasn’t a leg to stand on in claiming that the workloads that can be run on SPs are contractually restricted.

His decision in Neon’s favor would legitimatize the use of the forbidden zPrime and could cost IBM billions of dollars in licensing fees since Neon claims to be able to offload more than half of a mainframe’s workloads on to SPs.

IBM has used its contract claims – and a few other terror tactics – to scare customers off of zPrime. It’s also made SPs hard to get and insisted that users take a blood oath not to use the things for zPrime, basically changing the terms of existing contracts after the fact and raising a little issue of Clayton Antitrust Act violation. The law says you’re not allowed to condition the sale of a product on the buyer not using rival products.

Blue is now trying to coax customers into installed the all-seeing patch or APAR in mainframe terminology. It’s even offering owners of its shiny new z196 mainframe, just out last summer, a little discount to download the thing, a discount it may make back with the 10% increase it just slapped on a whole host of old Flat Workload-licensed software products, a list that fills about 38 pages single-spaced.

Since IBM has been trying to outlaw zPrime since it came out in the middle of 2009, it seems odd it didn’t make the APAR a default on the new z196, suggesting it may have recently reappraised its legal odds. Neon did get a fast-track schedule from the Texas court and its multiple anticompetitive charges go to trial in about six months.

Neon, which believed to have a couple of dozen zPrime customers braving IBM’s wrath, suspects the spyware will eventually be mandatory and then IBM can hook it into its monthly reporting system and start charging for using SPs.

Netezza, it says, is dependent on proprietary hardware that impacts its I/O and puts it out-of-sync with the latest advances. Oracle, it goes on, with its historical scaling issues, is using relatively skimpy old-fashioned legacy SMP widgetry that’s better at OLTP than data warehousing and analytics, Greenplum’s strength. Exadata, it says, “breaks at more than eight racks” and Teradata, well, Teradata might be considered a rival but its price point is so over the moon it’s not really comparable.

Greenplum, which never did hardware before and always preached the software-only approach, is using standard x86 Intel boxes sourced from Dell with 10 gigE switches that expand to 16 servers in a rack for its new integrated massively parallel Data Computing Appliance.

It developed the thing during its short two-and-a-half months as an EMC property – now that it’s got EMC’s wherewithal to do it – and positions the box as “a key enabler of ‘big data’ clouds and self-service analytics.”

It also positions EMC as a server wannabe like Cisco, which also jumped its hereditary boundaries.

The parallel-everything widget uses Greenplum’s latest and greatest 4.0 Database and is supposed to process 10TB an hour, making it twice as fast as Exadata systems and five times fast as systems from Netezza and Teradata.

Greenplum claims its purpose-built parallel system can handle up to 5PB of “real” user data across a maximum 4,608 cores, offering up to three times more scalability and four times as many database cores than rival systems for the industry’s best price/performance ratio.

Since it’s supposed to deliver the industry’s fastest data loading and performance, more data can be analyzed faster and at lower cost and users should be able to make sense of the massive amounts of data they generate from various sources such as always-on networks, the web, consumers, surveillance systems and sensors more efficiently. It supports both large batch and continuous real-time loading.

Of course IDC predicts that data will grow 44-fold over the next decade.

Greenplum has integrated database, compute, storage and networking into the enterprise-class system and will sell it in half-rack, full-rack and multi-rack appliance configurations that scale to 24 racks. And being an EMC vassal, it’s integrated with EMC’s replication, backup, recovery and deduplication technologies.

EMC’s Data Domain acquisition (famously plucked out of NetApp’s hands) is supplying integrated backup and deduplication while EMC’s own CLARiiON-based CX4 960 machines – in their RecoverPoint disaster recovery avatar – will be offered alongside Greenplum’s appliance for site-to-site replication. That way the company can say no server-based resources are consumed for remote replication and failback operations.

