SCO, it was good to know ya... you coulda been so much more

SCO, it was good to know ya... you coulda been so much more

Summary: I read with interest this morning a story in ComputerWorld (more like an obituary) about how SCO said in its most recent SEC filing that there is "substantial doubt" that it will survive. In addition to the meltdown of its lawsuit against IBM, the filing cites its depleted cash position and entry into Chapter 11 as its major woes.

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TOPICS: Open Source
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I read with interest this morning a story in ComputerWorld (more like an obituary) about how SCO said in its most recent SEC filing that there is "substantial doubt" that it will survive. In addition to the meltdown of its lawsuit against IBM, the filing cites its depleted cash position and entry into Chapter 11 as its major woes. While the Net is flush with celebration and legal analysis (and am happy that SCO did not prevail), I think my take on this is a bit more sobering in the bigger picture of our great industry.

SCO the brand was at one time a great brand. Before Linux and open source were the forces they are, SCO was the go-to solution provider for a great many companies who wanted to run a variant of Unix on the Intel platform. The SCO ecosystem thrived on two inter-related propositions.

First, Like many *ixes, SCO offered a networkable multiuser operating system on cheap hardware. Windows wasn't multi-user then and still isn't multi-user today. OS/2 wasn't really multi-user either (even with LAN Manager strapped to it). NetWare had multiuser characteristics but never drew the developers of bread & butter business applications the way the Unix ecosystem did. Banyan's Vines showed promise but ultimately was little more than a lesson on the importance of enterprise-wide directories. BSD, in any of its instantiations was probably next in line behind SCO but lacked a strong solution provider to give customers a single throat to choke in the event something went wrong.

Second, given SCO's dominant role as the go-to provider for networkable multiuser operating systems (on the Intel platform), it was a favorite target for software developers with those bread n' butter solutions that might not have been very sexy, but were needed by thousands if not millions of businesses (and/or departments). For example, patient management systems for medical and dental practices, fund raising systems, telemarketing and customer support systems.

When you think about it, SCO really had something special there. A unique niche in the marketplace. To be fair, the SCO I'm talking about is different from the SCO that's about to disappear into the ether (although some well-known company -- perhaps Microsoft or Sun -- is likely to pick up its assets in a fire sale). Even so though, the SCO brand was one of the lucky chosen ones to really succeed in the industry and as much as I'm happy that IBM prevailed, I'm also a bit saddened by the way those entrusted to safeguard that brand ended up destroying it instead.

For all that the SCO brand stood for when it was doing well, it can now be remember as a snapshot of what's wrong with the technology business, particularly the American technology business. Some number of people spend time worrying about what its going to take to keep America competitive in the global marketplace. Meanwhile, the global marketplace probably loves to watch Americans fight amongst themselves. What country needs to come up with a divide and conquer strategy when we're handing one to the world on a silver platter. It's not that I don't have respect for intellectual property (IP) law. But, had SCO not taken the incredibly risky and litigious path it took (one that other IP trolls are taking), today's SCO could have been so much more.

In the Linux space alone, think about what has changed since SCO first began its assault. Ubuntu comes to mind as a distribution of Linux (built on Debian) that arrived on the scene well after SCO started flexing its legal muscles and has since commanded a an amazing amount of buzz given the other more established alternatives in the market. Imagine if SCO saw the same niche opportunity and went for it. Or, maybe such opportunities can't happen with out someone like Mark Shuttleworth to drive them and perhaps the two companies (Shuttleworth's Canonical which sponsors Ubuntu and SCO) could have found some mutually beneficial arrangement.

We can debate all we want about the merit of this idea but let's not because it's not the idea itself that matters. It's the fact when SCO decided to pursue the litigious path it did, there were plenty of niche business opportunities that the company could have attached its credible brand to instead. Unfortunately, in what will probably make for a great case study in Harvard Business Review or the like, instead of looking to build its own interesting and unique business (one that employs people, contributes to the economy, has happy customers, etc.), the company tried to take down others. It ended up taking down itself instead and forever tarnishing what was once a great brand in the marketplace.

So long SCO. It was good to have known ya.

Topic: Open Source

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  • Belated obituary

    The Santa Cruz Operation died in 2002. The pieces were sold to Caldera (a Linux distributor, mind) and the rest eventually went to Sun Microsystems.

