IBM wants 200 million users on its cloud widgetry by the end of next year. It has to get to them before Oracle, HP or Dell do. It projects $7 billion in revenue from cloud computing hardware, software and services by 2015.

To advance its ambition it’s unveiled a new “simplified” enterprise-grade public cloud PaaS it calls SmartCloud Application Services (SCAS) that will ride on its SmartCloud Enterprise and Enterprise+ IaaS, which won’t be deployed globally until the end of next year. Initially it’ll be US-only.

SCAS is supposed to be safe enough for new and traditional mission-critical enterprise applications development and deployment. IBM promises cloud-based economics along with enterprise-grade security and governance, open Java and “cross-platform support with no vendor lock-in.”

It’s to beta later this quarter with what IBM calls “business-centric” SLAs. What they are exactly isn’t clear.

Among Blue’s offerings is a new SmartCloud for SAP Applications service for automating the most common labor-intensive tasks associated with managing SAP environments in the cloud. The widgetry will put all databases on the cloud IBM said.

IBM’s also got software called SmartCloud Foundation that will let users deploy a private cloud inside their own firewalls. IBM wants to make the process easy for SME beginners so it’s developed a self-service pre-packaged cloud starter kit called SmartCloud Entry with simplified cloud administration and standardized virtual machines. As one might expect it supposed to be optimized for IBM Power and System x hardware.

Somewhere in this potpourri is IBM’s Cast Iron acquisition which should connect private clouds and public clouds.

In addition, IBM’s got a provisioning engine called logically enough SmartCloud Provisioning that’s supposed to be able spin out 4,000 virtual machines in less than an hour and some cloud-based monitoring software.

That leaves the SmartCloud Ecosystem. IBM can’t make its numbers without rallying its resellers, ISVs and SPs to penetrate SMBs with both private and public clouds that can carry white labels.

SugarCRM is provocatively chucking in its cloud-ified open source applications to move things along. It will give users access to sales reports and data, as well as analytical tools to evaluate sales performance.

What any of this will cost is still a mystery. Early customers for IBM’s cloud platform include Kaiser, ING, Citi and Lockheed Martin.

IBM says the cloud is still a nascent technology. It took a survey and found only 33% had nothing more going than a cloud pilot, but figures the number will more then double in the next three years. It figures customers see the cloud’s value proposition they just need someone patting their hand. It could be worth $150 billion soon.

IBM’s mainframe monopoly marches on unscathed apparently but for the legal bills.

The latest threat to its hegemony – zPrime, Neon Enterprise Software’s seemingly legitimate attempt to move billions of dollars worth of mainframe workloads to IBM’s free-for-the-using specialty mainframe processors – a scheme based on IBM’s alleged failure to forbid such a thing in any of its contracts thereby potentially saving mainframe users the world over from IBM’s predatory pricing – was suddenly yanked off the market the other day reportedly as a result of a mediated settlement over the weekend. And nobody can say why Neon apparently folded like a limp noodle reportedly because of a gag agreement between the parties.

So we’ll never know whether Neon was paid off on the courthouse steps – its suit against IBM for antitrust was supposed to go to trial next week and IBM has been know to reach for its checkbook to make other mainframe rivals disappear ahead of such an impasse – or if IBM actually got Neon between the cross-hairs.

It sure would be a lot more “American,” as the Tea Party might say, if suits like this weren’t sealed with so much sealing wax that nobody can follow the narrative but they didn’t seal the docket and it appears from at least one filing that escaped the censor that IBM nailed Neon for destroying evidence and “reverse assembly of z/OS.” In IBM’s words, “fraud.”

All we know is that Neon didn’t oppose an IBM motion for a permanent injunction on May 31 and the court ordered Neon’s zPrime software off the market with a vengeance.

Neon can’t “market, sell, license (including any renewal or extension of any existing license), install, distribute, export, import, offer to sell, offer to license, offer to install, offer to distribute, offer to export or offer to import zPrime” any more.

The district court where Neon was hoping to bring IBM to book for unfair competition and worse ruled that “(1) only workloads expressly authorized by IBM can be processed on the specialty engines (including zIIPs and zAAPs) and (2) IBM’s contracts, including the IBM Customer Agreement and the License Agreement for Machine Code, prohibit software (a) that enables workloads not expressly authorized by IBM to be processed on specialty engines or (b) that circumvents IBM’s technological measures in machine code that protect the built-in capacity of specialty engines and enables workloads not expressly authorized by IBM to be processed on specialty engines.”