Greenplum’s Postgres-based Database 4.0 is still available as a licensed software-only solution for deployment on industry-standard x86 hardware and integrated infrastructure solutions such as the Virtual Computing Environment (VCE) coalition Vblock infrastructure packages.

EMC, which claims the appliance will be a “key element of private clouds,” will supply consulting, migration, services and training for the anti-Oracle/anti-IBM push.

The appliance lists for a million dollars for an entry-level half-rack, which is good for 18TB uncompressed, 72TB compressed.

Greenplum pre-sold a few racks ahead of its announcement Wednesday including the New York Stock Exchange and was reportedly expecting to deliver a six-rack system this week.

Since becoming part of EMC 75 days ago, Greenplum says staffing has increased by 30% to 200 people. Apparently its field organization is increasing.

Monday, July 26, 2010 – The European Commission said this morning that has opened not one but two formal investigations of IBM and its mainframe business on the suspicion that Big Blue has abused its dominant position.

IBM is already under investigation by the Justice Department for the same thing and the EC’s move may inspire the DOJ to make its case.

IBM’s immediate reaction was to blame Microsoft and “its satellite proxies” for its troubles but that “pretty to think so” excuse doesn’t quite hold water.

One of the twin probes the EC currently has underway has nothing to do with any of the recent complaints that would-be rivals have made against IBM. It is solely the regulators’ idea.

The Commission, which has apparently overcome witnesses’ fear of reprisal, said that – on its “own initiative” – it’s investigating what smells like discriminatory behavior towards competing suppliers of mainframe maintenance services.

It said it “has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services (i.e. keeping potential competitors out of the market), in particular by restricting or delaying access to spare parts for which IBM is the only source.”

One is left to wonder where this surprise charge came from. Third-party hardware maintenance was created by the 1956 consent decree that is still supposed to govern IBM’s mainframe business. With the downturn IBM may have looked to shore up its top line by reclaiming even low-margin business like hardware maintenance.

The EC has been investigating IBM for a lot longer than most people realize, certainly a lot longer than the DOJ, which only opened its probe last October.

The EC had started down the investigatory path when IBM bought the mainframe-to-Itanium start-up Platform Solutions Inc (PSI) in mid-2008 to get its monopoly maintenance complaint dropped. Whatever the EC found out during that preliminary investigation presumably became part of its institutional memory.

The PSI charges were replaced in January 2009 by T3T, once the world’s second-largest mainframe systems integrator which wanted to resell PSI boxes. Then this past March Paris-based TurboHercules SAS, the start-up begun to commercialize the open source Hercules mainframe project, filed a formal complaint against IBM with the EC.

These two complaints reportedly dumped a heap of evidence on the EC’s desk.

The EC says its second investigation concerns the charges that both T3T and TurboHercules made about IBM illegally tying its mainframe hardware to its mainframe operating system and – in the later case – shutting out providers of emulation technology that could enable users to run critical applications on non-IBM hardware.

IBM foreswore tying in its antique consent decree and in the undertakings given to regulators on both sides of the pond to get the decree terminated by 2001.

IBM’s allegation of the “meritless” charges being the work of Microsoft and its stooges comes from the fact that Microsoft put money into both PSI and T3T, whose new business involves migrating mainframe site to Windows servers. Microsoft’s investment wasn’t made until after T3 filed suit against IBM and complained to the EC.

But that’s why Blue figures it can say that “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.”

Of course, one wonders how much truck Microsoft, a convicted monopolist, has with the regulators that fined it a small fortune.

In response to IBM’s statement, Microsoft said it isn’t a party to T3T complaint and that it puts money in companies like T3T to give users greater choice. “We do share T3T’s belief that there needs to be greater openness and choice for customers in the mainframe market,” it told Bloomberg. “Customers tell us they want greater interoperability between the mainframe and other platforms.”