    The last five years haven't been so much a long slide into night as desecration of the corpse.
    Yagotta B. Kidding
  • Your own size.

    Other organizations making money from IP have long learned any needed lessons from SCO.
    Perhaps the most substantial being, Don't be distracted by having a product to sell, Don't be very public about billing, and especially Don't make IBM your target.

    IBM has an IP legal staff intended to take money or control of ideas from smaller organizations, and not to pay for IP used.

    SCO could be expected to lose, but it also must have had a case. The lessons are obvious, so someone making the choice to proceed had to recognize the difficulty. Waywardness is not a good bet-the-company strategy, and not one which would readily be endorsed or accepted by others, such as Microasoft and Sun.

    Whatever happened, SCO is almost certainly gone, and IBM has moved off to stomp on its next victim.
    Anton Philidor
    • Most agree, one completely off the wall statement

      For once I generally agree with you, except...

      [B]SCO could be expected to lose, but it also must have had a case[/B]

      No, and you can't re-write history or the abysmal failure of every legal front every tried by SCO, the simple fact is, they were beaten and battered about the head because [B] THEY HAD NO CASE [/B].

      If there was ANY merit to their claims, IBM would have bought them outright, which is what SCO really wanted in the first place.

      TripleII
      TripleII-21189418044173169409978279405827
      • It is possible...

        ... that SCO executives were so stupid as to proceed without a case. Even though they must have known the open source connection would give IBM so great a PR advantage that a buyout was unlikely.

        And it's possible that the legal and other advisors were so stupid as to recommend a course of action that would put the company out of business.

        And it's possible that both Microsoft and especially Sun were so stupid as to make what were - at least in part - investments in SCO's future path even though they could have seen that failure was inevitable.
        Sun doesn't have much money to waste. I hope no one was laid off as a result of an unnecessary investment. And that Sun received a fair return despite SCO's defeat.

        That much stupidity is possible. But I prefer not to make deciding people are behaving foolishly my first choice.
        Anton Philidor
        • The employees are the ones hurt.

          For those who stayed behind to work on decent products, etc. It must have been a hugely demoralizing work environment. I only hope that the call to "tar and feather" any designer who stayed "with the enemy" past a certain date never comes to pass. You can't blame the man in the trenches for upper managements moves.

          I think that MS and Sun's investments were "strategic". I still believe, like I did when this all started, SCO's plan was to be purchased and the best way to make that happen was to create an outrageous huge lawsuit and get purchased simply due to the nuisance factor. That in itself is a semi-workable plan, but IBM new 3 hours into the process they had no real case, and decided it is worth it in the long run to crush SCO instead of buy them.

          I don't think anyone acted stupidly, they all had a strategy, the chips then fell the way they did.

          TripleII
          TripleII-21189418044173169409978279405827
          • You're CEO at SCO.

            Someone walks into your office and says:

            "I have an idea about how we can get this company bought out or make a fortune in licensing.
            We sue IBM for putting our IP into open source. Then we start billing companies for the IP."

            "Do we have a case?"

            "No. But IBM won't care, they'll fold when we bluff."


            You may write your own dialogue from here on.

            How about:

            "The first stupid idea was saying 'We'. Go home. Rest. You can use it. Then come back tomorrow and work twice as long. On something sensible."
            Anton Philidor
          • Personally...

            ...I'd throw the individual in question out of my office on his ear, but that's just because it would offend my sense of morality.

            My previous post may have been too harsh. My sense of the man is that Darl McBride honestly believes everything that his company has alleged against IBM and honestly believes that Caldera bought the System V copyrights when they bought the Santa Cruz Operation's UNIX business, all evidence to the contrary. McBride appears to be a hothead and bad things happen when you put a hothead in charge.

            That said, even if I thought I was entitled to and had the law firmly on my side, I could not justify threatening Linux end users who had been acting in good faith, or trying to collect royalties from them without any publicly disclosed evidence of infringement. Rather, if there was any System V or UNIXWare code present in the Linux kernel, the kernel developers should have been notified, presented with the evidence, and given a reasonable opportunity to remove the offending code or to contest the allegations; if not, then legal action could have reasonably been taken against the developers and any distributors that insisted on still offering the infringing code. SCOSource was/is an extortion racket and in my view completely unconscionable. Unfortunate that licensees probably have no real chance of getting much of their money back.
            John L. Ries
          • Only the CEO?

