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IBM AND FUNDAMENTAL MAY BE AT AN IMPASSE

The relationship between IBM and Fundamental Software, Inc. that allowed FSI to sell the Flex-ES mainframe emulator may be coming to an end.

On Thursday, October 5, FSI's two main resellers, Cornerstone Systems and T3 Technologies, sent notices to customers and the Flex-ES community at large stating that their sales of new systems to IBM PartnerWorld Developers (PWD) will have to cease at the end of October unless IBM and FSI can hammer out a new deal.  So, the Flex-ES PWD business could become strictly a maintenance and support operation.

If the Flex crowd was startled by the postings here is the, it didn't show much shock, or any other reaction, in public forums.  There were few response notes posted to the Flex-ES listserver, and it took a whole day for the news to get posted on the principal IBM big iron newsgroup IBM-main.

Another sign of indifference:  The discussion on the IBM-main listserver started out on a serious note, but quickly degenerated into a silly debate about the singular and plural of MIPS.  Nobody even bothered to send a quick note about the developments to the IBM VSE newsgroup, but members of that group routinely also read IBM-main.

The lack of visible commotion may be masking activity that is going on behind the scenes, but it also may be the case that the parties who really feel significant interests are at stake boil down FSI, Cornerstone, and T3, and that they have said all they plan to say for now.

FSI, which works through its agents and does not sell systems directly, has made no public statements, and there isn't yet any information about changes in the licensing environment on its web site.

The company has been in touch with its resellers, however; FSI warned them about the possibility of impending problems last summer.  But FSI has maintained that its effort to renew suitable arrangements with IBM are still underway and that it really hopes to achieve a favorable resolution.  This position is one reason the two big resellers didn't make any public statements about a possible change in their situation until October.

The agents ultimately went public because they believe their relationships with existing customers depends to some extent on transparency, because they don't want to sell systems under terms that might later be viewed as deceptive, and because they apparently began to doubt that FSI and IBM will come to a viable agreement on licensing by November 1.

The difference in tone and content between the Cornerstone statement and that of T3 can be explained by the very different nature of the two companies.

Cornerstone is an IBM Business Partner, and it sells all IBM servers, including mainframes, alongside Flex-ES boxes.  If it can no longer offer Flex-ES systems to PWD folk, it can propose low end z9 machines to the same users.

T3 is authorized by IBM to market Flex-ES systems that will run IBM software, but it cannot supply real IBM hardware as an alternative.  T3 does, however, plan to offer its own IBM-compatible servers using technology from Platform Solutions.  At the moment, T3 hasn't actually announced availability of this product line, but says that the debut is imminent.

FSI is in quite a different position.  It will continue to get support revenue from a base that is probably in excess of 1,000 installations, even if it never sells another new system.

The company did have plans to establish a disaster recovery center in the Sacramento area in a building that was formerly an AT&T facility.  It's unclear whether Flex-ES machines can still be used as legitimate DR platforms under the terms of IBM's software agreements.  It is even less clear how prospects might feel about entrusting their emergency systems to FSI if they worry about the company's future vitality.  Chances are, if FSI does go ahead with its DR center, it will find ways to provide prospects with evidence of its viability. 

Flex-ES emulated mainframes run on servers at speeds of 18 MIPS and higher using X86 platforms as a hardware base and a Linux or SCO Unix operating system as a software base.  Generally speaking, they top out in the vicinity of 100 MIPS, although they could, in theory, be built to deliver more performance.  The machines support parallel and ESCON channels, use internal disks that emulate IBM disk and tape storage, and can host all current and recent IBM operating systems.

The emulated mainframes don't offer FICON connectivity or OSA network adapters, but shops that need only a small mainframe platform do not always require these features.  In addition to these server-based machines, the Flex-ES PWD crowd also uses a fair number of laptop mainframes, which run Linux plus Flex, and seem to be very useful for code development, demonstrations, and support work. 

Generally speaking, IBM will not license 64-bit environments to end users with Flex-ES systems, although there appear to be some exceptions.  So, most end users are limited to 31-bit software, which suits the VSE world pretty well but isn't what the z/OS crowd prefers.

Developers have more freedom, and until now have been able to get free PWD licenses for all the latest IBM mainframe software, including 64-bit products.  IBM is soon going to begin charging PWD users for software, but the charge will be modest, probably less than $1,000 a year. 

While IBM no longer sells 31-bit versions of z/OS and a number of other products, this has not prevented end users from moving from IBM hardware to Flex-ES systems.  They just install their old software and pay IBM for the continuation of their existing licenses and software maintenance agreements.

IBM says it will stop providing standard maintenance contracts for 31-bit software at the end of March 2007, but by all indications uses who want continued support for 31-bit IBM systems software and middleware on Flex-ES platforms (and old IBM iron, too) can work out arrangements with IBM that are similar to current support contracts, although the cost of such exceptional deals can be higher. 

What this boils down to is that the emulated mainframe world will not meet a sudden end, but if IBM and FSI part ways, it won't be getting any new citizens, either. 

— Hesh Wiener October 2006


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