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  1. Technology
December 2, 1991


By CBR Staff Writer

IBM Corp has moved to impose new, more restrictive rules to govern the microcode in AS/400 computers. In future, microcode will be licensed to a specific processor and frame; the serial number of the processor boards and frame number must be supplied to IBM before a customer can use the microcode that permits an AS/400 to operate. The impact of the new practice will not be felt by customers when they buy new or used machines from IBM. It will, however, affect all customers when they sell their machines because it will reduce resale values. The new rules will also hurt leasing companies and used computer dealers, ultimately creating problems for AS/400 users who would like to buy or rent processors from independent agents. The rules have been applied retroactively to all AS/400s, so IBM’s ability to enforce the rules to govern systems it has already sold may be limited. However, neither end users nor most computer lessors and dealers are keen on taking IBM to court. Thus IBM, with its massive legal budget and well-deserved reputation for courtroom belligerence, could get its way by bullying customers. The rules are in the form of what IBM calls attachments to its standard purchase agreement. During the past 10 days, the documents have been distributed to branch offices in the US and from these offices to independent lessors and dealers. In the UK, a source of IBM’s leasing company denies knowledge of the new rules. But the US material refers specifically to machines that originate out side the US, so the rules will affect the residual values of European AS/400s. Machines, features and processor upgrades are regularly traded across the Atlantic, enabling customers to obtain the best price for used machines in world markets. This worldwide competition has helped AS/400s users get a bit more when they sell unwanted AS/400s and pay a bit less when they buy or lease used machines. Whenever a processor is upgraded or replaced by an independent company, that firm must write to IBM for a system-specific tape containing what IBM calls Model Unique Licensed Internal Code. IBM will provide this tape at no cost. The request for the tape must contain both the processor number and frame number. Any code tapes for the AS/400 used before a processor replacement must be returned to IBM. Tapes for machines traded internationally are under the same rules, but instead of taking a few days to supply a correct tape, IBM will take three to six weeks. The company says it takes that long for it to move its records from one country to another and it won’t supply a tape without reviewing the records. The company gives no reason for its practice, nor does it explain why the world’s largest maker of computers must take so long to find records that are presumably stored on systems it made. IBM sells computers to enable customers to obtain instant worldwide access to their business records. Lessors in the US assert that IBM’s new Licensed Internal Code practices, particularly those affecting the international movement of machines, will hobble their businesses. The additional cost of business will be passed through to users in the form of lower prices paid for used computers, higher lease rates and higher charges for used AS/400s. Only time will tell how much the costs might be, say the computer traders. – Hesh Wiener (C) 1991 Technology News of America; all rights reserved.

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