Neon Expands Mainframe Complaint Against IBM

Neon Enterprise Software has shown no signs of backing down in its legal challenge against IBM, after it amended its lawsuit to give specific examples, which according to Neon executives, illustrates Big Blue’s monopolistic behaviour in its mainframe business.

In the amended complaint filed 17 February, Neon outlines instances where IBM officials have warned System z mainframe customers that use of Neon’s zPrime software is illegal, threatens their licensing deals with IBM, and could lead to IBM changing the cost structure of those deals.

Neon officials say that such actions highlight the lengths IBM will go to to protect its mainframe business from outside competition, and illustrates how dependent these customers have become on IBM to run mission-critical workloads.

“IBM’s willingness to threaten retaliation against any IBM Mainframe Customer that uses zPrime makes clear that its customers are ‘locked-in,’ and, in addition, that IBM is quite willing to use as a massive hammer its customers’ dependence on IBM’s System z Offerings,” Neon officials said in the 44-page complaint, filed in US District Court in Texas. “Customers that had an alternative would tell IBM to ‘pound sand.’”

Neon initially filed suit against IBM in December, claiming that IBM’s tactics have hurt its business and are part of a pattern of behaviour the giant tech vendor has exhibited over the years when dealing with other companies whose products have threatened to take away mainframe revenues.

At issue in this case is Neon’s zPrime software, which the company introduced in June 2009. The software enables mainframe users to shift more workloads off the mainframes’ more expensive CPs (central processors) and onto the cheaper SPs (specialty processors) that IBM has created over the past decade to let the mainframes run more modern workloads, including Linux and Java applications.

Not only are the SPs cheaper than the CPs to buy, but also to operate. IBM’s licensing model calls for customers to pay for the amount of work running on the central processors – the more workloads that run on them, the more businesses pay to IBM. However, workloads running on the SPs don’t face the same licensing costs.

Neon officials said that by using zPrime, businesses can move more workloads onto the SPs, potentially saving millions in licensing costs.

IBM executives, who filed a countersuit against Neon in January, claim that zPrime violates Big Blue’s copyrights and entices System z customers to violate their mainframe contracts. The workloads that run on the specialty engines are governed by contracts between IBM and the customers, and that moving more workloads onto the SPs violate those contracts.

Neon disagrees, and said that there are no provisions in IBM customer contracts limiting what workloads can be shifted to the specialty engines, which officials said are essentially identical to the central processors.