IBM is the only mainframe maker left and as it told the UK press last week “Western civilization runs on this system.” The Commission acknowledges that the vast majority of corporate data worldwide still lives only on the mainframe. It is too expensive to move it.

The EC puts the worldwide market for mainframes last year at roughly €8.5 billion ($11 billion) and €3 billion (~$4 billion) in the European Union, but those estimates apparently just cover mainframe hardware and operating systems.

IBM’s mainframe margins are understood to be quite handsome – BusinessWeek reckons the new next-generation mainframe that IBM just announced last Thursday could have a profit margin of ~70% – and Sanford Bernstein, for one, says the mainframe contributes over 20% of IBM’s revenues and 40% of its profits all things considered: hardware, software, storage, services, financing.

Last week IBM reorganized its executive suite and for the first united hardware and software under one person. Steve Mills, its long-time software boss, will also have all of IBM’s servers, including mainframes, and the chips they’re made out of reporting to him. IBM’s latest theory is that computer systems must be “designed and brought to market as tightly integrated” packages of hardware and software, a theory that suggests it’s seeking tighter control of the mainframe.

The EC is also entertaining another official complaint about IBM’s “on-going anticompetitive and abusive conduct” in the mainframe market that it didn’t mentioned this morning. That one was lodged in late June by Texas-based Neon Enterprise Software, a company 100% owned by John Moores, the “M” in BMC. Neon is also suing IBM for antitrust in district court in Texas.

Observers wonder whether the EC will ultimately open a third investigation involving Neon’s allegations. And Ed Black, the head of the Computer & Communications Industry Association (CCIA), whose complaint led to the DOJ investigation, issued a statement saying, “Although we are pleased the European Commission is taking a serious look into IBM’s actions, it comes as no surprise to us as the evidence of anticompetitive behavior is strong. We believe competition authorities around the world, as they learn about and focus on this vital market will take similar actions….It is vital that a market that is responsible for more than three quarters of the world’s government and business data not be walled off from competition and innovation. All we ask is that IBM actually apply the same principles they espouse in the open source world to their mainframe business as well.” Microsoft is a member of CCIA.

T3 president Steven Friedman, who is trying to get his antitrust suit against IBM back on track – it was dismissed on a legal technicality and he’s appealing that decision – said, “We applaud the EU Commission for taking formal action on the material issues raised in our complaint. We’ve felt all along that through a prism of just the fact of our case, the commission and others would find enough compelling documentation on IBM market abuses to warrant a complete investigation into IBM’s practices over the past decade. We’re hopeful that other judicial agencies will come to the same conclusion.”

Roger Bowler, the president of TurboHercules SAS and the originator of the Hercules project, said, “We welcome the European Commission’s decision to initiate formal proceedings against IBM’s suspected abuse of its dominant market position. Hopefully, it will lead to remedies that will allow companies like TurboHercules to compete in the mainframe market. We simply ask that customers be allowed to run their mainframe applications on the hardware of their choice. It is also good news for the Hercules open source community and its 11-year history of innovative development.”

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IBM has the Justice Department crawling over its mainframe business, complaints of monopoly maintenance going to the European Commission and users chaffing under its punitive licensing fees.

So IBM has reinvented the mainframe, apparently reducing the behemoth to a blade.

Sources say it’s ported its precious z/OS to a newfangled 5.2GHz quad-core z processor with two times the cache of the old z10 chip and a hundred new instructions, built a new z196 system round it, stuck it in a chassis, otherwise called a cage, added a BladeCenter Extension – Power7 blades that’ll run AIX and x86 blades running Linux – thrown in a Unified Resource Manager and has the whole lot sharing memory and disk space.

It has, they say, achieved its fondly held dream of a converged architecture. And this, as they also say, is a very big deal.

If it wasn’t for all that trouble with the regulators, one might conjecture that IBM’s trying to make mainframe iron relevant to a new generation of IT people. It’s clearly chasing new customers, new workloads and the cloud.