This was exactly what a jury was supposed to decide starting next week. Instead Neon is now supposed to tell its licensees and customers to destroy their copies of zPrime and certify that they did.

Shortly before Neon’s board met last Thursday and decided to grab at the offer of mediation, IBM accused the company of systemically deleting “huge volumes” of incriminating e-mails and files ahead of obvious litigation with IBM – a practice it claimed continued after they went to court – as well as of destroying proof of “reverse-assembled” code built at the behest of Neon’s owner John Moores, the “M” in BMC, although everybody knew that reverse engineering was forbidden in IBM’s contracts.

IBM told the court that “Neon executed its plan to remove any trace of the reverse assembly to near perfection, leaving in its wake only the detritus of Neon’s unlawful conduct. Whether ‘one of the dumbest ever,’ Neon’s scheme very nearly succeeded, but for IBM pushing for the production of missing e-mails and images of the developers’ hard drives.”

Of course, IBM is known to use some pretty strong language in its legal filings. Sometimes it’s over the top.

One item in the court order calls for Neon to send IBM “any payments or other proceeds received on or after the date of this permanent injunction in respect of or relating to zPrime…” Another one says “Neon shall take all steps necessary or advisable to terminate the escrow agreement dated September 20, 2010, among Neon, IBM and Austin Trust Company, and ensure the prompt return of the escrowed property (as defined in such agreement) to IBM.”

Anyway, Neon’s rout or defection – whichever it is – could weaken whatever case the European Commission and the US Justice Department have lethargically managed to cobble together so far against IBM’s mainframe monopoly unless of course they begin to see a pattern.

See https://ecf.txwd.uscourts.gov/doc1/18118134850.

IBM needs to step on the gas if it’s going to produce $7 billion-a-year in cloud revenues by 2015 like it promised.

Its new infrastructure-as-a-service gamble of course won’t just compete with Amazon. It’s directed at all the major cloud purveyors like Rackspace, GoGrid, OpSource and Terremark.

The thing it’s going to be hawking is the pay-per-use, multi-tenant IBM SmartCloud, which will come in two versions: Enterprise, which is available now, and the more functional, more secure Enterprise +, which is set to roll out later this year.

IBM sees the Enterprise version, which apparently replaces or expands its existing Red Hat cloudware-based Development and Test Cloud, as being largely for development and testing, which has historically been Amazon’s strength.

Enterprise +, now in pilot, is for production deployment of enterprise applications in a public, private or hybrid cloud and is supposed to let users pick fancier levels of security and isolation; availability and performance; platforms; management and ease of deployment; and payment and billing that suit them best.

Pricing is expected to be higher than Amazon’s although Enterprise is advertised as being 30% cheaper than using conventional environments.

Besides LotusLive, TivoliLive, Sterling Commerce, IBM Converged Communication Services and other IBM widgetry, IBM means for Enterprise + to run IBM SAP Managed Application Services in Q3. The SAP stuff is supposed to capable of cutting the installation of Oracle or DB2 to 12 minutes down from a day, clone a database in 20 minutes instead of two or three days and install an OS in 30 minutes not a day.

IBM’s own GUI-based Workload Developer software will be used to accelerate cloud deployments: provision all the middleware and application components across multiple servers or hypervisors, instead of configuring each one separately, configure databases, set up security and monitor the stuff.

IBM is coming armed to the party with 45 companies such as Lockheed Martin, Citigroup, State Street, ADP and North Carolina State University organized into a first-of-its-kind Cloud Standard Customer Council (CSCC) under the aegis of the Object Management Group (OMG).

Besides IBM the founders include Rackspace, Software AG, CA Technologies and Kaavo.

The idea is to make the cloud mainstream. It will prioritize interoperability issues such as management, reference architectures, hybrid clouds, security and compliance and come up with user-driven requirements.

It’s gonna tick Microsoft and Amazon off no end that it’s waving around that Open Cloud Manifesto that IBM is understood to have ghost-written a couple of years ago that they rejected as too Blue.

Anyway, apparently the CSCC means to produce standards roadmaps and white papers and interface with the Distributed Management Task Force, the Organization for the Advancement of Structured Information Standards (OASIS) and the Open Group, where IBM recently deposited a Reference Architecture for Cloud Computing.

Membership is free to users; vendors can join as sponsors. See www.cloud-council.org.

That, it figures, is two euros or $2.70 out of the pocket of every man, woman and child in the European Union since consumers ultimately wind up paying the price of IBM’s generosity.

