PSI sues IBM for right to share System z

Mainframe computer vendor Platform Solutions Inc. (PSI) has countersued IBM, saying the giant company should not have accused it of infringing patents when it created computers that allow customers to run IBM's System z operating system and software on mainframes from other vendors.

IBM sued the Sunnyvale, California, company in November for patent infringement and breach of contract because PSI is a licensed z/OS user. Now PSI has filed its own lawsuit alleging that IBM has committed antitrust violations, unfair competition, and business torts, according to papers filed Friday in the U.S. District Court for the Southern District of New York.

PSI's computers provide the only alternative in a market where IBM has held a monopoly position for decades, PSI vice president of product management and marketing, Christian Reilly, said in a release.

"IBM's lawsuit against PSI is part of a concerted effort to eliminate competition for mainframe computers, and its refusal to provide the operating systems needed to run mainframe computers is blatantly anticompetitive," Reilly said.

IBM did not respond to a request for comment.

PSI plans to launch a line of "open mainframe computers" later in 2007 that can run IBM's z/OS as well as other data center operating systems like HP-UX, Linux, and Windows. PSI is now testing the design with corporate beta users and has demonstrated it at trade shows such as the IBM users' group SHARE.

PSI hopes to sell the mainframes to corporate and government users who need to perform high-volume and mission-critical data processing needs, including matters such a billing, accounting, order entry, record keeping, and transaction processing, the company said.

In addition to denying IBM's patent infringement claims, PSI's lawsuit charges that IBM has now turned to illegal tactics, such as barring its software customers from using other vendors' hardware.

"Contrary to IBM’s assertions, IBM has and is engaged in anticompetitive, deceptive, and tortious acts intended to eliminate competition and prolong its monopoly in the worldwide market for mainframe computers compatible with IBM applications and software," PSI said in its lawsuit.

"Until 2001, IBM’s ability to abuse its monopoly power was limited by the existence of competition from developers of other IBM-compatible mainframes, such as Amdahl and Hitachi. Since the decisions by Amdahl and Hitachi to exit the mainframe market, IBM’s market power in the IBM-compatible mainframe market has grown year by year."

Today IBM has greater than 85 percent market share, towering over competitors like Bull and Unisys, PSI stated. Even Sun or Linux servers from larger competitors cannot compete because a user would have to link 30 of those machines to do the work of a single mainframe.

"Rather than competing on the merits against PSI by offering better products, better service, or lower prices, however, IBM has sought to extinguish the threat posed by PSI by conditioning the sale of its mainframe operating systems on the purchase or continued use of an IBM mainframe and by refusing to license its operating systems to customers of PSI’s mainframe computer," PSI said.

By suing IBM, PSI is picking a fight with a much larger opponent. But PSI does have some friends in its corner. The computers use the Itanium 2 processor from Intel, whose investment arm, Intel Capital, also provides some of the funding for PSI.