SCO Welcomes Linux Competition

The Santa Cruz Operation's UnixWare 7 is the operating system that's squeezed between Microsoft Corp.'s Windows 2000 and Linux on the low end and Sun Microsystems Inc., IBM and Hewlett-Packard Co. on the high end. The latest systems figures from International Data Corp. (IDC) in Framingham, Mass., show that SCO's market share is shrinking as Microsoft and Linux make headway in servers used for departments, file-and-print applications and e-mail. Computerworld interviewed SCO President Doug Michels and Mike Orr, senior vice president of worldwide marketing.
Q: Has Linux made SCO UnixWare superfluous?
Michels: There's room in the world for several operating systems. We think Linux has restored balance to the industry, which was veering heavily into a Microsoft totality, as we saw happen with the desktop. A lot of people thought that was going to happen with the server with the (increasing popularity of Windows) NT a couple years ago. Now, Linux is showing there are alternatives, but it's still not as stable as UnixWare 7.
Q: The latest purchased-server survey from IDC shows SCO's market share is declining next to Linux and Windows NT.
Orr: IDC is talking about units, not dollars. The price of Linux can vary from zero to thousands. We've seen our revenues grow from 1998 to 1999. The overall Unix market is growing, in revenue terms, even though the unit shares have declined. Linux's 25% of the units sold amounted to $32 million in revenues in a total market of $5.7 billion. The other 75% (of the market) was 99.9% of the revenues.
Q: The bulk of your revenue depends on a network that uses UnixWare for running the reseller's applications. How do you combat this group's substitution of Linux as an alternative to UnixWare?
Michels: Our software represents 5% of the purchase price of the total system. When our reseller sells a system to his customers, about 5% is going to us, and if he took that to zero (by using Linux), it wouldn't affect the buying decision much. The reseller doesn't have the ability to put in Linux and charge the same amount as UnixWare, because he has to break down the amount to the customer, and they know Linux is less. When you look at it from the reseller's point of view, he could conceivably put in a free operating system, but he still has to do the setup and configuration, which he can't charge for with Linux. So it's not an overwhelmingly positive thing for the reseller to give away the freesystem.
-- Robin Robinson, a freelance writer in San Mateo, Calif., conducted this interview.