Global CIO: IBM And Microsoft Clash Over Unbundling Policy

IBM attacks a study calling for mandatory unbundling of operating systems from hardware, especially for high-end servers and mainframes.
"The accusations in this report are not being driven by the interests of clients, but rather by some of IBM's competitors. To call the IBM mainframe a 'monopoly' is silly. IBM servers face vigorous competition. IBM's System z servers constitute less than 10% of all server revenue and 0.03% of total server shipments.

"In fact, only a decade ago, the IBM mainframe was on the verge of extinction because of competition from Wintel and other distributed platforms that still heavily dominate the market today. But by investing billions of dollars in research and development, IBM improved the mainframe platform and enhanced its competitiveness."

The authors of the study—called "The Issues of Competition in Mainframe and Associated Services in India"—see the whole situation from a very different perspective, however, and their prescription is vigorous regulation. Saying that India has "an excellent opportunity to avoid the pitfalls into which the more mature IT markets have fallen," the authors make these two recommendations that are direct shots at IBM:

"Unbundling hardware and software, i.e., to require that the sale of enterprise-class server hardware shall not be tied to the sale of enterprise software (in particular, the crucial server operating systems) is the first policy recommendation," the report says.

And here's the second: "Customer choice can be enhanced if server operating-systems vendors (all of them, not just IBM) are required to license their software on RAND terms (Reasonable and Non-Discriminatory). These terms, however, would in no way restrict the right, software."

Then, in an almost laughable attempt at portraying themselves as the very picture of light-handed moderation and restraint, the authors offer this: "Requiring IBM to reveal its source code a la Microsoft is not a pragmatic solution, so we refrain from making it."

I come down solidly behind IBM on this one: when others abandoned the mainframe business and analysts and the media were tossing shovelfuls of dirt into the mainframe's grave, IBM was beginning to invest what has turned out to be several billion dollars on new mainframe technology.

The notion that IBM is to be penalized for having had that foresight, and for having taken that risk, and for having made that massive investment, is repulsive to anyone who values the free market and the right of companies to act freely—and legally—in what they feel is their own self-interest.

Ten years ago, that meant that if a company wanted to get out of the mainframe business, it didn't have to ask some nanny-state regulatory agency for permission; it just got out, and took care that the door didn't hit it on the keister on the way out.

But that also means that today, a decade later, after IBM has resuscitated the mainframe business, those companies should be able to petition the government of India to use the threat of force to compel IBM to effectively give massive subsidies, worth hundreds of millions of dollars, to those cut-and-run companies by making them full-fledged competitors to IBM with technology that IBM alone funded, created, and evangelized.

I support fully support the right of Microsoft and every other company to use whatever legal means possible to compete succeed in the marketplace. But when such approaches begin to entwine government agencies and government fiat too deeply in the affairs of the private sector, then everyone ends up a loser: Microsoft by helping to create a less-free market; IBM for having its industriousness taken by force; and ultimately customers, who will find over time that fewer and fewer companies are willing to take risks when unfettered competition becomes secondary to government's ruinous desire to be "fair."


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GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].

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