DBS came to make the calculation in case it decides to complain to the European Commission about IBM.

The EC opened a monopoly maintenance investigation of IBM last summer on complaints from other ISVs. The Justice Department is also conducting a similar probe.

The Swiss software and consulting house is a mainframe DB2 specialist that has gotten roughed up lately by IBM in its zeal to squeeze every dime out of its mainframe monopoly even if it means riding roughshod over would-be competitors.

In September of 2009 DBS released a software utility called IRS for DB2 that increases the authorized DB2 workloads users can run on their mainframes’ zIIP specialty processors (SPs).

It saves them a lot of money in licensing fees, money they actually thought they were already saving.

See, IBM doesn’t charge its usually hefty monthly license fees for running DB2, Java and XML workloads on SPs. It’s a device Big Blue concocted to dissuade users from abandoning mainframes for cheaper-to-run modern computers; zIIPs, like zAAP SPs, are just mainframe central processors (CPs) renamed and sold at a lower price.

IBM has always been hazy about the “portion” – its word – of zIIP-qualified workloads that DB2 sends to zIIPs to execute, but it put no contractual limits on the number of DB2 Distributed Relational Database Architecture (DRDA) workloads that could be offloaded.

Every piece of software that uses the zIIP offload interface can decide what portion or percentage of its workload is redirected to the zIIP. Third-party products that have to compete against other products naturally want as much of their workloads offloaded as possible to make them cheaper to run.

Not DB2. DB2 is the only RDBMS running on z/OS. It doesn’t have to compete. And, as far as DBS knows, it’s the only software to limit its offloaded workloads.

DBS figured out that IBM only routed 55% of the legitimate DB2 workloads to the zIIPs, not 100% – even though the user-owned SPs had the capacity to handle more and the mainframes’ CPs were overworked.

The scheme insured that IBM raked in maybe an extra $1.5 billion a year in licensing fees worldwide, conservatively speaking.

It was because of a little artificial limit hard-coded into DB2 that IBM never quite got around to telling its customers about. Its existence only officially surfaced last May when IBM happened to mention it in a software patch.

So, to address the imbalance, DBS created IRS for DB2 – IRS is short for Install, Run, Save – which upped the so-called legal generosity factor to 95% and smoothed out the peaks and wait times that IBM had artificially created.

All DBS did was use information that IBM had on its web site for system programmers, information that happens not to be there anymore. And, contrary to IBM’s contention that DBS uses the zIIP offload interface, the company says it doesn’t and that IBM knows it; IRS for DB2 runs on CPs, not SPs.

Anyway, IBM – which recently described its so-called generosity factory as a business decision, obviously meaning it gives away just enough to keep its customers from bolting to other platforms – didn’t take the revenue-denying innovation any too well.

Last May its mainframe software VP Dan Wardman, head of DB2 and IMS, put IBM’s position on IRS for DB2 in writing for European customers: “Any other DRDA processing beyond the portion determined by DB2 that is diverted to a zIIP would not be eligible workload.”

Aside from trying to spook users into not using it – because no contracts forbid it – IBM released a software patch called APAR PM12256 meant to make IRS for DB2 useless. It was a clumsy patch that actually increased some people’s licensing fees and set off a little firestorm of opposition among its usually docile, intimidated mainframe clientele.

The APAR changed the generosity factor from a steady 55% of CPU use to 100% of a sometimes unachievable 60% of transactions and zero for the other 40%. It also created a very high variance in effective and predictable zIIP use that in turn created nasty spikes that cost users more.

DBS responded with a new version of IRS for DB2 to deal with the APAR and a new product called Dynamic SQL Balancing Optimizer (DSBO) to deal with the APAR’s disadvantages. This month IBM upped the ante and released two new APARs that again change the way the system works to render DSBO useless and partly correct the problems with the first APAR.

To get around users’ fear of IBM, DBS sells its software on a month-to-month basis. A customer can terminate at any time if the pressure IBM exerts gets to be too much to bear. For the 5,000 euros, or $6,500 it costs a month, the user saves about €15,000-€20,000 (~$20,500-~$27,500) a month.

Depending of their arrangements with IBM, the ROI is immediate for some sites while others see their end-of-year penalty payments cut.

DBS is afraid to talk about the adoption of IRS for DB2 because its customers are afraid of IBM’s reaction. It says its penetration would be over 50% by now in the German-speaking parts of Europe were it not for IBM.

