Caldera Pushes SCO Unix to Forefront in Turnaround Bid

Struggling software vendor renames itself SCO Group, aims to regain user loyalty

In a bid to stop a series of losses, Caldera International Inc.—known primarily as a Linux software and services vendor—last week said it plans to focus more attention on the once-lucrative SCO Unix business it bought two years ago.

Lindon, Utah-based Caldera said it plans to change its name to The SCO Group Inc. to take advantage of the SCO name, which is familiar to IT managers who still use the low-end Unix software.

Caldera acquired the SCO Unix technology along with The Santa Cruz Operation Inc.'s services division in late 2000. But the firm has been hit hard during the past 12 months by weak sales and layoffs (see box). Last week, it reported a $4.5 million net loss on revenue of $15.4 million for its third quarter, which ended July 31.

Reg Broughton, senior vice president of worldwide operations at Caldera, said the company will continue to support both Linux and SCO Unix and add new programs to help resellers expand the Unix software's market share.

New Management

The name change and strategy overhaul comes two months after co-founder and CEO Ransom Love left the company and was replaced by outsider Darl McBride .

"Now, with a new CEO and a new economy, we need to invigorate the company," said Broughton.

That may not be easy. For example, two longtime SCO Unix users said they think the new strategy is a good one but that it comes too late for their companies—both of which plan to shift to different operating systems.

Tom Pratt, the information systems manager at Coastal Transportation Inc. in Seattle, said service and support improved after Caldera took over the SCO divisions.

But the shipping company is now migrating to Red Hat Linux, Pratt said. The motivators, he added, include rising licensing costs for SCO and the need to pay for special developer editions to build applications.

Roland Priest, a Unix administrator at The Pep Boys, a Philadelphia-based auto parts retail chain, said returning to its Unix roots should help Caldera retain its strongest customers. But Pep Boys is replacing SCO Unix with IBM's AIX operating system so it can use more robust servers made by IBM.

"The path has already been set," Priest explained.

Unix software and services represented "really the only viable business model" Caldera had, said George Weiss, an analyst at Gartner Inc. in Stamford, Conn. The decision to focus more heavily on those offerings could help the company regain the loyalty of some users, he added.

But according to Al Gillen, an analyst at IDC in Framingham, Mass., the changes at Caldera are mostly being made on the surface.

"They're trying to regain the momentum that SCO had, but that's going to be hard to do," Gillen said. "The momentum they've had in the last few years has been downhill."

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Caldera's Struggles

September 2001 Caldera lays off 8% of its workers in effort to stem losses.

May The company cuts another 15% of its workforce as sales continue to lag.

June CEO Ransom Love departs to head UnitedLinux venture.

August Caldera revives SCO name and re-emphasizes Unix roots.

Copyright © 2002 IDG Communications, Inc.

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