Five years on [LWN.net]

Five years on

Posted Oct 3, 2010 0:32 UTC (Sun) by dlang (guest, #313)
In reply to: Five years on by pboddie
Parent article: Red Hat Responds to U.S. Patent and Trademark Office Request for Guidance on Bilski

back when IBM was investigated for their mainframe monopoly, the mainframe basically _was_ the computer market (there was a smaller market in mini computers, but microcomputers/PCs were not a noticable factor)

today the entire mainframe market is happily ignored by almost all businesses using computers.

At this point, saying that IBM has a monopoly on the mainframe market and should be forced to separate their hardware from their software is very similar to saying that Apple has a monopoly on their market (they are the only ones who make the hardware, and they forbid anyone from using their software with anyone else's hardware)

It would be nice to have both open, but the law doesn't require it, and in the Apple vs Pystar lawsuit recently, Apple got the court to rule in their favor in a big way (namely that copyright forbade pystar from installing OSX on their computers, even though they had purchased the appropriate number of legal copies)

In many ways, apple's control of their market is much more significant to consumers than IBMs control of the mainframe market.

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Five years on

Posted Oct 3, 2010 4:54 UTC (Sun) by FlorianMueller (guest, #32048) [Link]

today the entire mainframe market is happily ignored by almost all businesses using computers.

This statement is true only if you base it on the number of companies but disregard size. In terms of economic weight, we talk about legacy program code worth $5 trillion ($5,000 billion) still in use, and about 80% of the world's business data still being processed by mainframes. IBM itself said a couple of months ago that Western civilization runs on the mainframe. You can read more about it here.

At this point, saying that IBM has a monopoly on the mainframe market and should be forced to separate their hardware from their software is very similar to saying that Apple has a monopoly on their market

From a competition point of view, those cases are different. In order to counter the claim that they dominate what competition law calls a relevant product market, both companies would have to argue for a broader market definition including all sorts of competitors. Apple would have a much better basis to do so than IBM. Apple's products are generally more expensive than those of their competitors, but the difference is limited enough that one can argue they are exposed to competitive pressure from others operating in the same relevant market. By contrast, if you look at IBM's price discrimination in the mainframe market, you can easily see that mainframes and other servers aren't the same market. Otherwise IBM wouldn't charge you about ten times as much -- for identical hardware -- for the execution of mainframe legacy workloads as for new applications operating in a more competitive market. Also, mainframe memory costs about 60 times as much as memory for other servers. Sure, mean time between failures is very high, but still that's the kind of price difference that shows it's not the same market.

It would be nice to have both open, but the law doesn't require it,

In IBM's case it can certainly be imposed, like it was in the past, and I'm confident that this will be the outcome of the ongoing investigations in the EU.