DBS speculates that between IRS for DB2 and Neon Enterprise Software’s IBM-outlawed zPrime widgetry, which offloads and runs traditional DB2, CICS, IMS, TSO/ISPF and batch workloads on SPs, IBM’s juicy monthly licensing fees could be cut by 50%.

And the only reason that Big Blue would want to do that is if it thinks it may lose the antitrust suit filed against it by Neon Enterprise Software.

See, Neon’s zPrime software lets mainframers use SPs – which are otherwise called zIIPs and zAAPs and are actually just standard mainframe central processors under another name – to offload and run classic mainframe DB2, CICS, IMS, TSO/ISPF and batch workloads free of IBM’s notoriously exorbitant monthly fees.

IBM claims it’s illegal to run those workloads on SPs and that users are contractually limited to running XML and Java programs and accelerating DB2 workloads on the things.

IBM created the widgets so it wouldn’t lose valuable mainframe business to modern distributed systems, which is why it doesn’t charge customers to use them.

Neon claims no such contracts exist anywhere and is currently waiting to hear back from a Texas federal judge if he’s going to grant it a partial summary judgment saying IBM hasn’t a leg to stand on in claiming that the workloads that can be run on SPs are contractually restricted.

His decision in Neon’s favor would legitimatize the use of the forbidden zPrime and could cost IBM billions of dollars in licensing fees since Neon claims to be able to offload more than half of a mainframe’s workloads on to SPs.

IBM has used its contract claims – and a few other terror tactics – to scare customers off of zPrime. It’s also made SPs hard to get and insisted that users take a blood oath not to use the things for zPrime, basically changing the terms of existing contracts after the fact and raising a little issue of Clayton Antitrust Act violation. The law says you’re not allowed to condition the sale of a product on the buyer not using rival products.

Blue is now trying to coax customers into installed the all-seeing patch or APAR in mainframe terminology. It’s even offering owners of its shiny new z196 mainframe, just out last summer, a little discount to download the thing, a discount it may make back with the 10% increase it just slapped on a whole host of old Flat Workload-licensed software products, a list that fills about 38 pages single-spaced.

Since IBM has been trying to outlaw zPrime since it came out in the middle of 2009, it seems odd it didn’t make the APAR a default on the new z196, suggesting it may have recently reappraised its legal odds. Neon did get a fast-track schedule from the Texas court and its multiple anticompetitive charges go to trial in about six months.

Neon, which believed to have a couple of dozen zPrime customers braving IBM’s wrath, suspects the spyware will eventually be mandatory and then IBM can hook it into its monthly reporting system and start charging for using SPs.

Oracle is after all – to the consternation of many – suing Google for using Harmony or a subset of it in Android – including the infamous Dalvik Java Virtual Machine – rather than Java Mobile Edition (ME) and IBM has been the mainstay of Harmony development. Now IBM is pulling out of a potentially litigious situation for it, throwing in its lot with Oracle and probably killing Harmony absent Google jumping in. My. My. My.

According to IBM open source and Linux VP Bob Sutor, who provides some back-story color to the press announcement but doubtless not all, IBM finally recognized that Oracle – like Sun before it – was never going to make the Java compatibility test kits (TCKs) available to the renegade Apache project and, after years of fruitless struggle, threw in the towel.

In his blog Sutor said of Oracle’s position, “We disagreed with this choice, but it was not ours to make” and called IBM’s decision to co-operate a “pragmatic choice.”

“We believe,” he said “that this move to work together on OpenJDK is in the best interests of IBM’s customers and will help protect their investments in Java and IT technology based on it.”

Harmony became untenable when Oracle sued Google. That was what convinced IBM that Oracle would never ever loosen its grip on the TCKs – and may be an assessment of Oracle’s chances of winning – but between times without its backing Java development would drift or stagnate more than it already has.

So IBM will shift its development work from the “unofficial and uncertified” Harmony to OpenJDK, recognize OpenJDK as the primary Java runtime, and collaborate on the Java Standard Edition (SE) reference implementation.

In exchange, Sutor said, IBM is supposed to get some kind of leadership position in OpenJDK and expects “to have strong say in how the project is managed and in which technical direction it goes.”

Actually, however, Oracle drew the roadmap at OpenWorld last month and IBM is tagging along, throwing its weight behind the Oracle-laid plan to accelerate the release of JDK7 to mid-2011 by delaying certain features until JDK8, now due in late 2012. Oracle is supposed to create the Java Specification Requests (JSRs) for Java SE 7 and 8 and submit them to the JCP.

