SCO out, VMware in

Winning may not be everything, but losing has little to recommend it.

-- Sen. Dianne Feinstein (D-Calif.)

Picking the network vendor most quickly losing power is easy. That company would be SCO.

At one time a respected company, SCO launched itself down the path of self-destruction when it filed suit against IBM in March 2002. It alleged that IBM had "made concentrated efforts to improperly destroy the economic value of Unix, particularly Unix on Intel, to benefit IBM's new Linux services business." The lawsuit also charged IBM with "tortious interference, unfair competition and breach of contract."

Now, more than three years later, we're no closer to seeing this case resolved, as SCO still hasn't shown the code it claims violates its intellectual property rights. What it's done is spend a lot of money in creating a legal swamp that has effectively sucked in all rationality, leaving nothing more than hyperbole and hand waving behind.

SCO's tactics in this fiasco have been to try to scare corporate Linux users into buying SCO's protection licenses to avoid possible future litigation and creating a smoke screen of doubt in the Linux market. In the process the company has seen its revenue collapse while it burns through cash reserves.

The latest foolishness came last summer when SCO asked IBM for "all documents concerning IBM's contributions to the Linux 2.7 kernel." This was curious, as there is neither a Linux 2.7 kernel nor plans for such a thing!

SCO will eventually shrivel up and blow away but not before it has wasted our time, wasted its shareholders' money and gained the enmity of everyone in the computer business.

Picking the network vendor most quickly gaining power is somewhat harder. Even so, while many companies are having a transformative effect on the computer market, one vendor is at the very forefront of acquiring power: VMware.

VMware's virtual machine products are some of the best in the market and its financial performance has been stunning: VMware's third-quarter revenue this year was a record $101 million, a 63% increase year over year.

What is driving this success is obvious: The enormous benefits of server consolidation. Most enterprises find the utilization of the majority of their servers to be very low individually. With VMware, they can, in many cases, consolidate servers to the extent of migrating up to 10 physical servers over to 10 virtual machines on a single physical server.

Particularly interesting is VMware's recent release of the VMware Player, a virtual-machine run-time system that can execute virtual machines created not only with VMware's products but also those created using Microsoft Virtual PC. This system could transform software distribution for publishers and enterprises by becoming virtual shrink-wrap.

Despite the competition from Microsoft, the Xen project, Parallels and Swsoft, I expect VMware's experience in servicing the enterprise market will maintain the company's leadership.