I suspect that all IBM needs to do to make this go away is bribe the right chinaman.
The dispute between China and the USA over backdoor-riddled information technology equipment has just heated up, with Bloomberg reporting Chinese authorities are wondering whether the time has come for local banks to ditch their IBM servers. The newswire's report mentions “high-end” servers and suggests Chinese authorities “ …
"I suspect that all IBM needs to do to make this go away is bribe the right chinaman."
Ah, they've tried to bribe "the right chinaman" already:
"U.S. District Judge Richard Leon in Washington yesterday signed off on the $10 million agreement between IBM and the U.S. Securities and Exchange Commission initially submitted in March 2011. Leon refused to approve the deal until the company agreed to file reports to him and the regulator on its possible wrongdoing. "
The Chinese authorities have a long track record of replacing imports with locally sourced gear, and their motives for doing so appear to be identical to the US/rest of world: subsidizing local vendors & security. Given their track record I think it's fair to say they can (and probably will) find a way to remove IBM from the critical path within 5-10 years, but I also think they would have that goal if the NSA leaks hadn't happened.
Interesting that you blame Snowden for the US government's spying programme.
All he did was call them out on it, because he wanted an end to the blanket surveillance tactics employed by the NSA. I don't think he would have been brought to this had the agency been more specific in its targets or they and their overseers more accountable to the country they serve.
The fault is entirely that of the government and the fallout is from their own actions which they thought they could get away with indefinitely.
One of those weird coincidences that I'm just finishing the Cuckoo's Egg, about a time when America's cybersecurity efforts were quite ineffectual. American tends to oscillate in a crazy way, and since 9/11 the country has gone overboard in the other direction.
Then again, I don't recall whether or not anything Snowden revealed refuted the descriptions of the book. It is certain that some of the stuff he blew the whistle on took a lot of time and effort to create. Maybe Cliff Stoll was just an easy patsy? "Nobody here but us cyber-virgins!"
IBM has spent considerable $$billions in replacing most all it's older mainframe OS operations software with custom GNU/Linux OS configurations.
Since China recently achieved (for short time) the top performance for their Tianhe-2 (mainframe ) Super Computer, using the same basic Linux OS, the issue for them would be to now re-program or rewrite all their banking and financial services aplications software to Linux OS base, which is what IBM had already done for it's US customers.
As neither IBM or any other USA or other entity - business or country government has any control of GNU/Linux software code, the dynamics of control of technology elsewhere has changed significantly.
IBM's hardware division is not in rude health. Even the mere suggestion Big Blue is in cahoots with US authorities won't make it any easier to shift boxes, making life harder for IBM at a time it needs to be fighting off spookware allegations like it needs a hole in the head.
Although it needs to be noted that the reason(s) for IBM's hardware division not being in rude health are entirely of their own making. Smaller, faster, cheaper was always going to lead to manufacturing in countries where cheapness could be gained at the expense of the people doing the work. All the manufacturers have gone the same way, and all western industry has created it's own downfall.
It appears from the outside like business management is only about cutting costs, with no long term consideration of the consequences of cutting costs, either in social terms, or in business terms. Nothing matters but the bottom line. Fuck knows why it takes years in a university to learn that.
The inevitable consequence of which is that the country where manufacturing skills can be transfered to, purely for the purpose of making everything for the least cost, will always be the country who rises to the top by virtue of them being the maker of everything and anything you want to make.
Most western world businesses are all going to fail at some point, the business model they operate by has to lead to that. At best they'll end up as shells who badge other peoples products, because they created the world in which those other people develop and manufacture everything cheaper than they can do it.
The real question is how long it will take the developing nations to reach the point where they can adopt the policies so many western companies developed of holding back critical information to benefit their own developers. Like MS did with all them secret API's which they could use to benefit their own development on the Windows platform.
Chinese manufacturers will eventually own enough of the marketplace, and will have developed enough of the software for that to become a viable model for them as well. The major difference will be that there won't be any intervention from the Chinese government to make them play fair, when they do eventually make moves like that.
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Try years - or longer| Any financial institution who tries to move critical apps from platform to platform in a few months is in for a very nasty shock and that is before adding mainframes et al into the fray
Might this finally change Obamas view on the NSA?. As long as only foreign politicians or industries where complaining..... who cares! But now it's US enterprises. Yesterday CISCO, today IBM and I'm sure some more like HP, Oracle, etc. will follow.
This really hurts the US business and I just hope that at least it will lead to more control over NSA activities, who, under the cover of protecting the US, are spying on all and everything in the world. I hope this will slow them down as otherwise the US will face more of this "challenges"
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Regarding possible Chinese bans on Power servers, as long as there's no outright ban on Power chips, IBM can keep cranking out expensive Power8 chips and sell them to Chinese sourced server manufacturers.
Isn't this one of the reasons for the OpenPower Foundation?
So far, both Tyan and Google have at least made prototypes of Power8 motherboards. Since most motherboards are made in China these days, they can't be far behind.
The banks can keep their Power based OSes / applications, while IBM still makes some money (granted, not as much as they'd make selling the whole server, but selling CPUs and licensing fees for Power Bus / chipsets would be better than losing the entire market).
Trouble is, once China starts selling power servers, there goes IBM's market (except for IP and chips). Of course, if this cuts IBM's expenses, similar to selling off the x86 server line to Lenovo, and (in the short term) pushes up the Earnings per Share, then IBM's upper management can call it a win.
"Do they have any particular reason to believe that high end IBM servers have an NSA backdoor?... or are they just doing this for spite?"
1) The US has a motive (China is a major competitor),
2) The US has the means (the pwned routers, the fancy keyboard cables etc)
3) The US has the opportunity (high end stuff tends to be assembled in US/Mexico - so slotting in the back doors *after* manufacture is relatively straight forward).
4) The US has also has legislation that hides this class of activity from the public and judicial system
5) Snowden's leaks show that they do conduct mass-surveillance using back-doored gear.
6) The ass-covering denials of mass-surveillance have usually made a distinction between US citizens and the rest of the world, and even then it has been shown that the NSA does in fact conduct surveillance on US citizens too.
If I were responsible for the banking system that keeps a few billion souls fed and watered I would want to be sure that gear from a foreign power can't simply DoS the entire finance sector in a fit of pique. Given the track record of US & China's relations over the last 50 years, and the naked racism, fear and hostility that is expressed by significant number of US apparatchiks, I think China has a very good reason to *expect* the high end IBM gear to be back-doored by the US authorities. Same applies to the idea of China back-dooring gear in the US financial sector. :)
IBM sold their PC/server business? Maybe they feared this would be the reaction if the NSA spying program they knew about (since they're on the list of cooperating companies and have probably worked with them for decades to bug specific computers known to be going to unfriendly nations)
I may give them too much credit, but if not, the guy who made this call may for once deserve whatever oversized 7 or 8 digit bonus he gets.
Not to point out the obvious here but: Lenovo (Chinese owned) did just buy IBM's xSeries line - it would appear that the Chinese gov would seem to be well positioned if they so desired to have a much tighter control on the hardware via potential agreements with Lenovo etc.. Really - why bother with the other lines if they can simply control gear manufactured in their country ? Also - I can say with near-certainty that one would likely not see another Xseries server in any security-sector business in the US... That being said - I can't say that I'd blame China for making a similar move with other US hardware vendors. Lets not forget that neither country is playing nice here - as we know the NSA has reportedly intercepted and modified hardware etc (likely just the tip of the iceberg) but we also have seen very significant activity from China targeting US companies as well: http://www.theregister.co.uk/2012/02/15/nortel_breach/ (just one example that is known). Food for thought..