            If a CEO wants to act impulsively and destructively, most companies would have a process to review his action in advance, or at least meliorate the damage.

            Wouldn't a legal opinion be asked before what everyone must have known was a potentially fatal decision?

            Also, wouldn't every company investing in a license have made some sort of effort to find out whether there was something to purchase?
            This isn't a case like the Linux kernel, in which it's necessary only to accept in general terms that infringement is occurring. The infringement here was supposed to be specific.

            Seems reasonable to suppose that at some point the case wasn't as bad as the one criticized publicly.



            The procedure you describe - notifiaction of infringement and negotiation - appears to be the usual practice. Fully understanding what happened includes a discussion of the reasons the licensing efforts occurred as they did. Perhaps the problem was the litigation in progress, but that should be examined.

            I agree with you, and am wondering why the licensing was treated exceptionally.
            Anton Philidor
          • Anton: One would hope

            One would hope that the due dilligence you mentioned would happen, but if it did, I'm certain that there would be fewer former CEOs in prison because they would have been fired by their boards before they were in a position to commit the crimes for which they were convicted. There would certainly be no need for laws such as Sarbanes-Oxley if companies could be trusted to adequately police themselves.

            Experience suggests that a pushy CEO can get away with a lot, particularly in a small company when things are starting to look desperate (old parliamentary trick: the Prime Minister proposes some hideously controversial bill and threatens to resign if it doesn't pass; works far more often than not). Have no idea why anyone would take SCO at their word on the Linux issue, but that's really a question for SCOSource licensees to answer.
            John L. Ries
        • Bluff gone amok?

          One has to remember that SCO vs IBM is probably the most closely watched case since the O.J. Simpson trial and may be the most closely watched civil case in US history. SCO management could hardly have expected that kind of scrutiny when they filed their claim (Groklaw wasn't started until a couple of months later) and may well have expected the subsequent anti-Linux campaign to proceed challenged only by the Linux developers themselves (not like the businesspeople SCO was targeting were going to listen to a bunch of free software fanatics anyway).

          They could hardly have expected Pamela Jones to spend the next 4 years covering all of the subsequent SCO litigation like a rug, publishing every last detail on her website, and making SCO a laughingstock by showing how weak their case really was.

          Poker players sometimes make huge bets on very weak hands, but those hands don't end up published on the Internet for all to see (while the game is going).
          John L. Ries
          • "...most closely watched civil case in US history."???

            [b]One has to remember that SCO vs IBM is probably the most closely watched case since the O.J. Simpson trial and may be the most closely watched civil case in US history.[/b]

            In a word, no.

            Not a single lawyer and only a handful of geeks that I've spoken with have any idea who SCO is and/or what the case is about.
            shoktai
          • You failed to state you qualifications

            Of course the poster you replied to didn't say how he knew what was the most watched case either.

            Perhaps a list of those you have spoken to will convince us of the value of your assessment.
            Still Lynn
          • Different circles

            [i]Not a single lawyer and only a handful of geeks that I've spoken with have any idea who SCO is and/or what the case is about.[/i]

            In contrast, a friend who was working in the Arizona AG's office a few years ago relates that [i]SCO v. IBM[/i] was the frequent subject of water-cooler humor.
            Yagotta B. Kidding
          • I guess what I meant was...

            I don't think there's been another civil case that has been covered so extensively Groklaw has covered SCO vs IBM, where all filings and all rulings are freely available on the WWW and extensively commented thereon. Such things are not normally so widely available unless you pay for the privilege or physically go to the courthouse. Only real comparison I can think of is the O.J. trial, which was covered gavel to gavel on TV (not that I think that a good model).

            You are correct that it's mostly techies and tech journalists that have been following it, but I can't imagine that things would have gone as badly for SCO outside of court (which they have) were it not for the fact that a blogger was paying such close attention to what was going on inside of court that she became the primary source of information on the case.
            John L. Ries
          • What are you, KIDDING me?