And for its allegiance IBM expects “to see some long needed reforms in the JCP, the Java Community Process, to make it more democratic, transparent and open. IBM and, indeed Oracle, have been lobbying for such transformations for years and we’re pleased to see them happening now. It’s time. Actually, it’s past time.”

What these concessions might be is unclear. Sounds like the JCP could come away less powerful not more. Oracle’s got a you-can-be-disbanded gun to its head just like Sun.

Oh, yes, by the way, Eclipse Foundation, which IBM started, is reportedly going to support Java SE 7.

See www.sutor.com/c/2010/10/ibm-joins-the-openjdk-community/.

Netezza, it says, is dependent on proprietary hardware that impacts its I/O and puts it out-of-sync with the latest advances. Oracle, it goes on, with its historical scaling issues, is using relatively skimpy old-fashioned legacy SMP widgetry that’s better at OLTP than data warehousing and analytics, Greenplum’s strength. Exadata, it says, “breaks at more than eight racks” and Teradata, well, Teradata might be considered a rival but its price point is so over the moon it’s not really comparable.

Greenplum, which never did hardware before and always preached the software-only approach, is using standard x86 Intel boxes sourced from Dell with 10 gigE switches that expand to 16 servers in a rack for its new integrated massively parallel Data Computing Appliance.

It developed the thing during its short two-and-a-half months as an EMC property – now that it’s got EMC’s wherewithal to do it – and positions the box as “a key enabler of ‘big data’ clouds and self-service analytics.”

It also positions EMC as a server wannabe like Cisco, which also jumped its hereditary boundaries.

The parallel-everything widget uses Greenplum’s latest and greatest 4.0 Database and is supposed to process 10TB an hour, making it twice as fast as Exadata systems and five times fast as systems from Netezza and Teradata.

Greenplum claims its purpose-built parallel system can handle up to 5PB of “real” user data across a maximum 4,608 cores, offering up to three times more scalability and four times as many database cores than rival systems for the industry’s best price/performance ratio.

Since it’s supposed to deliver the industry’s fastest data loading and performance, more data can be analyzed faster and at lower cost and users should be able to make sense of the massive amounts of data they generate from various sources such as always-on networks, the web, consumers, surveillance systems and sensors more efficiently. It supports both large batch and continuous real-time loading.

Of course IDC predicts that data will grow 44-fold over the next decade.

Greenplum has integrated database, compute, storage and networking into the enterprise-class system and will sell it in half-rack, full-rack and multi-rack appliance configurations that scale to 24 racks. And being an EMC vassal, it’s integrated with EMC’s replication, backup, recovery and deduplication technologies.

EMC’s Data Domain acquisition (famously plucked out of NetApp’s hands) is supplying integrated backup and deduplication while EMC’s own CLARiiON-based CX4 960 machines – in their RecoverPoint disaster recovery avatar – will be offered alongside Greenplum’s appliance for site-to-site replication. That way the company can say no server-based resources are consumed for remote replication and failback operations.

Greenplum’s Postgres-based Database 4.0 is still available as a licensed software-only solution for deployment on industry-standard x86 hardware and integrated infrastructure solutions such as the Virtual Computing Environment (VCE) coalition Vblock infrastructure packages.

EMC, which claims the appliance will be a “key element of private clouds,” will supply consulting, migration, services and training for the anti-Oracle/anti-IBM push.

The appliance lists for a million dollars for an entry-level half-rack, which is good for 18TB uncompressed, 72TB compressed.

Greenplum pre-sold a few racks ahead of its announcement Wednesday including the New York Stock Exchange and was reportedly expecting to deliver a six-rack system this week.

Since becoming part of EMC 75 days ago, Greenplum says staffing has increased by 30% to 200 people. Apparently its field organization is increasing.

Monday, July 26, 2010 – The European Commission said this morning that has opened not one but two formal investigations of IBM and its mainframe business on the suspicion that Big Blue has abused its dominant position.

IBM is already under investigation by the Justice Department for the same thing and the EC’s move may inspire the DOJ to make its case.

IBM’s immediate reaction was to blame Microsoft and “its satellite proxies” for its troubles but that “pretty to think so” excuse doesn’t quite hold water.

One of the twin probes the EC currently has underway has nothing to do with any of the recent complaints that would-be rivals have made against IBM. It is solely the regulators’ idea.

The Commission, which has apparently overcome witnesses’ fear of reprisal, said that – on its “own initiative” – it’s investigating what smells like discriminatory behavior towards competing suppliers of mainframe maintenance services.

