Neon Enterprise Software sued IBM Monday morning in federal court in the Western District of Texas claiming Big Blue is out "to crush" it and prevent mainframe customers from saving hundreds of millions of dollars. Neon's the Texas outfit with the newfangled mainframe widgetry called zPrime that, if unfettered, could supposedly drain IBM's prized mainframe revenue stream.

1. G2 C o m p u t er I nt elli ge n c e Issue No. 818 | December 21, 2009 – January 8, 2010
Client Server News
Competitive Intelligence On Systems, Virtualization and Cloud Computing
Google Catches Hardware Bug
Larry Ellison's not the only software maven
bitten by the hardware bug badly enough
Neon Sues IBM for
to risk losing focus.
Besides that Google-designed HTC-
Trying To Destroy It
manufactured Android Phone reportedly by Maureen O'Gara
dubbed the Nexus One that Google itself Neon Enterprise Software sued IBM Monday morning in
is getting ready to sell directly through its federal court in the Western District of Texas claiming Big
web site come January, Tech Crunch says Blue is out "to crush" it and prevent mainframe customers
to look out for a Google-branded Google- from saving hundreds of millions of dollars.
peddled Chrome netbook next year too. Neon's the Texas outfit with the newfangled mainframe
The blog claims that multiple sources widgetry called zPrime that, if unfettered, could supposedly
report that, with RFP in hand, Google has drain IBM's prized mainframe revenue stream.
been talking to at least one hardware It reportedly can, in some cases, save mainframe
maker about running it up its very own customers 90% of their onerous software licensing fees. One
netbook. potential customer reckoned zPrime could save it $100
Tech Crunch is most curious about million over two years.
whether that RFP calls for an Atom or an See, Neon can move legacy workloads onto the zAAP and
ARM chip. It's betting ARM and an Nvidia zIIP specialty processors (SPs) that IBM uses to run XML
Tegra, which should tick Intel off. and Java programs and accelerate DB2 apps on its big iron.
Anyway, at last report from the There are no monthly software licensing fees associated with
Googleplex, Google had its people testing the widgets - even though they're no different from the
- excuse me, "dogfooding" - the Nexus mainframe's central processors (CPs) that run legacy
One and tweeting about it. workloads - and that's so mainframe users won't drift off and
Reuters expects Google to sell an start running the more modern Java and SOA workloads on
unlocked Nexus One as well as one with a commodity boxes.
T-Mobile service contract. Presumably this IBM doesn't want zPrime anywhere near its mainframes
will not go down well with the existing and, according to the suit, has run off potential Neon
Android crew, not to mention RIM and customers such as Wells Fargo, the big financial house, and
Apple. (Goodness, no wonder Eric's not on Highmark, the insurance company, by claiming that their
the Apple board anymore.) contracts forbid them to use the SPs for legacy workloads.
The Wall Street Journal suggests that "In case after case," the suit alleges, "as IBM became
between the Google Voice call-routing aware that a given customer had tested and was prepared to
service and Google's recent purchase of acquire zPrime, IBM made clear that such a decision by the
the Gizmo5 VoIP network, Google could customer would result in prospective and severe discipline
be its own carrier soon. from IBM."
All the apps on the touch screen-based Neon says IBM has threatened to sue customers for using
Nexus are reportedly Google-made. The zPrime and to "extract from future negotiations any revenue
handset's supposed to be a little bit thinner lost via a customer's use of zPrime."
and a little bit bigger than an iPhone with Neon apparently had more than 50 potential customers to
start with and claims it was forced to sell zPrime for less than
HAPPY HOLIDAYS!
GSM technology and Qualcomm's ARM-
it would have fetched to those companies that IBM didn't
based Snapdragon chipset. Doubtless
there will be a digital media store off in the
cloud somewhere.
No word on pricing yet. Pricing is key. CSN Wishes One and All
Bear in mind that the mobile ad market in a Very Happy Holidays
the US is only supposed to be worth
around $416 million this year. and a Prosperous New Year!

