IBM starts restricting hardware patches to paying customers

Following an Oracle practice, IBM starts to restrict hardware patches to holders of maintenance contracts

Following through on a policy change announced in 2012, IBM has started restricting availability of hardware patches to paying customers, spurring at least one advocacy group to accuse the company of anticompetitive practices.

IBM "is getting to the spot where the customer has no choice but to buy an IBM maintenance agreement, or lose access to patches and changes," said Gay Gordon-Byrne, executive director of the DRTR (Digital Right to Repair), a coalition for championing the rights of digital equipment owners.

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Such a practice could dampen the market for support service of IBM equipment from non-IBM contractors, and could diminish the resale value of IBM equipment, DRTR charged.

On Aug. 11, IBM began requiring visitors of the IBM Fix Central website to provide a serial number in order to download a patch or update. According to DRTR, IBM uses the serial number to check to see if the machine being repaired was under a current IBM maintenance contract, or under an IBM hardware warranty.

"IBM will take the serial number, validate it against its maintenance contract database, and allow [user ] to proceed or not," Gordon-Byrne explained.

Traditionally, IBM has freely provided machine code patches and updates as a matter of quality control, Gordon-Byrne said. The company left it to the owner to decide how to maintain the equipment, either through the help of IBM, a third-party service-provider, or by itself.

This benevolent practice is starting to change, according to DRTR.

In April 2012, IBM started requiring customers to sign a license in order to access machine code updates. Then, in October of that year, the company announced that machine code updates would only be available for those customers with IBM equipment that was either under warranty or covered by an IBM maintenance agreement.

"Fix Central downloads are available only for IBM clients with hardware or software under warranty, maintenance contracts, or subscription and support," stated the Fix Central site documentation.

Nor would IBM offer the fixes on a time-and-material contract, in which customers can go through a special bid process to buy annual access to machine code.

The company didn't immediately start enforcing this entitlement comparison policy however -- until earlier this month. "Until August, it didn't appear that IBM had the capability," Gordon-Byrne said. "We were wondering when they were going to do that step."

The policy seems to apply to all IBM mainframes, servers and storage systems, with IBM X system servers being one known exception. Customer complaints forced IBM to halt the practice for X servers, according to Gordon-Byrne.

This practice is problematic to IBM customers for a number of reasons, DRTR asserted.

Such a practice limits the resale of hardware, because any prospective owner of used equipment would have to purchase a support contract from IBM if it wanted its newly acquired machine updated.

And this could be expensive. IBM also announced last year it would start charging a "re-establishment fee" for equipment owners wishing to sign a new maintenance contract for equipment with lapsed IBM support coverage. The fee could be as high as 150 percent of the yearly maintenance fee itself, according to DRTR.

IBM could also use the maintenance contracts as a way to generate more sales.

"If IBM decides it wants to jack the maintenance price in order to make a new machine sale, they can do it because there is no competition," Gordon-Byrne said.

IBM is not the first major hardware firm to use this tactic to generate more after-market sales, according to Gordon-Byrne. Oracle adopted a similar practice for its servers after it acquired Sun Microsystems, and its considerable line of hardware, in 2010.

The Service Industry Association -- which focuses on helping the computer, medical and business products service industries-- created DRTR in January 2013 to fight against encroaching after-market control of hardware manufacturers. The SIA itself protested Oracle's move away from free patches as well.

DRTR is actively tracking a number of similar cases involving after-market control of hardware, such as an Avaya antitrust trial due to start Sept. 9 in the U.S. District Court for the District of New Jersey.

IBM declined to comment for this story.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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