RE: Re: slanted article "Inside System Storage -- by Tony Pearson"

Paul,

Here's a thought experiment to help determine whether IBM has a lock on the
market. Suppose that Dell decided to increase prices by a factor of 10, what
would happen? Customers would be able to switch to HP, Lenovo, or any of a
number of PC-compatible hardware vendors with very little disruption, and
Dell would go out of business. Now suppose that IBM decided to increase
mainframe pricing by a factor of 10, what would happen? Well, a decade or
more ago customers could have gone to a PCM such as Amdahl or Hitachi with
little disruption. But that was then. Can you imagine the worldwide economic
impact on large corporations and governments of a 10-fold increase in their
mainframe costs from their sole vendor, IBM? Even for the lucky minority for
whom a wholesale migration using LegacyJ or something like that might be
feasible, they would still experience enormous disruption in the short term.
Of course IBM would not likely do that, because even a monopolist knows
better than to charge more than the market will bear. But in the absence of
direct competition, the mainframe market is bearing a great deal more than
when the PCMs were in business. And the even more cost-effective, innovative
emulation-based technology has been denied to mainframe customers.

Ron Hilton

-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Paul Raulerson
Sent: Wednesday, September 22, 2010 5:39 PM
To: [email protected]
Subject: Re: [hercules-advocacy] Re: slanted article "Inside System Storage
-- by Tony Pearson"


On Sep 22, 2010, at 7:21 AM, Roger Bowler wrote:

> On Wednesday, September 22, 2010 Paul Raulerson wrote:
> > Believe it or not, IBM *does* have a point about protecting IP that
> > they spent *billions* of dollars to develop. MVS alone cost about a
> > *billion* dollars to develop. I have no idea how much more money has
> > been put out iby IBM for development and support of OS390, z/OS, VM,
> > z/VM, CICS/Transaction Server, DB2, and all the other products
> > around.
> 
> More to the point is where did that R&D money come from. IBM didn't
> just conjure it up out of thin air. It came from sales of mainframe
> systems to banks, airlines, utility companies, and government
> departments. And where does their money come from? It comes from you
> and me. Over the last 40 years IBM has been paid vast amounts of money
> by all of us to help develop an IT infrastructure on which our modern
> society now depends.
> 
The R&D money came primarily from customers yes. Customers who
believed they got fair value for their money when they spent it. Certainly
all the companies I know that run on mainframe hardware are quite 
realistic, and even hardnosed about their IT budgets. They spend what they
spend because they realize profit from their mainframe operations, one
way or another. 

Unless those customers are shareholders in IBM as well, then they have very
little indeed to say about how those profits are spent. 

And IBM's decisions to put profits back into R&D was a wise move indeed.
Look at the internally developed patent portfolio. It can be argued that
along with AT&T,
IBM has contributed more technology discoveries that the rest of the planet
combined.
Don't know if that is precisely true or not, but I have heard it bandied
about more than once.


> 
> And let's not forget that the mainframe ecosphere does not consist
> solely of IBM hardware and software. As well as an enormous range of
> third party products, the viability of the mainframe depends most
> importantly on the existence of the 20 trillion dollars worth of
> customer-developed applications which IBM is so proud of (see
> http://www.ibm.com/software/htp/tpf/tpfug/tgf02/tgf02x.pdf slide 5)
> Who paid for those COBOL applications and the IT infrastructure that's
> built around them? Not IBM, and yet IBM now seeks to retain a monopoly
> on reaping the rewards from this massive customer investment. A
> customer investment which dwarfs IBM's claimed R&D expenditure.
> 
> 

What customer investment? Are you saying IBM owns the COBOL programs 
developed by say, Nationwide?  Or mine?!  

I'm not sure what your point is here. People and companies paid for those 
programs and infrastructures - and those same people and companies own them.

The same is true for companies that build around Unix, VAXen, or even PCs. 



> The real question is, should the customers, who have invested so much
> in legacy applications, be obliged to continue to pay through the nose
> to contribute to IBM's profits, or should they have a choice about
> where they run their legacy applications? I stress, these are customer
> applications we are talking about, they are not IBM's. Many mainframe
> customers continue to be happy with IBM quality and are willing to pay
> a premium for that. That is fine, and that is free competition. But
> the flip side is that many customers are seeking alternative
> solutions, not necessary for their core applications but for a variety
> of reasons including disaster recovery, testing, training, "sunset
> applications" which must be kept running for regulatory reasons, and
> which do not need the latest IBM System z to run on. These are the
> areas in which IBM is using its monopoly position to exclude customer
> choice.
> 
> 

If you want to run on IBM hardware, then yes, you are obliged to pay IBM. 
If you want to run IBM licensed software, and IBM demands a license fee,
then yes,
you are again obliged to pay IBM for the privilege. 

If you want to run IBM software on non-IBM  hardware, then you are
obliged to negotiate with IBM for the right to do so. That's the whole point
isn't it? 

And no mainframe shop is locked to the mainframe platform, especially shops
whose applications are primarily in COBOL or Fortran. My shop uses a lot of
assembler, 
so we are tied pretty tightly to mainframes, but then, we can use Hercules
to run z/Linux,
and our applications, even the assembler ones, will run on top of that. 

But Oracle/Sun for instance, offers a CICS like transaction platform
designed to 
run Mainframe CICS programs, with a suitable re-compile. 


My buddy Dan Meyers, is the CEO of Legacyj - and he will sell you a COBOL
compiler that will compile and run your COBOL and CICS programs on a
Windows, Linux, or other platform. It works very well too. Indeed, he will
even sell the serives to port your programs off to the platform of your
choice.  (I have no financial interest in Legacyj, I just like it.) 

There are at least a dozen other choices for porting and running mainframe
apps on non-mainframe platforms. Nobody is really locked into the mainframe.


Now, grant you, I love our mainframe, not the least because the lovely
little box never breaks, and works and works and works and works.

I also want to see Hercules mainstream. 

But blaming IBM because people bought their superb products? Doesn't that
seem a little silly to you? 


> The billions of R&D spent on System z is a red herring. I've no doubt
> that System z has some marvellous technology inside it, but that is
> not the point. Hercules does not have access to that technology and
> does not copy it. What Hercules does provide is an independently
> developed alternative platform capable of running customer's legacy
> applications. And in a free market the customer should be able to
> choose whether he wants to run his applications on System z or a
> lower-priced alternative.
> 
> 
In a truly free market, IBM would also be free to choose to whom, and how
and when it
sells it's hardware and software, without reservation. That certainly isn't
true, though it has certainly
been more so since the consent decree expired. 

We might not like it, but either you want a free market, or not. If you do,
then you have to realize that IBM holds the moral high ground here, and we
are the supplicants asking for a boon. 


> --
> Regards,
> Roger Bowler
> http://perso.wanadoo.fr/rbowler
> Hercules "I can't believe it's not a mainframe!"
> 
> 



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