SCO business ‘plan’ is a flop

It’s sad that SCO had the opportunity to turn itself into a competitive purveyor of Unix and Linux but instead decided to make its money through scare tactics and the courts. The company better turn a profit soon, or there might not be an SCO left to continue the fight.

It’s been a long time since I read Dale Carnegie’s book How to Win Friends and Influence People, but I’m pretty sure there wasn’t a chapter called “Win new business by suing everyone.” Perhaps we should buy a few cases of the book and spread them around the executive offices at The SCO Group, the company that has gone Linux lawsuit-happy as of late.

In addition to suing fellow IT vendors such as IBM and Novell, SCO is now going after users such as AutoZone and DaimlerChrysler. I guess SCO CEO Darl McBride and his colleagues have concluded, “If you can’t join them, beat them.” Beat them with a stick, that is.

McBride says SCO tried to settle the matter of intellectual property rights amicably by licensing its technology through a program called SCOsource. When that didn’t work, the company resorted to the courts to enforce its alleged rights. While I’m 100% behind the notion of being paid for your intellectual property, in this case there’s some serious doubt to SCO’s claim.

The premise of the lawsuits is SCO’s claim to be the rightful owner of Unix, small parts of which might have made their way into open source Linux code. SCO asserts that any company selling or using Linux is violating SCO’s intellectual property rights. In reality, many of these declarations are in dispute.

The open source community denies that any parts of Unix were used in developing Linux. Novell says it owns the disputed rights to the Unix code. IBM is fighting SCO’s claim that IBM misappropriated copyrighted Unix source code. And Red Hat is suing SCO, claiming unfair and deceptive actions in its assertions of copyright infringements.

In my opinion, SCO took some bad advice and is working off a pretty tenuous business plan today. A lot of puzzle pieces have to be sorted out in court before SCO can claim victory. I have my doubts whether SCO can survive in the meantime. SCO says it has two primary sources of revenue: sales of its Unix software (OpenServer and UnixWare), and licensing of its Unix code and derivative works. The former is in decline, and the latter has yet to take off. And the lawsuits have made SCO an industry pariah.

By SCO’s admission in its January Form 10-Q filing to the Securities and Exchange Commission, “The decline in our Unix business revenue may be accelerated if industry partners withdraw their support as a result of our SCOsource initiatives and in particular any lawsuits against end users violating our intellectual property and contractual rights.”

Thank heavens Microsoft still sees lots of value in SCO’s business. Microsoft has paid SCO for the license rights to the Unix technology “to ensure interoperability and legal indemnification for our customers,” a Microsoft spokesperson says. Certainly it wouldn’t be to slow down the adoption of Linux, a leading rival to Windows, would it? We now know that Microsoft senior executives influenced the $50 million investment that BayStar Capital made in SCO last October, although the exact reasons for this investment aren’t clear.

CIOs, rightfully, are keeping a wary eye on the developments surrounding the intellectual property rights issue. Companies with vast stakes in Linux, such as HP and Novell, are offering to indemnify their customers against lawsuits, should they erupt.

I might have more empathy for SCO if it actually had developed the Unix code in question. Instead, the company (claims to have) gained the rights to the Unix intellectual property through a fortuitous acquisition. In its decades-long history, there have been many disputes over who really owns Unix.

It’s sad that SCO had the opportunity to turn itself into a competitive purveyor of Unix and Linux but instead decided to make its money through scare tactics and the courts. The company better turn a profit soon, or there might not be an SCO left to continue the fight. I just hope there’s enough money left over for McBride to buy his own copy of Carnegie’s book.