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Compuware Brings IBM to Antitrust Court
pcs305 writes "
According to a news article at Yahoo, Compuware is accusing IBM of stealing code and copying Compuware manuals. They also accuse IBM of being a monopoly in the mainframe market and of anti-competitive behaviour.
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Rather unfortunate. Of course, the article is scant on details, but on the face of it it just seems that IBM delivered what customers wanted, and their competitors waffled. mmmmmm free market.
As for the copying, I sure hope nobody posts any opinions, because there isn't enough information here to even form one about that question.
Ryan T. Sammartino
"Ancora imparo"
"The Compuware suit says Armonk, New York-based IBM uses its massive Global Services arm, the world's largest computer consultancy, to steer customers to its own products even when products made by other software vendors may be more suitable."
How is this somehow wrong? This is called "sales" in the real world. Sales people specialize in getting potential customers to use their product even "when products made by other software vendors may be more suitable", it's what they're paid to do. Yes, IBM may have a large sales department, and yes, maybe they do try to get people to buy their products even when a competitor's products might work better, but this the nature of sales, and is hardly anti-competitive.
Peter Karmanos is probably just upset because his company is going down the tubes right in the middle of building a huge new world HQ in Detroit and they need some loot to finish the project.
Make no mistake... the world runs on IBM mainframes. All other systems and os's are fledgling for small players only. From airports, to financial institutions to nearly every one of the Fortune 500... they all use IBM mainframes for their core business. The reason isn't because it's a monopoly... there are always other options, but would you rather pin your business on a 50 node cluster of failure-prone DELL boxes (that may catch fire at any minute) or a slick, bulletproof mainframe? It's just good business sense to buy reliability. No one else can offer that yet.
For years IBM stayed well out of the mainframe database tools market, instead it was dominated by tools from Platinum (now CA, I believe), BMC, Compuware and others. To be realistic, you couldn't really run DB2 effectively without some of these tools.
Then all of a sudden IBM announces that they are going to begin selling competing tools (not bundled, but separately priced products) and the 3rd party vendors were screaming.
Why? Yes, they would have cause to be unhappy about the new competition, but one would think that their products would be technically superior in the short term (having been around for 10 years) and too well-entrenched in many shops to be easily surplanted.
Well, it actually turns out that some of these products actually didn't do much themselves. They were basically fancy front ends to code that IBM supplied with DB2 that wasn't entirely easy to access (only programmatically). We are not talking just basic funtionality here, were talking enhanced processing. IBM discovers this, and realizes that these vendors are really riding IBM's gravy train (and anyone who has ever looked at mainframe software costs will understand how much these vendors charge for a 'front-end'). So now IBM separates that code from DB2 and ships it (and their own front end) as a separate product. What does that mean for a 3rd party vendor? That if you want to use their product, you also have to have the equivalent IBM product installed. No brainer, really.
As far as I'm concerned, the 3rd party vendors deserve to get shafted here. I've seen how much they charge - and they couldn't even be bothered to write a decent tool that could ever possibly compete with an IBM supplied one...
Anyway, that's the story as I heard it..... YMMV.
It's clear that IBM has a monopoly in the mainframe market, or at least something close to it. You can deduce this simply by looking at their pricing policies.
If you buy a mainframe then it often comes with say six CPUs, of which only one is activated. If you pay IBM some extra subscription money they will send an engineer round to activate the second CPU, or up to all six depending on how much you pay. It costs them almost nothing to do this, and it would cost nothing extra to simply have all six enabled when the machine leaves the factory, but IBM charges extra for it.
You can consider this as market segmentation - selling the same product to different parts of the market and charging different prices, so as to squeeze the most out of each consumer. If there were plenty of competition in the market, then IBM would need to sell mainframes with the best price/performance possible and would ship with six CPUs by default, at a price close to the manufacturing cost. The fact that they can get away with this pricing scheme shows they have considerable market power, if not an outright monopoly.
A more positive way of looking at the situation is that the cost of a mainframe reflects less the manufacturing costs (marginal cost), and more the R&D effort that went into desigining it or the expense of building the factory (fixed costs). In this case IBM's charging different prices, despite the marginal cost to them being no different, is just like Novell charging different prices for a 10-client Netware licence and a 100-client licence. So IBM has a monopoly on that particular mainframe design in the same way Novell has a monopoly on Netware. This is still not ideal for the consumer, but it's often considered a necessary evil to provide incentive to invest in new designs.
-- Ed Avis ed@membled.com
Monopoly in the mainframe market? If the other (now mostly dead) mainframe companies would have focused on technology, instead of becoming the 'next IBM', they may not have died. Look at what Getronics did with the Wang VS mainframe - cut R&D, stopped marketing, etc.. It was ahead of it's time back in the 80's. Had they embraced open standards, and kept the emphasis on technology, they might still be around. Complain about IBM all you want, they have always (and still have) a big focus on R&D.