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US regulators okay the sale of IBM's server division to Lenovo

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August 18, 2014

U.S. regulators have given the green light to IBM's sale of its x86-based server division to chinese server maker Lenovo. The approval was largely expected by the IT community.

"The authorization of the $2.3 billion deal to Lenovo enables Big Blue to better focus on system and overall software innovations that bring new avenues of value to IBM customers in areas such as cognitive computing, Big Data and cloud, and provides clarity and confidence to current x86 customers that they will have a strong partner going forward," IBM said in a statement.

The divestiture had been under review by the U.S. Treasury Department's Committee on Foreign Investment in the United States (CFIUS), which examines whether the sale of U.S. businesses to foreign parties could have national security implications.

Two months ago, the Wall Street Journal reported that the CFIUS review was dragging out because U.S. security officials were concerned that Lenovo could give Chinese spies access to IBM servers, perhaps by installing backdoors of some sorts during routine maintenance or other tasks.

U.S. officials were reportedly also worried about China getting its hands on IBM clustering technology, which they believed could give the Middle Kingdom a boost in high-performance computing.

The latter concerns were probably unfounded, since China already claims the title of the world's most powerful supercomputer.

U.S. regulators have raised similar security issues in the past when Lenovo acquired IBM's PC business in 2005.

CFIUS ultimately approved the PC division sale, but even that wasn't enough to satisfy the U.S. State Department, which banned the use of Lenovo-built PCs on secure government networks anyway, over China's objections.

Australia, Canada, New Zealand, and Britain reportedly did the same. There's been no word yet from government sources as to whether these bans will now also extend to System x servers, but in June, Hewlett Packard claimed that it had already won hundreds of customers away from IBM since the Lenovo deal was announced in January.

The System x sale was approved by China's Ministry of Commerce in July, which left the CFIUS review as the final government hurdle it needed to clear before going forward with the deal. "The parties now look forward to closing the acquisition," IBM said.

In other IT news

Oracle is saying that recent findings by the judge hearing its case against third party software support firm Rimini Street prove that its IP has been violated.

Judge Larry Hicks' orders aren't online yet, but Oracle has let the world know about what it considers the best victory.

That includes a quote to the effect that Rimini Street has engaged in massive theft of Oracle's intellectual property in which the Judge apparently said it is undisputed that Rimini engaged in theft of Oracle's intellectual property.

Oracle says that today's findings also demonstrate that Rimini Street ran 200 unlicensed copies of its database software.

Oracle's attorney Geoff Howard's statement indicates that Oracle expects Rimini Street to start talking about specific damages payments (read: and out-of-court settlement) or suffer a full-fledged jury trial.

The case directly hinges on how third-party support providers like Rimini Street go about their business.

Oracle has in the past accused Rimini Street of signing up for Oracle support, downloading as much of the stuff on the support database as it can, then using that material to provide its support service to Oracle users at rather less than Oracle charges.

Oracle asserts that behavior directly violates the terms of its contracts and represents theft of its intellectual property.

Which may well be true. A more complex issue is that software vendors make decent profits from support and don't like the idea that anyone can undercut them, especially when it's their own software.

A certain hostility towards third-party providers is therefore almost inevitable, as is some pondering of various competition laws.

Rimini Street has not issued a response to the new decision at the time of writing. The case continues, and we will keep you posted.

In other IT news

Microsoft's Visual Studio Online services for software developers are in the midst of a total service outage that has lasted for more than five hours, and nobody seems to know when it will be back up.

Microsoft is blaming a database bug for the interruption. The services, which were launched in November 2013 to coincide with the general availability of Visual Studio 2013, are hosted on Microsoft's Azure cloud platform, and are available at a number of monthly subscription levels.

The services offer a variety of cloud-based enhancements for the Visual Studio IDE, including source code version control, a hosted build service, load testing, a basic online code-editing environment, and telemetry data that can give insights into application performance and stability.

The stability of Visual Studio Online itself wasn't so appealing yesterday, however. Beginning at around 7:30 am Pacific Time, users began reporting trouble accessing any of the services and performance issues when they were able to login.

Before long, the Azure service status page was reporting that Visual Studio Online was experiencing a multi-region full service interruption.

After about an hour of investigating the various issues, Microsoft reported that its DevOps engineers had decided to roll back some changes they had made to the infrastructure in the last 24 hours, in hopes that this would address the problems.

"The actual root cause is still under investigation, but initial analyzis is indicating that a contention in our core database seems to be causing blocking and performance issues in the services," the team wrote on the Visual Studio Online service blog.

"Our DevOps teams have identified a couple of mitigation steps and currently going thru various validations as a group," Microsoft added.

But even after reverting those changes, Microsoft reported that its database issues seemed to persist, and the last time we checked in, they were still down. We'll keep you updated on how the issue gets resolved.

In other IT news

Hitachi Data Systems (HDS) says it has acquired Sepaton, a high-end enterprise deduping backup service.

Sepaton used to have a rewarding deal with Hewlett Packard until the StoreOnce came along.

The news was announced by Sean Moser, a senior vice president for HDS' global portfolio and product management.

Sepaton will now be run as a wholly-owned independent subsidiary, however. HDS calls it "a leader in incredibly fast, scalable, and cost-efficient purpose-built backup appliances (PBBA)."

But Gartner's magic quadrant for deduping backup appliances suggests otherwise-- Sepaton is positioned just over the boundary from the niche vendors into the visionary's category, well behind Exagrid and nowhere near the leaders' quadrant.

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But Sepaton (turn it backwards and its name spells 'No Tapes') must be a good fit for HDS.

HDS says the acquisition "is part of a larger data protection strategy that offers enterprise customers comprehensive data protection that is scalable and integrated."

Further Moser says-- "This acquisition better enables us to help our customers reduce the cost of protection, enable more data to be protected against disaster, and offer greater flexibility where or how it is protected."

He adds that "Sepaton and HDS have partnered for many years, and have a number of mutual customers." The PBBA growth prospects are good. IDC reckons its compound annual growth rate (CAGR) is 19.2 percent to a $5.3 billion market in 2015, according to Moser.

Sepaton has some 3,000 customers and that number should increase, HDS says, with its channel pitching the Sepaton message to its customers.

HDS also wants to extend Sepaton's technology-- "We intend to leverage [the Sepaton] team to aggressively develop next generation solutions that will integrate with other HDS assets, such as storage and copy creation, and management software."

How much did HDS pay for the company? It isn't saying. Sepaton was founded in 1999 and its total funding is said to be $98 million.

HDS' announcement strategy is different. It hasn't issued a press release, just the Moser blog. The news is blazoned across the home page on Sepaton's website and mentioned as a subsidiary item on HDS' site with a link to the Moser blog.

It gives HDS, which acquires companies shrewdly, a nice high PBBA gap-filler and they may extend the product down-market.

Source: IBM.

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