Flex-ES And IBM: Can They Bend? Are They Broken?

Flex-ES And IBM: Can They Bend? Are They Broken?

by Hesh Wiener
IT Jungle

March 20, 2007

There are hundreds of Fundamental Software's [ http://www.funsoft.com/ ] Flex-ES mainframe emulators in use around the world. At least two thirds of the installed base is in the hands of IBM's mainframe PWD (PartnerWorld for Developers) members [ http://www-03.ibm.com/systems/z/solutions/isv/ ] or IBM personnel; the rest are owned by end users. During the past few months, a deadly rift has grown between IBM and Fundamental. Every Flex-ES system sold to a PWD member or to IBM contains a firmware time bomb. It can only be defused if Fundamental and IBM cooperate. That's not happening, and the bombs are starting to go off, killing the systems.

A smoldering dispute between IBM and Fundamental caught fire last October [ http://www.itjungle.com/big/big101706-story01.html ]. Basically, IBM has not renewed its agreements to let Fundamental provide Flex-ES systems that incorporate patented IBM technology.

Fundamental fired back with a refusal of its own, and has ceased providing firmware keys to IBM for new Flex-ES systems or to extend the useful life of Flex boxes already in IBM's possession.

Flex-ES systems sold to PWD members come with a firmware dongle that has a lifetime of three years. When its time is up, the Flex system will no longer function. Flex-ES systems sold to IBM include a firmware dongle with a lifetime of only one year. It, too, must be alive for the system to operate. Flex-ES systems sold to commercial end users have a dongle that is used to confirm Flex-ES licensing, but it has no fixed lifetime, so a Flex box in a commercial center will keep working as long as the user wishes.

The there different sets of rules for Flex-ES systems are not only different when it comes to the Flex licenses controlled by dongles. The three market segments each have their own pricing structure and unique terms and conditions.

Flex-ES boxes in the commercial segment are only allowed to run 31-bit IBM software, which is losing IBM support this month and is difficult or impossible to buy from IBM in the event a user wants to install a new (but architecturally old) Flex-ES processor. Commercial Flex systems run on SCO UnixWare on X86 and X64 servers. The smallest boxes use tower or rack-mounted servers, nearly always IBM models. Flex-ES can run on uniprocessor, but it is usually configured to run on a machine with two to four processors. The performance of the systems may be governed by software to enable the machines to qualify for software licenses under various IBM discount plans, such as GOLC.

Flex-ES systems sold to PWD members can use UnixWare but more often run under Linux. They will support 64-bit and 31-bit IBM environments. They can be X86 servers but in practice the majority of units sold run on ThinkPad laptops. Systems sold to IBM are essentially the same as PWD models, except for the shorter life of the dongle license.

Flex-ES systems sold for commercial use had price tags that were considerably higher than those sold to PWD members. Fundamental and IBM have successfully kept their financial arrangements under wraps. IBM might have paid for Flex licenses or received them wholly or partially in trade in return for rights granted to Fundamental under IBM patent licenses and other agreements. The smallest systems, including those based on laptops, appear to run mainframe software at roughly 8 MIPS.

To put some hard numbers on things, a small commercial Flex-ES box that runs at up to 35 MIPS had a price of about $75,000 plus related services and support. That's about the cheapest possible Flex box built on a server. Systems with more engine power, more disk space, and more memory than an entry base system cost more, but the core package of hardware and Flex software was generally sold for about $1,000 to $1,500 per MIPS on larger platforms. None of these prices include any IBM or ISV software. The installed base of commercial Flex-ES system is probably 300 to 400.

For developers, entry into the Flex world via a laptop cost just $15,000, and perhaps less in some cases. Servers for PWD start at roughly $35,000 to $40,000 for about 35 MIPS. Qualified PWD members also got ADCD systems software sets from IBM, which several years ago were free, but currently cost a nominal $1,800 per year. An ADCD set includes CDs with all IBM's operating systems plus lots of other mainframe software. Basically, PWD members got a Flex at bargain prices and IBM software for practically nothing. I believe there are 600 to 700 Flex systems in use by developers.

IBM qualifies potential PWD members individually and reviews its qualification policies on an annual basis. To achieve PWD status a developer, which may be an individual or a company, must offer a mainframe software product that IBM believes has commercial viability. A freelance systems programmer with no qualifying products cannot become a PWD member and therefore could not get a cheap Flex platform. But if that same programmer had code that could be packaged and sold as a commercial product, doors would open. Similarly, an individual or firm without a product can become a PWD member by selling and supporting a qualified product acquired elsewhere, but IBM appears to exercise some discretion in cases where the prospective PWD member is not the originator of a software product. There is apparently enough flexibility in the system to allow specialized mainframe software products to obtain marketing and support that spans geography in ways that a small software development outfit could not achieve if it were compelled to do all its own marketing.

