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SCO's CEO says buyout could end Linux fight

His comments came in response to an analyst's proposed scenario

By Todd R. Weiss
May 30, 2003 12:00 PM ET

Computerworld - If IBM wants to buy The SCO Group Inc. and end SCO's ongoing Unix licensing assault on Linux, CEO Darl McBride is apparently all ears.
"If there's a way of resolving this that is positive, then we can get back out to business and everybody is good to go, then I'm fine with that," McBride said today in an interview with Computerworld. "If that's one of the outcomes of this, then so be it."
McBride's comments came in reaction to a report from Forrester Research Inc. analyst Ted Schadler, who wrote last week that IBM or an IBM-led consortium will likely "pay off SCO" or buy the company to "make the SCO problem go away."
Such possible scenarios have been circulating on listservs and Web discussion lists ever since SCO filed suit against IBM in March for $1 billion, alleging that some of SCO's protected Unix source code has illegally made its way into Linux (see story).
Now McBride himself has confirmed such possibilities.
"I'm not trying to screw up the Linux business," he said. "I'm trying to take care of the shareholders, employees and people who have been having their rights trampled on."
Asked why SCO has suddenly started looking at these issues now, after years of declining revenues at his company and the increasing popularity of Linux, McBride said SCO had few options in the late 1990s as Linux began surfacing in the business computing world. "Even if you potentially had a problem [with concerns about Unix code in Linux back then], what are you going to do?" McBride asked. "Sue Linus Torvalds? And get what?"





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SCO saw its revenue go from $200 million in 1999 to $60 million this year "due primarily to the onslaught of Linux in the marketplace," he said. "The notion that we're going to sit back and let the Linux steamroller go over us at our expense, at the shareholders' expense, makes zero sense to me."
Since January, though, SCO has realized that its real long-term value comes from its Unix heritage, history and holdings, he said. That's why SCO is suing IBM and why the company earlier this month warned all commercial Linux users that they could be legal targets (see story).
McBride said his company will open samples of its contested code to interested parties next week under nondisclosure agreements so SCO can prove its points. The open-source community, however, won't be be given an opportunity to remove any offending code and replace it with new material, he said. Instead, damages will continue to be sought.
"It's sort of like somebody stealing your car, and you hunt them down and you find them, and they say you can have your car back, but there's no penalty for that," McBride said. "If there's no penalty for stealing property, then where are we?"
In a conference call today with analysts and reporters, McBride also reacted harshly to comments earlier this week from software vendor Novell Inc., which has challenged SCO's alleged Unix ownership rights (see story).
Novell, which had previously bought the Unix systems business of AT&T Corp., owned Unix until it broke it into four parts and sold them in 1994 and 1995. One of those deals was with the former Santa Cruz Operation, which was bought by Caldera International Inc. and later became The SCO Group.
In a letter to SCO, Novell CEO Jack Messman said the purchase agreement entered into between Novell and SCO in 1995 didn't transfer the Unix System V rights to SCO, making SCO's recent claims invalid.
"We strongly disagree with Novell ... and see it as a desperate attempt to curry favor with the Linux community," McBride said of Messman's letter. "If the System V code is showing up inside the [Linux] kernel, then that is going to change the playing field."
June "will be show-and-tell time," McBride said. "We're not going to show two lines of code. We're going to show hundreds of lines of code" that allegedly violate SCO's intellectual property.
Analyst Dan Kusnetzky at IDC in Framingham, Mass., said McBride can't blame all of SCO's recent financial problems on Linux. A lot of the biggest competition came from Microsoft Corp., which targeted Unix with its own Windows server offerings, he said. "Windows attacked that market and grabbed a great deal of business," Kusnetzky said. "Then Linux came from below."
Part of the blame lies with the former Santa Cruz Operation itself, he said. While the company sold a good Unix operating system, it was bundled on hardware from major vendors such as IBM, Hewlett-Packard Co. and the former Digital Equipment Corp., without SCO's brand name being attached anywhere. "It had no brand image" or recognition, Kusnetzky said, which made it easy for businesses to overlook its importance.





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