The report calls for lending serious thought to issues of free and fair competition, entry of new innovators in this space, international or Indian, prevention of bundling of IT goods and services, ensuring universal inter-operability between different IT systems, including high-end computers.

 

Given the need for inclusive growth in India – in the last few years, social sector

programmes have seen a dramatic increase in scale and scope targeted towards the

underprivileged – it is imperative that the public and private sector build a large-scale IT

backend, especially high-end servers, including mainframes. For this, it is vital that there

is free and fair competition in the mainframe sphere in the country.

India’s high-end computer market is dominated by IBM (with 50% market share), HP

(33%) and Sun (17%). “During the MRTP days this would have been sufficient to launch investigations against IBM because of its size. Competition authorities, influenced by Chicago, no longer believe that the relation between a high market share and market power is obvious. We therefore need to further probe IBM’s conduct and ask whether it has denied customers benefits of technological innovation and whether it charged abovemarket prices for IBM solutions, including the mainframe in India,” says the ICRIERIndicus report.

Although IBM has had a “history of antitrust violations” in Europe and the US, “the Indian mainframe market is relatively young but growing rapidly”. At the same time, the report has cautioned that expansion in the installed base of mainframes with the proprietary z/OS could lead to “welfare losses like those reported for Europe”. The proprietary nature of the operating system of the IBM mainframe creates problem for legacy mainframe workloads as these cannot switch to high-end servers, because they are tied to an operating system (z/OS) that cannot run on these servers because of IBM’s restrictive licensing practices.

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