The fact that IBM Corp. (NYSE:IBM) dominates the global market for mainframe computers is beyond doubt. The company owns about 90% of the worldwide market for big iron, making dwarfs out of would-be competitors like Unisys Corp. (NYSE: UIS). Even giants like Hewlett-Packard Co. (NYSE: HPQ) and Oracle Corp.
(NASDAQ: ORCL) only dabble in the market for mainframe hardware.
IBM’s dominance is tailor-made for antitrust cases, and the company just collected two more. The European Commission has announced two investigations into IBM’s alleged abuse of its dominant market position.
The first case is based on complaints from software emulation vendors T3 Technologies and TurboHercules. The two companies claim that IBM has shut out emulation software that allows IBM-compatible software to run on non-IBM hardware by tightening the integration between IBM’s proprietary software and hardware. T3 filed suit in New York alleging the same thing, and that suit was dismissed in October 2009.
IBM has accused Microsoft Corp. (NASDAQ: MSFT) of having driven the new investigations: “The accusations made against IBM by Turbo Hercules and T3 are being driven by some of IBM’s largest competitors — led by Microsoft — who want to further cement the dominance of Wintel servers by attempting to mimic aspects of IBM mainframes without making the substantial investments IBM has made and continues to make,” according to Reuters.
The second antitrust inquiry was opened by the European Commission itself, and involves the Commission’s concerns that IBM discriminates among competing suppliers of maintenance services for mainframe computers. Because IBM is the sole supplier of spare parts for its mainframes, the Commission wants to know if IBM “engaged in anti-competitive practices with a view to foreclosing the market for maintenance services.”
The global market for new mainframe hardware was about $11 billion in 2009, with $3 billion of that coming from Europe. Add service and maintenance contracts to that and there’s a lot at stake.
The US Department of Justice opened preliminary inquiries last year into IBM’s dominant position in the US mainframe market. Those inquiries are mainly related to the allegations made by T3 Technologies and TurboHercules.
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