PWD members are supposed to operate under rules that prohibit the use of IBM software (and cheap Flex systems) for production work or for purposes other than the development and marketing of PWD products. IBM may have been pretty lax about its rules in the past, but these days it is quite strict. It is probably possible for a developer to stretch or ignore the rules, but not without peril.

IBM's Flex users, who probably number 500 to 700, appear to include developers and support personnel within IBM, and also include quite a few people in marketing. IBM routinely conducts mainframe road shows to promote new software products and new versions of existing products. These events generally include live product demonstrations. The demos are almost invariably done on Flex-ES systems, often laptops. There are simply no IBM mainframes that can be taken on the road, and setting up remote access to run road shows off a central system via broadband is pretty much impractical.

These road shows are likely to be the first and most prominent casualties of the war between IBM and Fundamental. Road show boxes working today are going to quit tomorrow and will certainly go dark by the end of this year, unless there is a peace treaty. IBM may already be scouring its facilities and checking dates on dongles to make sure road show personnel will have systems that can be counted on for the remainder of the year.

PWD members typically have a longer horizon, but IBM could cut them off from its own software, if not from the use of Flex systems that have three-year dongles, when it does its annual PWD qualification reviews.

Still, some PWD members are coming to the end of their Flex tethers and they have been complaining to anyone who will listen, both within IBM and, via the Flex user listserver [ http://www.listserv.uga.edu/ ], to others in the Flex universe.

IBM is telling PWD members it will be happy to sell them z9 systems under favorable terms or to provide remote services in the form of virtual machines out of its Dallas services center. The z9 mainframes IBM offers come with discounted software, but both the hardware and the software are very costly compared to the combination of a Flex box and ADCD software that used to be available. The services offering [ http://www.itjungle.com/big/servicesfordevelopers.pdf ] has a starting price of $2,000 a month. That, too, is a lot more than a Flex system costs, and the two grand is only for starters. Developers that need more capacity than IBM provides in a base offering have to pay more. IBM's services offering is measured in usage units IBM defines and it includes a modest amount of storage space. In a year, it's clear that a PWD member will spend more money on IBM services than it used to take to buy a whole Flex system and its software. On a three-year basis, the length of the license under which PWD Flex deals were done, developers comparing the old low end Flex boxes (whether laptops of small servers) to IBM virtual machines can see that they are getting killed with costs.

Commercial users of Flex systems remain isolated from the dispute as long as they are content to keep running their machines with 31-bit code and without standard IBM support. But events will eventually catch up with them, too, because Fundamental has to make its payroll to provide backing for its mainframe emulator, and that takes revenue.

The dispute that is most visible in the PWD world and among IBM's internal users of Flex is blocking Fundamental's air hose, and it is unclear what impact this will have.

Fundamental can still collect support fees for systems that are in the field, but it cannot get new business the way it used to. Thus, unless it strikes a new deal with IBM or expands into new ventures, its revenue stream will be reduced.

Currently, Fundamental apparently has in its possession a number of IBM licenses for end user Flex-ES systems that it acquired in bulk before its relationship with IBM hit the skids. Nevertheless, it appears that Fundamental is not actually using these licenses. The companies that remarket Flex-ES systems, which are not sold directly by Fundamental, are no longer offering new Flex-ES servers except in special situations. For example, users who acquire a Flex-ES system for use as a disaster recover platform are probably clear of the war zone. Another exception is a special box called FLEXCUB. Based on Flex-ES software, it acts as a dedicated storage controller. Nothing about the dispute between IBM and Fundamental appears to stand in the way of this product.

Neither of these market opportunities have any impact whatsoever on PWD members of IBM's internal Flex users, except indirectly to the extent they help Fundamental to keep providing support as usual.

The outlook for PWD members using Flex and for the commercial customers who depend on their offerings is clouded right now. PWD firms that fear that their Flex systems may soon lock up have to make some tough choices.

They can go underground, running Hercules [ http://www.itjungle.com/big/big020706-story01.html ] emulators that will let them continue their work. This would necessarily involve the use of IBM systems software in violation of IBM licensing terms, but the developers do have the opportunity to do this if they dare. They have ADCD disks, they have suitable hardware, and they have the requisite know-how. They also know that despite its public declarations that it will come down on software cheats like a ton of bricks, IBM has in fact never taken legal action against any Hercules user.

Some might look at the Platform Solutions [ http://www.platform-solutions.com/ ] alternative, particularly the low end Liberty models from T3 [ http://www.t3t.com/ ]. But that would take even more courage than running Hercules, because IBM has shown it has no compunction against setting its lawyers on Platform.

A number of developers, possibly including a few who are loudly complaining about the end of Flex availability, can in fact afford z9 systems, particularly if they finance the equipment and its software over a long stretch. Others can stump up for IBM's services offing and still remain viable.

So, even though the situation is discouraging, it probably does not mean the end of PWD for the mainframe world, or the demise of its smallest and most specialized members. But it remains an unsettling situation for PWD and IBMers using Flex, and a source of worry for end users who don't find low end z9 systems commercially attractive.