SCO gives Linux users more time on license fee charges

IDG News Service - The SCO Group Inc. has decided to give Linux users another two weeks before doubling the license fees it's demanding for its Intellectual Property License for Linux. And it has backed off on plans to begin sending invoices to commercial Linux users this month.
The extension comes because SCO was late to market with its licensing plan, which was announced in August, according to Blake Stowell, a SCO spokesman. "We didn't actually get the license on our price list and make that available for distribution until early September," he said "It was our own fault that the license was getting out there a little later than we'd hoped."
SCO wants to give Linux users more time to purchase the license at the lower license fee of $699 per processor, Stowell said, so the company has extended its deadline to Oct. 31. After that, pricing will jump to $1,399 per processor, he said.
At the same time, SCO decided to hold off on its plans to begin sending invoices to Linux users. It's compiling a list of commercial Linux users. Previously, the company had said it expected to begin invoicing those companies by mid-October. The invoicing plans have now been delayed indefinitely, said Stowell. "At this point, we're pleased with the progress we've made on the licensing end, and we feel it's not something that we need to do at this time," he said.
Though they're not being invoiced, Linux users are still being contacted. They're being telephoned and sent e-mail messages by SCO's sales people, who offer to meet with them and explain the licensing plan, Stowell said. "Certainly, if we don't have to send out the invoices, that would be our preference. It's a more aggressive step," he said.
Sending out invoices may also force SCO into a course of action it's not yet prepared to take, said Gordon Haff, an analyst at research firm Illuminata Inc. in Nashua, N.H. "If they send out the invoices, they really have to follow that up with some action, if they're not paid. Otherwise, it looks like their bluff has been called."
Invoicing could also expose SCO to lawsuits, the analyst said. "It's one thing to file a lawsuit against a specific company, and it's another thing to present invoices to a large number of end-user companies, many of whom will regard them as fraudulent and take counter action," Haff said.
SCO claims that the Linux source code violates its Unix intellectual property rights. In March, it launched a $1 billion lawsuit against IBM, saying that it had inappropriately contributed code to Linux. SCO has also threatened to sue individual Linux users on the basis of these claims. It introduced the Intellectual Property License for Linux as a way for Linux users to avoid litigation, even though SCO's claims have yet to be proved in court.
In an unrelated announcement, the company yesterday touted a $50 million private investment from a group led by BayStar Capital. The private investment will aid SCO's financial position and help it carry out its plans, including new partnerships, development of its Unix and SCOx Web Services products, and enforcement of its intellectual property claims, SCO said.
The financing was structured as a private placement of SCO shares, which are convertible into common equity at a fixed conversion price of $16.93 per share. That's the average closing bid price for SCO's common stock for the five trading days before the closing, according to the statement. After converting, the investors, led by Larkspur, Calif.-based BayStar, will own 17.5% of SCO's outstanding shares, the company said.
Stephen Lawson of the IDG News Service contributed to this report.