It said it “has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services (i.e. keeping potential competitors out of the market), in particular by restricting or delaying access to spare parts for which IBM is the only source.”

One is left to wonder where this surprise charge came from. Third-party hardware maintenance was created by the 1956 consent decree that is still supposed to govern IBM’s mainframe business. With the downturn IBM may have looked to shore up its top line by reclaiming even low-margin business like hardware maintenance.

The EC has been investigating IBM for a lot longer than most people realize, certainly a lot longer than the DOJ, which only opened its probe last October.

The EC had started down the investigatory path when IBM bought the mainframe-to-Itanium start-up Platform Solutions Inc (PSI) in mid-2008 to get its monopoly maintenance complaint dropped. Whatever the EC found out during that preliminary investigation presumably became part of its institutional memory.

The PSI charges were replaced in January 2009 by T3T, once the world’s second-largest mainframe systems integrator which wanted to resell PSI boxes. Then this past March Paris-based TurboHercules SAS, the start-up begun to commercialize the open source Hercules mainframe project, filed a formal complaint against IBM with the EC.

These two complaints reportedly dumped a heap of evidence on the EC’s desk.

The EC says its second investigation concerns the charges that both T3T and TurboHercules made about IBM illegally tying its mainframe hardware to its mainframe operating system and – in the later case – shutting out providers of emulation technology that could enable users to run critical applications on non-IBM hardware.

IBM foreswore tying in its antique consent decree and in the undertakings given to regulators on both sides of the pond to get the decree terminated by 2001.

IBM’s allegation of the “meritless” charges being the work of Microsoft and its stooges comes from the fact that Microsoft put money into both PSI and T3T, whose new business involves migrating mainframe site to Windows servers. Microsoft’s investment wasn’t made until after T3 filed suit against IBM and complained to the EC.

But that’s why Blue figures it can say that “Certain IBM competitors which have been unable to win in the marketplace through investments in fundamental innovations now want regulators to create for them a market position that they have not earned.”

Of course, one wonders how much truck Microsoft, a convicted monopolist, has with the regulators that fined it a small fortune.

In response to IBM’s statement, Microsoft said it isn’t a party to T3T complaint and that it puts money in companies like T3T to give users greater choice. “We do share T3T’s belief that there needs to be greater openness and choice for customers in the mainframe market,” it told Bloomberg. “Customers tell us they want greater interoperability between the mainframe and other platforms.”

IBM is the only mainframe maker left and as it told the UK press last week “Western civilization runs on this system.” The Commission acknowledges that the vast majority of corporate data worldwide still lives only on the mainframe. It is too expensive to move it.

The EC puts the worldwide market for mainframes last year at roughly €8.5 billion ($11 billion) and €3 billion (~$4 billion) in the European Union, but those estimates apparently just cover mainframe hardware and operating systems.

IBM’s mainframe margins are understood to be quite handsome – BusinessWeek reckons the new next-generation mainframe that IBM just announced last Thursday could have a profit margin of ~70% – and Sanford Bernstein, for one, says the mainframe contributes over 20% of IBM’s revenues and 40% of its profits all things considered: hardware, software, storage, services, financing.

Last week IBM reorganized its executive suite and for the first united hardware and software under one person. Steve Mills, its long-time software boss, will also have all of IBM’s servers, including mainframes, and the chips they’re made out of reporting to him. IBM’s latest theory is that computer systems must be “designed and brought to market as tightly integrated” packages of hardware and software, a theory that suggests it’s seeking tighter control of the mainframe.

The EC is also entertaining another official complaint about IBM’s “on-going anticompetitive and abusive conduct” in the mainframe market that it didn’t mentioned this morning. That one was lodged in late June by Texas-based Neon Enterprise Software, a company 100% owned by John Moores, the “M” in BMC. Neon is also suing IBM for antitrust in district court in Texas.

Observers wonder whether the EC will ultimately open a third investigation involving Neon’s allegations. And Ed Black, the head of the Computer & Communications Industry Association (CCIA), whose complaint led to the DOJ investigation, issued a statement saying, “Although we are pleased the European Commission is taking a serious look into IBM’s actions, it comes as no surprise to us as the evidence of anticompetitive behavior is strong. We believe competition authorities around the world, as they learn about and focus on this vital market will take similar actions….It is vital that a market that is responsible for more than three quarters of the world’s government and business data not be walled off from competition and innovation. All we ask is that IBM actually apply the same principles they espouse in the open source world to their mainframe business as well.” Microsoft is a member of CCIA.

