collective unconscious of the smarter planet

More legal shenanigans from HP and Oracle over Itanium. Oracle claims that HP is paying Intel to continue developing Itanium.

Late Friday, Oracle filed a countersuit against HP, which sued Oracle back in June because Oracle said in March that it would not be developing future releases of its database, middleware, and application software on future Itanium processors.

It’s hard to tell who is stretching the truth more it in the ongoing lawsuit, and now countersuit, between Hewlett-Packard and Oracle over the fate of the Itanium processor from Intel. The reason is that the court documents coming out describing the situation are heavily redacted, with all the juicy bits that might offer some clarity being blacked out.

In the amended cross-complaint filed last Friday, which was posted on the Scribed document sharing site here, Ellison & Co’s lawyers are slapping back at HP with seven counts, including charges of fraud, defamation, intentional interference with contractual relations, intentional interference with prospective economic advantage, as well as violation of the Lanham Act and two violations of the California Business and Professional Code.

“HP engaged in a multi-year campaign of secrecy and deception designed to conceal the truth about Intel Corporation’s commitment to the Itanium microprocessor in order to extend its Itanium server business at Oracle’s expense and reap large profits from its own unsuspecting installed base of Itanium users,” Oracle lawyers wrote in the brief sent to Judge James Kleinberg of the California Supreme Court in Santa Clara.

“When Oracle announced the truth about Itanium – that Intel’s strategic focus was not on Itanium but on its competing Xeon line of microprocessors, and that Itanium was nearing its end of life – HP reacted with a ferocious effort to foment false customer outrage and to vilify and defame Oracle, all to buy itself more time to milk its customer base and falsely blame Oracle for Itanium’s demise.”

Oracle says that in the process of document discovery in the Itanium case, it stumbled upon an agreement whereby HP is paying Intel to keep the Itanium processor alive – something Oracle says it did not know when it made the decision to pull software support from the future Itanium processors back in March. Oracle’s beef is that this revised “Itanium Collaboration Agreement” was done secretly, without partners or customers being told what the deal is.

“There is, of course, nothing wrong with entering into a contract with a supplier to ensure the supply of a key input,” Oracle said in its countersuit. “Had HP simply entered into the Intel deal and revealed it – perhaps taken credit for it – Oracle would have nothing to complain about.” Oracle contends that “Intel desperately wanted out of Itanium” and that this as well as the HP agreement to essentially pay Intel to keep the Itanium roadmap alive was something that it was entitled to as an HP and Intel partner and that HP’s customers (who are often users of Oracle’s software as it turns out) are similarly entitled to.

By torpedoing the Itanium platform, Oracle can sink a big portion of HP’s enterprise systems profits, which come from HP-UX system sales and support contracts. Oracle has shown no love to HP since it acquired the Sun Microsystems hardware and operating system business and it got worse when HP fired Larry Ellison’s tennis buddy, Mark Hurd, as CEO.

It got even worse when HP hired former SAP CEO Leo Apotheker to replace him and former Oracle president Ray Lane to be its chairman. Once Hurd came into Oracle as co-president, it was a matter of months before the gloves were off. Whatever the legal, technical, or market merits of Oracle’s moves with regard to Itanium, the intended effect has been realized: HP’s Unix business is shrinking. Then again, so is Oracle’s Unix business, as the latest Gartner server figures show. So far, IBM seems to be the big winner in the tit-for-tat legal spat between these two companies.

Oracle is also filing its countersuit against HP because it says that it was fraudulently induced into entering in an agreement that allowed it to hired Hurd after he had been let go from HP. It claims that HP concealed and misrepresented the “truth about Itanium” and concealed “material information” that it was about to hire Apotheker and Lane to run the company.

Oracle also reminded everyone that HP tried to add clauses to the Hurd agreement that would guarantee HP’s access to Java, its ability to sell Solaris on x86 platforms, and ongoing support from Oracle for its software stack on HP-UX. This language was struck from the commitment reaffirmation portion of the Hurd agreement, and in a draft supplied by Oracle, all that was left was this:

“Oracle and HP reaffirm their commitment to their longstanding strategic relationship and their mutual desire to continue to support their mutual customers. Oracle will continue to offer its product suite on HP platforms and HP will continue to support Oracle products (including Oracle Enterprise Linux and Oracle VM) on its hardware in a manner consistent with that partnership.”

The actual Hurd agreement remains under seal, so we don’t know what it says. But this portion of the agreement, however it was worded, is the clause in the agreement that HP’s lawyers are arguing is a commitment by Oracle to continue to support its software on HP-UX/Itanium machines made by HP. Oracle is seeking a recission of the Hurd hiring agreement in its countersuit.

Incidentally, Oracle’s countersuit says that HP’s allegations in its lawsuit from June that Oracle is withholding support to current Itanium customers on current Oracle software is “utterly false” and that “Oracle is fully supporting the current (and many past) versions of its software on Itanium servers, by issuing bug-fixes per its standard policies.”

In the wake of Oracle’s countersuit, HP put out a lengthy statement of its own.

Interestingly, in the week before the Hurd hiring agreement was signed on September 20, HP says that Oracle’s general counsel wrote in an email that this provision was “an agreement to continue to work together as the companies have – with Oracle porting products to HP’s platform and HP supporting the ported products and the parties engaging in joint marketing opportunities – for the mutual benefit of customers.”

While much remains murky in this suit and countersuit, what seems clear at this point is that we are going to have a Bill Clinton verb definition moment like that during the ex-President’s impeachment. It will all depend on what the definition of the word “support” is.