IBM has been briefing its nearest and dearest followers for days under NDA about every conceivable nuance of the box called – for the moment at least -either the zNext System or the zEnterprise System and it has a clutch of the things out with large accounts.

The system will reportedly be announced in New York in mid to late July (July 22′s looking likely) with so-called pre-ships going out immediately and launch in volume this fall, probably in September.

It’s supposed to cost a third less than what IBM usually charges for mainframes but the pricing picture is probably more complicated than that.

The whispers say zNext will run all the z/OS widgetry back to goodness knows when and OS/400 on Power7 blades by the end of the year. Throw in AIX, Linux and maybe Windows and that’s why it’s also called a “system of systems.”

It brings to mind the Platform Solutions (PSI) box that IBM bought so it could yank it off the market. The PSI machine ran Windows, Linux, Unix, Open VMS and z/OS on Itanium chips way cheaper than IBM could on its mainframes. That’s why IBM smothered the thing in its cradle.

Now Blue has IBM-ized the concept and gone PSI one better. In zNext, which appears to involve single-function appliances too, the environments are integrated. The multi-OS resources are supposed to function as a single, logical, virtualized system.

Applications run on the zExtensions will bask in the reflected glow of the mainframe’s qualities of service.

Likely to be advertised as a great leap in virtualization, IBM will play it as ideal cloud infrastructure.

Reportedly the shared virtualization IBM is using is Red Hat’s very own KVM.

The Duquesne Group thinks this “consolidation of platform under the zSeries roof” puts IBM squarely on the road to a “data center in a box” managed by a new species of hypervisor or “control hyperprocessor.”

Among other things, the widgetry may distract customers toying with using Neon’s zPrime software to lower their workload bills. At a guess it looks like virtual servers could ultimately replace the ZiiP and ZaaP specialty processors Neon is currently exploiting in a threat to IBM’s revenue stream.

Reading off an IBM PowerPoint, zNext or zFuture is supposed to “reduce cost, reduce risk and improve service,” and be positioned as being easier on power consumption, utilization, resource management, communication, RAS and of course elasticity.

IBM is reportedly throwing all its software into the mix. Users should prepare for a deluge.

All this automation is going to cost jobs but of course IT companies never say it that way. IBM’s got all sorts of “value” statistics.

The modernization move will reportedly change the outsourcing equation.

It will also put companies like CA and BMC that have always depended on the old mainframe for much of their revenues in a pretty pickle. Sources say the zNext or whatever IBM ultimately deems to call it won’t need their scheduling, security, disk management and systems management software.

Maybe that’s why CA, for one, has realigned into two new organizations: a Customer Solutions Group and a Technology and Development Group. The Customer Solutions Group, headed by newly recruited ex-Corel CEO David Dobson, includes five customer solutions units, each a strategic business unit responsible for its own P&L. The self-explanatory Technology and Development Group will be headed Ajei Gopal. If IBM gossip is right Dobson used to be CA CEO Bill McCracken’s boss back in their Blue days.

It’s gotten a temporary restraining order according to InformationWeek.

Olsen, with IBM for 31 years, was a general manager in IBM’s services unit and was hired by Oracle as senior VP of on-demand services, the SaaS versions of its software, reporting to none other than Larry Ellison, who’s aiming to do as much damage as he can to IBM.

IBM alleges that she knows too much about IBM, its operations, its growth strategies and its potential acquisitions to fall into Oracle’s hands.

IBM has gone to court a couple of times in the last couple years waving its non-competes around.

Oracle’s on-demand revenue in its fiscal fourth quarter just reported Thursday was $295 million, up from $204 million a year ago.

There’s simply no nice way of putting this. IBM is an Indian giver.

To prevent the commercialization of the long-standing open source project Hercules – which might put some of its mainframe revenues at risk since Hercules is a mainframe emulator – IBM has suddenly claimed – out of the blue – that Hercules infringes at least 173 of its US patents or patent applications – including – get this – patents that it pledged the open source community could use without fear of infringing in 2005.

