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IBM faces inquiry on mainframes

Bloomberg News / October 8, 2009

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SAN FRANCISCO - International Business Machines Corp.’s position in the market for mainframe computers is being reviewed by the Justice Department to assess whether the company is excluding competitors, according to a trade group.

The Computer and Communications Industry Association submitted a report to the Justice Department in September, saying IBM is exploiting its monopoly in operating systems for mainframes, said Ed Black, the group’s chief executive officer. Some of the organization’s members, including IBM rivals, have been contacted by the Justice Department, he said.

IBM, the world’s largest computer-services company, began developing mainframe computers in the 1940s and ’50s and is now among the few companies offering such systems. Mainframes, once the dominant form of computers, have been superseded by personal computers and servers. Even so, some businesses still rely on mainframes and IBM has stifled competition, the industry association said.

“Our goal was to educate the DOJ about why we think there’s a monopoly maintenance case,’’ Black said. “Our hope was they would open an investigation.’’

The market for high-end servers, classified as machines costing more than $500,000, will total $8.5 billion this year, accounting for about a fifth of the $44.5 billion market, according to Framingham, Mass.-based researcher IDC. IBM leads the market in overall server sales.

T3 Technologies Inc., a company that builds mainframe computers and is mentioned in the report, complained to the European Commission this year that IBM shut competitors out of the market. The company also filed an antitrust claim against IBM in the United States, according to a January statement. IBM said yesterday that the US claim was dismissed last week. T3, based in Tampa, has appealed the ruling.