T3 president Steven Friedman, who is trying to get his antitrust suit against IBM back on track – it was dismissed on a legal technicality and he’s appealing that decision – said, “We applaud the EU Commission for taking formal action on the material issues raised in our complaint. We’ve felt all along that through a prism of just the fact of our case, the commission and others would find enough compelling documentation on IBM market abuses to warrant a complete investigation into IBM’s practices over the past decade. We’re hopeful that other judicial agencies will come to the same conclusion.”

Roger Bowler, the president of TurboHercules SAS and the originator of the Hercules project, said, “We welcome the European Commission’s decision to initiate formal proceedings against IBM’s suspected abuse of its dominant market position. Hopefully, it will lead to remedies that will allow companies like TurboHercules to compete in the mainframe market. We simply ask that customers be allowed to run their mainframe applications on the hardware of their choice. It is also good news for the Hercules open source community and its 11-year history of innovative development.”

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IBM has the Justice Department crawling over its mainframe business, complaints of monopoly maintenance going to the European Commission and users chaffing under its punitive licensing fees.

So IBM has reinvented the mainframe, apparently reducing the behemoth to a blade.

Sources say it’s ported its precious z/OS to a newfangled 5.2GHz quad-core z processor with two times the cache of the old z10 chip and a hundred new instructions, built a new z196 system round it, stuck it in a chassis, otherwise called a cage, added a BladeCenter Extension – Power7 blades that’ll run AIX and x86 blades running Linux – thrown in a Unified Resource Manager and has the whole lot sharing memory and disk space.

It has, they say, achieved its fondly held dream of a converged architecture. And this, as they also say, is a very big deal.

If it wasn’t for all that trouble with the regulators, one might conjecture that IBM’s trying to make mainframe iron relevant to a new generation of IT people. It’s clearly chasing new customers, new workloads and the cloud.

IBM has been briefing its nearest and dearest followers for days under NDA about every conceivable nuance of the box called – for the moment at least -either the zNext System or the zEnterprise System and it has a clutch of the things out with large accounts.

The system will reportedly be announced in New York in mid to late July (July 22′s looking likely) with so-called pre-ships going out immediately and launch in volume this fall, probably in September.

It’s supposed to cost a third less than what IBM usually charges for mainframes but the pricing picture is probably more complicated than that.

The whispers say zNext will run all the z/OS widgetry back to goodness knows when and OS/400 on Power7 blades by the end of the year. Throw in AIX, Linux and maybe Windows and that’s why it’s also called a “system of systems.”

It brings to mind the Platform Solutions (PSI) box that IBM bought so it could yank it off the market. The PSI machine ran Windows, Linux, Unix, Open VMS and z/OS on Itanium chips way cheaper than IBM could on its mainframes. That’s why IBM smothered the thing in its cradle.

Now Blue has IBM-ized the concept and gone PSI one better. In zNext, which appears to involve single-function appliances too, the environments are integrated. The multi-OS resources are supposed to function as a single, logical, virtualized system.

Applications run on the zExtensions will bask in the reflected glow of the mainframe’s qualities of service.

Likely to be advertised as a great leap in virtualization, IBM will play it as ideal cloud infrastructure.

Reportedly the shared virtualization IBM is using is Red Hat’s very own KVM.

The Duquesne Group thinks this “consolidation of platform under the zSeries roof” puts IBM squarely on the road to a “data center in a box” managed by a new species of hypervisor or “control hyperprocessor.”

Among other things, the widgetry may distract customers toying with using Neon’s zPrime software to lower their workload bills. At a guess it looks like virtual servers could ultimately replace the ZiiP and ZaaP specialty processors Neon is currently exploiting in a threat to IBM’s revenue stream.

Reading off an IBM PowerPoint, zNext or zFuture is supposed to “reduce cost, reduce risk and improve service,” and be positioned as being easier on power consumption, utilization, resource management, communication, RAS and of course elasticity.

IBM is reportedly throwing all its software into the mix. Users should prepare for a deluge.

All this automation is going to cost jobs but of course IT companies never say it that way. IBM’s got all sorts of “value” statistics.

The modernization move will reportedly change the outsourcing equation.

It will also put companies like CA and BMC that have always depended on the old mainframe for much of their revenues in a pretty pickle. Sources say the zNext or whatever IBM ultimately deems to call it won’t need their scheduling, security, disk management and systems management software.