The “non-exhaustive” list of the 106 patents and 67 patent applications that Hercules allegedly violates fills nine pages of a letter that IBM’s mainframe CTO Mark Anzani wrote to Roger Bowler, the creator of the project and the president of TurboHercules SAS, the little French outfit trying to commercialize the widgetry.

In that letter dated March 11, Anzani again rejects the company’s proposal that IBM return to its long-established practice of licensing its mainframe operating systems to customers for use on non-IBM hardware on fair and reasonable terms.

For decades until 2006 IBM licensed its mainframe operating systems and associated patents so customers could run the operating systems on plug-compatible hardware from such as Amdahl and Hitachi. TurboHercules simply wants the same kind of license.

The letter didn’t reach TurboHercules until after it filed a formal antitrust complaint against IBM with the European Commission two weeks ago. It has accused IBM of tying the use of its dominant mainframe operating systems to its own mainframe hardware.

Anzani’s letter also alleges that individual contributors to the Hercules project, some of whom worked at IBM, have made “unauthorized use of proprietary IBM information.” He doesn’t identify what that proprietary information is.

TurboHercules claims that this is utter twaddle, that IBM itself publishes thousands of pages of technical manuals documenting how to interoperate with its dominant operating systems and that IBM is “abusing its patent portfolio to block open source competition.”

It says Hercules has existed for over a decade without any allegation of patent infringement by IBM. Mainframe professionals have used it to learn mainframe skills and test new programs. And IBM itself previously promoted its use in its “Linux for S/390″ RedBook published in 2000.

However IBM removed all references to Hercules when it republished the RedBook in 2002. That was after IBM got out from under its consent decrees on both sides of the pond. That was also about the time IBM started getting completely intolerant of any mainframe competition and started driving any would-be rivals out of business.

TurboHercules says that “despite IBM’s prior endorsement of Hercules – as well as the release of its own mainframe emulator last year and the purchase of emulation companies Sequent, Platform Solutions and Transitive – it now claims that Hercules is no ‘different from those who seek to market cheap knockoffs of brand-name clothing or apparel.’”

It accuses IBM of breaking two promises: both its pledge not to use its vast patent portfolio as a weapon against open source software projects and its undertaking to the European Commission in 2000 to license its patents to any company on reasonable terms.

The statement Blue made to the EC reads: “IBM has an open patent licensing policy under which we are prepared to license our patents on a non-discriminatory worldwide basis.” (See http://ec.europa.eu/internal_market/indprop/docs/comp/replies/ibm_en.pdf.)

IBM used to provide a patent policy on its web site that said, “IBM has an open approach to patent licensing for products in the Information Technology (IT) field and is generally willing to grant non-exclusive licenses under reasonable and non-discriminatory terms and conditions to those who in turn respect IBM’s intellectual property (IP) rights.”

IBM removed that statement from its web site during its litigation with wannabe mainframer Platform Solutions in 2007. It then acquired Platform Solutions to get it off the market and end the litigation.

TurboHercules claims IBM’s current behavior “demonstrates that IBM’s support of open source stops the moment those efforts threaten IBM’s lucrative mainframe monopolies.”

It also says that IBM’s attack on Hercules and its individual contributors should strike fear in the hearts of all open source developers everywhere.

“Instead of addressing the important tying claims raised by TurboHercules,” it says, “IBM is threatening a patent war against a small open source project to protect its multibillion-dollar mainframe monopolies. If IBM can get away with this, why wouldn’t Microsoft, Google, Apple, Oracle and Adobe follow suit against other open source projects?”

Florian Mueller, the guy who started the NoSoftwarePatents campaign that led the European Parliament to reject proposed legislation sanctioning software patents a few years ago, agrees with TurboHercules.