Oracle will no doubt argue that it is continuing to support HP-UX and Itanium with current and prior releases of its database, middleware, and application software. HP will no doubt argue that what the clause meant was that Oracle would continue to port future releases to future Itanium chips and HP-UX releases.

HP continues to contend, and reiterated in its statement, that Oracle wants to move Itanium server customers to its own Sun systems and that the “tactics employed by Oracle in support of this purpose included pricing misconduct, withholding of benchmarking scores for HP servers run on Oracle software, and abusing customers on support issues.”

The HP-Oracle lawsuit is scheduled for trial on April 2, 2012, and will also probably have both sides arguing about how long a proper server chip roadmap needs to be so it is not at “end of life,” and what it means if HP is indeed paying Intel to keep the Itanium chip alive. It will be interesting to see what that is costing HP and how long that commitment term is for, if it turns out to be true.

Tension between HP and Oracle is only heating up since Oracle announced it would no longer support Itanium in March.

Hewlett-Packard says it has sent a formal demand letter to software giant Oracle insisting that it reverse its decision, made in March, to stop building software for Intel’s Itanium server chip.

In the letter, which was not released, HP demands that Oracle honor confidential contractual obligations made between them, and return to developing software that works with Intel’s server chip, and for which HP is essentially the only significant vendor.

Bill Wohl, HP’s chief communications officer, said that HP was making the demand on behalf of its customers who he said have made a significant investment in buying HP servers that use the Itanium chip.

Wohl said that HP and Oracle share roughly 140,000 different customers between them. HP believes that Oracle’s decision violates legally binding commitments and that it constitutes an “unlawful attempt to force customers from HP Itanium platforms” to Oracle’s own hardware platforms. Oracle acquired Sun Microsystems last year.

“It is our hope that Oracle will honor its commitments to HP and to our shared customers,” HP said in a statement. “However, if Oracle continues to disregard its commitments, and continues to engage in conduct designed to deny choice and harm competition, we will take whatever legal actions are available to us necessary to protect our customers and the significant investments they have made.”

Oracle’s decision touched off a war of words with Intel and HP when it said it would stop supporting Intel’s chip, saying it said it saw no future for the business. Intel responded saying that there is indeed a long-term roadmap for more Itanium products. Oracle then said it was only being honest about the situation. Intel and HP have since promised that they remain committed to the Itanium product.

Customers then started a campaign to try and change Oracle’s mind, which apparently hasn’t worked. Oracle declined comment.

Intel tries to have its cake and eat it too with its new Itanium messaging… seems slightly cannibalistic to me. (Cakes eating cakes.)

The Big Statement from Intel on Itanium didn’t happen at the company’s Developer Forum, as many expected, but Intel did make a few more concrete statements about the processor in an effort to put Hewlett-Packard HP-UX, OpenVMS, and NonStop customers at ease after Oracle’s announcement that it will cease development its database, middleware, and applications on Itanium machines…

The sales pitch for the new “Westmere-EX” Xeon E7 processor is virtually the same as what Intel was talking about a year ago when the “Nehalem-EX” Xeon 7500s came out.

In the pre-briefings that Skaugen gave for the Xeon E7 chips, he said that Sparc, Power, and Itanium chips account for a mere several hundred thousand shipments (each) per year compared to around 18 million x64 chips across Intel and Advanced Micro Devices. Yet the servers using those RISC and mainframe chips accounted for $15bn in revenues in 2010, according to IDC.

Yes, that number might be half what it was in 2002, and yes Intel’s processors may have nearly doubled – from $19.2bn in revenues eight years ago to $30.5bn in 2002 – but Intel is rankled, like a Roman emperor who is reminded of Carthage that anyone buys RISC or mainframe systems still. Intel reckons that converting those RISC and mainframe customers to Xeons would yield about $1.5bn in chip revenues just for Intel per year. That is a drop in the bucket, really, when you say it like that. That would only increase Intel’s server chip revenues by 5 per cent.

The funny bit as far as we’re concerned is that in 2002, AMD’s chips only pushed $330m in revenues and are up by a factor of 8.5 in that same eight-year term. And the other amusing bit is that Itanium server sales in 2002 were a mere $102m and have grown by a factor of 39 over that same period. Itanium-based systems, reckons IDC, did about $4bn in revenues last year, so it may not be as weak as you were thinking. An alien from another planet, not knowing the long and tortured stories of Itanium and Opteron, might say that these were the CPU workhorses to bet on.

A year later, the Xeon E7 sales pitch has gone up an octave and Intel is being more emphatic that Xeon can stand up there against any RISC or mainframe processor – as well as its own Itanium chips.

“We used to pitch Itanium up here,” Skaugen said in his keynote address in Beijing on Wednesday, raising his hand above his head. “The highest performance, the highest reliability. It’s really now a choice of operating systems. Xeon’s reliability and performance is now equal – and in some cases better – than Itanium, and they are going to leapfrog in performance over time.”

That was new, and he did not elaborate the cases when Xeon was more reliable than Itanium. And just in case you didn’t get the message, Skaugen reiterated this line from his initial Westmere-EX briefings: “But now Xeon is in a place where there’s no workload in the world it cannot handle.” (Well, except HP-UX, OpenVMS, and NonStop workloads, not to mention Bull GCOS and NEC ACOS mainframe operating systems, which are only available on Itanium chips these days.) “At the end of the day, this is about choice for customers.”