2. Client Server News Issue No. 818 | December 21, 2009 – January 8, 2010
have a completely "chilling effect" on. It told the software on those SPs, Neon could hit IBM with
court it expects to lose more sales and margin if IBM charges of foreclosing competition under the
isn't stopped. Clayton Antitrust Act, which outlaws conditioning a
Both Neon and large mainframe users have sale on the buyer not using rival products.
reportedly combed through their contracts and IBM's Evidently Reynolds figures he's got IBM boxed in.
collateral material in vain searching for the alleged And IBM may not have helped its defense in
prohibition. Neon says it has also repeatedly asked issuing the statement it did in response to the suit.
IBM for the citation and IBM hasn't produced it. It said Neon's claims "have no merit, and its
Neon's lawyer, Chris Reynolds of Reynolds, product offers no innovation. Neon's software
Frizzell, Black, Doyle, Allen & Oldham in Houston, deliberately subverts the way IBM mainframe
reasons that if the language exists - as it does for computers process data. This is akin to a
the specialty processor used to run Linux on homeowner tampering with his electrical meter to
mainframes - the guys running IBM's mainframe unit save money. IBM has invested billions of dollars in
would have stuck the passage under the nose of the mainframe this decade and we will vigorously
every mainframe user on the face of the earth and protect our investment."
made them read it back to them after zPrime came Perhaps IBM hadn't gotten to the part of the suit
out in June. where it's accused of disparagement because it
Instead Reynolds found IBM telling IT Jungle in certainly just called Neon a thief.
2006 when the zIIP processor came out that its Neon's suit says IBM has told customers that
interfaces were "open, and other vendors are open zPrime is an "unlawful 'circumvention' technology"
to leverage it....We want to make it accessible, since and has conditioned the sale of new SPs on the
this can only help encourage more workloads to customer pledging not to use it.
move to the mainframe." IBM has 60 days to answer the suit and Reynolds
Therefore he figures no restrictions exist, IBM is fully expects IBM to countersue in return and
bluffing and Neon is perfectly within its rights. And probably ask that the charges be dropped and the
he has asked the court for a declaratory judgment venue switched to New York, where it lives. The
saying so. parties might get in to see the judge about
Furthermore Neon is charging Blue with tortious scheduling a jury trial in February or March, he said.
interference, business disparagement and unfair The suit's at www.neon.com/doc/misc/lawsuit.pdf.
competition under California law, which is stricter
than most. It's asking that IBM be forced to disgorge FTC Means To Clap Intel in Irons
any profits made at Neon's expense under the
Lanham Act, which basically says that if IBM is
& Rip Out Its Claws
found to have caused Neon to, say, lose a $2 million Just about all Intel will be left with is its list price if
sale to protect $20 million in revenues, well, it could the Federal Trade Commission gets its way.
kiss that $20 mil good-bye. The two dozen far-reaching remedies that the US
Neon also wants IBM enjoined from bad mouthing regulator is demanding in the complaint it lodged
it and zPrime any more as well as actual damages, Wednesday for Intel's alleged decade of stifling
punitive damages, pre- and post-judgment interest competition to maintain its monopoly and now
and attorneys' fee. extend it to the GPU market are draconian.
Neon, which is backed by BMC co-founder John Intel wouldn't be able to offer volume discounts or
Moores, has reserved the right to sue IBM for bundled prices; optimize its widgetry if the
antitrust violations, figuring it could make a dandy optimization disadvantages rivals; have any say
case of monopoly maintenance and tying. over who's using its IP to produce chips; write
Of course the Justice Department is a couple of licenses without the government guiding its hand;
months into an antitrust investigation of IBM's sue competitors' third-party fabricators to protect its
behavior in the mainframe market since it got out IP; or even restrict licenses in case control of the
from under its 1956 consent decree in 2002 so licensee changes hands.
Neon may not have to. It even looks like the FTC wants Intel to drop what
On the other hand, if IBM produces a contract that Intel figures is billions of dollars worth of IP on
restricts its mainframe users from using competitive Nvidia for nothing - like hand it an x86 license along
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