“In market segments,” he says, “where IBM has nothing to lose, open source comes in handy and the developer community is courted and cherished. In an area in which IBM generates massive revenues (an estimated $25 billion annually just on mainframe software sales!), any weapon will be brought into position against open source. Even patents, which represent to open source what nuclear arms are in the physical world.”

In a blog that calls for a formal investigation and intervention by the European Commission (http://fosspatents.blogspot.com/), Mueller writes:

“Make no mistake: this is not about a simple commercial dispute between IBM and some other vendor. The patents in question, the largest group of which covers the IBM mainframe CPU instruction set, are not specifically connected to what the TurboHercules company is doing beyond the Hercules code base….Other patents that IBM brings into position here cover general address management and virtualization/emulation functionality that would affect many other open source projects as well.

“This is an attack on Free and Open Source Software as a whole. Unless IBM is stopped, other vendors might do the same to protect their turf.”

Mueller has been skeptical of IBM’s 2005 patent pledge from the very beginning.

“When IBM announced its so-called pledge of 500 patents to the open source community five years ago, I said this was just hypocritical and wasn’t going to have any positive effect. Now that half of IBM’s profits are at stake, it resorts to anything including patent warfare against open source just to keep customers locked in for more time to come.”

He claims the purpose of the patent pledge was merely to appease the community as well as the anti-patent legislators during the debate over European software patents “But it was clear to me from the beginning that IBM fully intended to reserve the right to use patents against open source, and by now it’s very apparent that that is the case,” he says.

What initially made him suspicious was the number patents IBM pledged.

“It was clear that a quantity of 500 is so miniscule compared to the size of IBM’s overall patent portfolio that this was going to be, at best, a drop in the ocean. They still reserved tens of thousands of patents. Compared to that, even nuclear disarmament treaties involve much more substantial percentages of the nuclear arms owned by the parties to such treaties.”

Meanwhile, from inside the NoSoftwarePatents campaign he could see that “IBM’s love for free and open source software ends where its business interests begin.”

“I saw,” he says, “IBM as a driving force behind the lobbying for software patents in Europe. We ran into each other from time to time, such as at government roundtables.”

Furthermore, “Not only had IBM been a driving force in terms of lobbying but also through its patent filing activity, which aimed at gradually extending the scope of patentable subject matter over here.”

Plus, he says, “IBM was also known as a relatively aggressive enforcer of its patents, such as through the infamous ‘IBM patent tax.’”

“They started a long time ago to approach smaller companies (companies that wouldn’t have a large enough patent portfolio to do a cross-licensing deal) and told them that in order to steer clear of infringing on any of IBM’s countless patents (which are too many for a small or medium-sized company to check on) they should pay IBM a percentage of their total revenue as a patent licensing fee. I don’t mean cases where they would have said specifically ‘these are the patents you need to license from us’ but really this approach of just scaring people with the sheer breadth and depth of their patent portfolio.”

Mueller also claims “IBM is hypocritical about how it wants patents on industry standards to be licensed. In connection with the European Interoperability Strategy and the European Interoperability Framework, IBM and its political allies demand free access to all sorts of patents in the name of interoperability. But the mainframe architecture is also a de facto industry standard and IBM should therefore make its related patents available on the same terms it demands from other industry players.”

Anzani’s letter can be found at http://openmainframe.org/storage/IBM_reply_TurboHercules_March_2010.pdf and at http://www.scribd.com/doc/29469085/IBM-letter-dated-11-March-2010-to-TurboHercules-SAS. A quick comparison indicates Anzani’s list includes at least two patents, US 5,613,086 (an instruction set architecture patent entitled “Method and System for Locking a Page of Real Storage Using a Virtual; Address) and US 5,220,669 (another architecture patent entitled “Linkage Mechanism for Program Isolation”), that IBM pledged to open source use in 2005 (see http://www.ibm.com/ibm/licensing/patents/pledgedpatents.pdf).