As the Department of Justice gets further along with its investigation into how IBM maintains its dominance of the mainframe market, Lacy Edwards is certainly someone it will want to talk to.

Mr Edwards is the boss of Neon Enterprise Software, a small Texas company that is trying to make a living around the edges of the mainframe business.

Big Blue, however, is having none of it. It has written to some of Neon’s customers warning them that if they buy the company’s software, they could be in breach of their licences from IBM - even though it confesses it has yet to get a close look at Neon’s technology.

Does that sound like a case of FUD, designed to scare customers away from a rival’s product? That’s certainly the way Mr Edwards sees it.

Neon’s software is designed to take advantage of the fact that IBM charges its mainframe customers less for certain computing workloads that take place on what it calls “specialty processors”.

Beginning earlier this decade, IBM started to allow customers to run Linux and Java applications on these chips as a way to tempt them to move more of their computing onto the mainframe. But other applications continue to rely on the mainframe’s general purpose chips, for which it charges more.

Step forward Neon.

It came up with software that lets mainframe users shift all their legacy applications onto cheaper specialty chips. According to Mr Edwards, one big credit card company that has explored using Neon’s software estimates it could save $20-30m a year this way.

“It’s unlikely IBM would bless this,” he says.

That’s something of an understatement. In a letter to customers dated 10 July, IBM warned that Neon’s technology could violate its intellectual property (it’s not clear how many mainframe users got this letter, though Neon says it believes it went out to all of them.)

The letter, signed by Mark Anzani, chief technology officer of IBM’s mainframe business, made this admission:

Currently, IBM does not have enough information about the referenced product to comment on any specific product-related claims.

But that did not prevent Mr Anzani from going on to say that “in general”, products like this”should be evaluated to determine whether [they] would violate, among other things, the IBM Customer Agreement”, and added:

IBM would also caution its customers regarding any claimed ability to reduce IBM Program license charges by off-loading workloads to Specialty Engines beyond the eligible workload identified by IBM.

This, says Mr Edwards, is a clear attempt to sow uncertainty and doubt among potential customers, and adds that the company has a legal opinion to support its argument that it doesn’t violate IBM’s IP.

IBM won’t be drawn into a discussion on Mr Edwards’ claims, but a spokesman says that Neon “hasn’t responded to repeated calls and repeated letters to talk about this.” For his part, Mr Edwards claims Neon had contact with IBM on two occasions, and since then Big Blue “hasn’t called back.”

The Neon case touches directly on an issue the DoJ is now looking into: IBM’s unwillingness to license parts of its mainframe technology to potential competitors.

Big Blue certainly has a strong case to argue. A Federal judge, dismissing a private anti-trust suit from another would-be mainframe competitor, declared last week that IBM should be allowed to enjoy the fruits of its investments in mainframe technology without being forced to give up its IP.

It is now down to the DoJ to decide. As it weighs IBM’s motives and actions, the unspecific, blanket warning sent out to discourage customers from looking at Neon’s software is surely the sort of tactic that warrants a closer look.

Tags: IBM, Neon

October 9, 2009 2:05am in Tech | Comment