February 16, 2019

Analysis: Novell Tries to Torpedo SCO Unix IP Claims - page 3

Now: Novell Upstages SCO Earnings Call

  • May 28, 2003
  • By Steven J. Vaughan-Nichols

"If there could be any doubt about this, Novell CEO's letter of May 28, 2003, shows otherwise. Besides just tackling SCO on its UNIX ownership and potential intellectual property (IP) rights claims, Novell attacked SCO on grounds that sound like those of the most tried and true Linux supporter.

For example, Messman says, "SCO claims it has specific evidence supporting its allegations against the Linux community. It is time to substantiate that claim, or recant the sweeping and unsupported allegation made in your letter. Absent such action, it will be apparent to all that SCO's true intent is to sow fear, uncertainty, and doubt about Linux in order to extort payments from Linux distributors and users."

The proximate cause to Novell's outburst was SCO's May 12 "Letter to Linux Customers." Both CEOs' comments indicate though that the two companies had been talking-and disagreeing-about UNIX IP issues since at least January.

To outside observers, like Dan Kusnetzky, IDC vice president for system software research, Novell's move spells bad news for SCO. "Are we living in a soap opera?! It's getting harder to see how SCO can prove their case against IBM. Can they prove that SCO didn't introduce UNIX code into Linux? Can they prove IBM introduced the code? And, now, do they 'own' any code at all?"

Of course, he continues, this case isn't good for much of anyone. "The only one getting any benefit from this is Microsoft." As for the conspiracy theories that Microsoft is somehow behind SCO's posturing, he thinks that while this "makes for interesting conversation around Starbucks," there's nothing to it.

Bill Claybrook, the Aberdeen Group's research director for Linux and UNIX, thinks that this Novell and SCO's IP claims and counterclaims "could lead to a court case." This is especially true since, from where he sits, these issues would have to be resolved before the IBM case. Still, "you'd think that David Boies," SCO's chief outside attorney, "would have looked at the SCO-Novell contracts."

Claybrook continues that while, up to now, he's been supportive of SCO, "but if SCO has anything to their claims against Linux and IBM they should be getting them out. If they don't have anything, there's just doing this to raise their stock."

He's been reluctant to look at SCO's actions in this way, but lately he's begun to think that, "maybe SCO's leaders, knowing that SCO has only a short-term future, are not looking at building a real company, but instead are building their own profits now because they know they'll be gone in three to five years. OpenServer is slowly dying, UNIXWare has been a non-starter, and their Linux line was already dying." And, as for the future, "no one would buy SCO operating systems now."

Claybrook blames it on the new management. "If Ransom Love was still in charge, this wouldn't have happened. I think he would have resigned before he went with it."

McBride insists, though, that application hosting and vertical business, based on SCO UNIX operating systems and Web Services via SCOx, will be profitable. At the same time though, during his teleconference, McBride may it sounds like the real profits will come from SCOSource, the division charged with realizing money from UNIX IP, in amounts that may range from tens of millions, to hundreds of millions or even billions.

For now, SCO's reported net income of $4.5 million on revenue of $21.4 million for the 2nd quarter with $13.1 million of revenue coming from its operating systems and $8.3 million from SCOSource's licensing program. SCO says this was the first time that SCO has ever had net income.

On any other day this would have been great news. Today, after a stock-price drop of almost 27% on the NASDAQ, the market paid more attention to Novell's IP claims than SCO's claims and numbers.

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