            A few searches on news portals and search engines will prove that your friends have been living in a cave.
            What other civil suit has received this kind of scrutiny in public? Point to even one example.
            You can't because you're just trollin'.
            Go away.
            bmerc
        • RE: SCO [sic] executives were so stupid...

          ... that they sued the company that provided 20% of the sales of their products.

          They claim that Linux stole their lunch. They were a Linux company before AND AFTER they bought part of SCO's reseller business. Footgun antics like this are laughable, not defensible.
          Still Lynn
        • Re: It is possible...

          [i]That much stupidity is possible.[/i]

          The only stupid thing was to have gone after IBM early. The IP shakedown playbook clearly states to go after small fry first, then use your record to create facts on the ground before approaching the behemoths.

          It's a mistake to analyze events as if SCO was a normal business trying to sell product. SCO was an extortionist, a racketeer, and *that's* how they were behaving.




          :)
          none none
        • Stupid is as Stupid does..

          [b]It is possible...
          ... that SCO executives were so stupid as to proceed without a case. Even though they must have known the open source connection would give IBM so great a PR advantage that a buyout was unlikely.[/b]

          Wait a sec.. We're talking about SCO here. SCO got bought out by Caldera, who renamed the company SCO after that merger - who, if memory serves, is infamous for buying dead IP (in this case DR DOS), and suing someone to get money. Weren't they the same people who sued Microsoft way back when about Windows 3.x not running on DR DOS properly...? Yes, of course they were.

          So you've got a group of executives who had some success nailing a big target - Microsoft, so they, undoubtably figured lighting could strike twice. After all, it's a lot easier to make money by suing a big corporation that has deep pockets (provided you have a leg to stand on) than to hire programmers to write code, hire tech people to do quality control and support, and sales people to sell it to the masses and all the other messy stuff of running a company.

          Keeping that in mind, it's not too hard to figure it all out.
          Wolfie2K3
          • ... "provided you have a leg to stand on" ...

            Exactly.

            SCO started a bet-the-company Court case and campaign for licensing fees as if there were a chance to win. Other companies bought the licenses, made investments as if there were a chance to win.

            If the case has never been any better than what we've seen, then a large number of intelligent people suffered from wishful thinking or ... something simultaneously.

            Occam's razor, the simplest solution, seems to indicate we never saw what those others saw. Maybe what they saw was fraud, but they precived a reasonable case.
            Anton Philidor
          • Occam's Razor

            "Occam's razor, the simplest solution, seems to indicate we never saw what those others saw. Maybe what they saw was fraud, but they precived a reasonable case."

            I don't doubt that there was at least the perception (if only by Mr. McBride himself) that there was evidence of infringement.

            That being said, if evidence proving the guilt of the accused is not presented, one can reasonably presume for all practical purposes that no such evidence exists.

            Then again, I have to wonder whether anybody in the inner circle (the board, the "crack legal staff," etc.) ever raised the possibility to Mr. McBride that there was no "there" there.

            The only possibilities that I can really see based on the chronicles of this sad display are as follows:

            1) SCO had a case, but their legal staff lacked the ability or will to put this case forth in such a way as to convince the court.

            2) SCO strongly believed that they had a case, but they didn't check everything they should have checked to make sure that they had legal standing to bring forth the case. Unfortunately for them, in a system where reasonable doubt is enough to force an acquittal, anything less than genuine near-certainty is going to make the case almost impossible to win.

            3) SCO knew they had no case, but figured that many big companies will settle when faced with a threat of a lawsuit, so as to avoid a time- and money-consuming PR nightmare.

            To be honest, the second scenario seems the most likely. One does not typically attribute to malice what can be readily explained by incompetence, but even incompetence is superfluous when the situation can be assessed as being a product of negligence.

            As to why SCO went full speed ahead on Mr. McBride's say-so, when a CEO gives you a direct order--even a potentially suicidal one--the sound waves that come out of our mouths as "no" sometimes reach the CEO's brain as "Please fire me." The courage to say "no" when knowing of this disconnect is, unfortunately, in short supply.

            Until there exists a precedent for legal recourse in the event of getting fired for someone else's hearing problem, SCO will only be the latest such scenario.
            Third of Five