Maybe that’s why CA, for one, has realigned into two new organizations: a Customer Solutions Group and a Technology and Development Group. The Customer Solutions Group, headed by newly recruited ex-Corel CEO David Dobson, includes five customer solutions units, each a strategic business unit responsible for its own P&L. The self-explanatory Technology and Development Group will be headed Ajei Gopal. If IBM gossip is right Dobson used to be CA CEO Bill McCracken’s boss back in their Blue days.

On Tuesday it wheeled out a new release of zPrime, the software that IBM has declared contraband, the stuff that slashes the cost of mainframe computing by offloading massive amounts of work from System z mainframes to low-cost IBM specialty processors (SPs).

Neon claims it’s legal; IBM claims it’s not, branding the company owned by BMC co-founder John Moores a “thief” and a “pirate” and a few other choice epithets meant to dissuade mainframe installations from taking up with Neon.

The new zPrime 2.1 is bound to get a similar rise out of Armonk because it expands the types of workloads that can be offloaded to SPs.

Neon says that up to 90% of all CICS workloads can now be offloaded to the SPs, and virtually all DB2 workloads. Mainframe administrators can also ensure maximum SP utilization and fine-tune it to match specific needs with less intervention than previous zPrime versions.

This stuff gets IBM’s knickers in a twist because it doesn’t charge for running workloads on the SPs, which are just mainframe central processors masquerading under a different name and were dreamed up to keep mainframe users from running off and using commodity servers for their XML and Java apps or to accelerate DB2.

Even though IBM has been unable to produce any workload-restricting licenses saying so, it contends that mainframe users are contractually restricted from running anything but IBM-authorized workloads on the widgets. It is also trying to undo its legal oversight by asking users – especially those who want to buy new specialty processors – to sign retroactive agreements that would foreclose their right to use zPrime. Neon calls that an antitrust violation.

Anyway, Neon said that eight companies moved into production with zPrime 2.1 Tuesday when the stuff went gold. They’re not customers yet but they all did a proof of concept and probably soon will be.

The eight must be exceedingly brave as well as utterly fed up paying IBM’s notoriously exorbitant monthly licensing fees because Neon’s antitrust suit accuses IBM of threatening retaliation against users that dare to use zPrime software. Neon said IBM threatened to sue them, jack up their mainframe fees and curtail its maintenance and support.

Neon CEO Lacy Edwards says IBM continues to interfere with his business but so far its threats have proven mere bluster. Tellingly, all of the customers who have bought zPrime have stuck with it. Nobody has dropped out.

Edwards says he knows of no case of IBM adjusting upward a zPrime customer’s perforce lower bills and it’s had a good six months now to make good on that particular threat. And of course no one has gotten sued. If IBM sued a customer we’d be reading about that on the front page of the Wall Street Journal.

One account reportedly signed IBM’s new change-the-rules anti-zPrime licensing terms without knowing that zPrime existed or realizing its consequences. It apparently feels deceived by IBM because it means to go ahead and buy zPrime anyway, Edwards said. Presumably it will tell IBM it can turn blue.

Reluctant under the circumstances to say how many customers zPrime currently has, Edwards does claim that sales are growing quarter-on-quarter in the US, Europe, Latin America and Australia and that they represent “million of dollars” in recurring annual license fees. Those millions are probably under $10 million, but it’s a bigger loss to IBM.

By way of outreach to skittish accounts spooked by IBM, Neon says “IBM’s legal team has the zPrime source code, so IBM should have confirmed by now that our code does nothing IBM alleges” like misappropriate IBM IP or infringe IBM copyrights.

IBM has had the code for two weeks and Neon claims that it would take IBM about the space of a NDA test to see any misappropriation or infringement.

It will be interesting to see if IBM modulates the names it calls Neon any in light of discovery. Neon says it’s turned over everything IBM asked for.

Jury selection in its antitrust case against IBM has been set to start March 12, 2012; Neon was hoping for next year and is disappointed.

Obviously Neon would be helped along if the European Commission and the US Justice Department move on their on-going antitrust investigations of IBM and the mainframe market.

Neon says zPrime 2.1 is much easier to install than its predecessor and ready to run in less than 30 minutes with no JCL changes, system exits or restarts of any z/OS subsystem.

Its new “Scan” interface monitors the system at user-designated intervals for tasks to be made eligible. Working with zPrime’s “Attach” interface, which uses the standard z/OS interface to enable workloads when tasks are started, it gives administrators the versatility necessary to maximize specialty processor utilization according to their specific needs. zPrime no longer uses z/OS exits for workload enablement.