Where does SCO go from here?

SCO took a huge gamble and lost! There never was much hope that they could pull together a team of lawyers better than those at IBM but the potential threat to Linux, whether real or imagined, is gone -- along with any asset value SCO had left. There customer list is all that's left!

Anyone who was surprised by this week's court decision (Another nail in SCO's Linux lawsuit coffin) has not been following the history-turned-saga of UNIX all that long. 

AT&T unwittingly spawned what would become the open-source movement by turning to America's colleges and universities for UNIX software development during the 1970's.  In exchange for access to AT&T source code, universities gave AT&T full rights to use the source-code they developed.  AT&T also collected a fee for every license of UNIX installed.  In those days, software was protected through source-code copyrights -- not patents.  This fact, in and of itself, gave the open-source movement the latitude it needed to exist.  Put simply, UNIX intellectual property (source-code) may be protected by copyrights but that does not preclude someone from writing unique source code which accomplishes the same tasks as UNIX source code.  Patents protect the tasks themselves.

The commercialization of UNIX began in the early 1980's with the founding of Sun Microsystems.  Sun was by no means the only vendor selling one variant or another of UNIX but they maintained a close relationship with AT&T -- one which made them a partner in the development of UNIX System V, Release 4.

The open-source software movement was also born in the early 1980's under the moniker of GNU (Gnu's Not UNIX).  The goal was to produce an AT&T-code-free functional equivalent of UNIX.  The movement was started by the very people who spent their college careers developing code for AT&T.  No one knew UNIX better than these folks. The development of the Linux kernel in 1991 by Linus Torvalds would round out the GNU project with a complete implementation of a UNIX "clone", free from AT&T code.  Other AT&T-code-free versions of popular UNIX variants soon appeared as well. 

The fun began when AT&T decided to rid itself of the UNIX Systems Laboratory unit of Bell Laboratories.  In 1992, Novell purchased the USL lock, stock, and barrel and immediately began selling off perpetual licenses to UNIX System V Release 4 code-base.  The first buyer was it's co-developer, Sun Microsystems.  In a short time, IBM, HP and a handful of other first-tier vendors purchased their own licenses.  These licenses permitted buyers to distribute an unlimited number of UNIX licenses without further payment to the USL. 

Here's where SCO comes in ...  Once known as the Santa Cruz Operation, SCO pioneered UNIX-on-Intel throughout the 1980's.  In 1995, SCO acquired what was left of the intellectual property of the USL from Novell.  Or so they thought ... 

(Two years earlier, Novell transferred the UNIX trademark and certification rights to the X/Open consortium -- leaving SCO with nothing except one specific variant of UNIX, the SVR4 code-base.  There is a really nice treatment of UNIX history at Wikipedia).

This most recent ruling seemingly clarifies that Novell never really transferred ownership of UNIX intellectual property but only gave SCO the right to market SVR4.  Under the terms of its agreement with Novell, SCO must pass on a portion of its profits back to Novell for each license sold.

So where does SCO go from here? 

In a word...  NO-WHERE!  Whatever asset value they had is gone.  Aside from a short list of customers, they are no longer attractive for purchase.  Novell owns the SVR4 code-base upon which SCO's customers are dependent, putting Novell in a great position to pick-off those customers one-by-one, (if RedHat doesn't get to them first!)  If someone does buy-out SCO, it will be to acquire their customer list -- not much else. 

As others have reported, since deciding to sue first IBM (attempting to cancel IBM's AIX license) and then its customers, SCO stock prices have plummeted, right along with their revenues. 

I don't know how long it took SCO to realize that they had bought "a pig in a poke" when they acquired whatever it is they actually bought from Novell but that is exactly what they did!  By selling off perpetual licenses, Novell brought on the end of the dominance of UNIX in the market place.  Make no mistake, SVR4 and its variants from Sun, IBM, and HP are still a major force in the enterprise machine room but today, the open-source movement, with the Linux kernel as its flagship, continues to expand its influence.  All the while, UNIX vendors are pressured from the other side by the Microsoft juggernaut, with its fully patent-protected code-base. 

Where does this ruling leave UNIX?

Right where it was.  Nothing has changed for IBM, or Sun, or HP.  As owner of the SVR4 code-base as well as SuSE Linux, Novell is in the best position of all as they can co-mingle any UNIX and Linux code that they wish, as long as they are willing to put that SVR4 code out under the GPL.  Their licensees are not quite so fortunate as they are bounded by their individual SVR4 licenses. 

Where does this ruling leave Linux?

Right where it needs to be.  Novell's commitment to SuSE Linux is clear.  Owning everything SVR4 gives them leeway to make whatever deals it wants, utilizing UNIX and Linux.  And, as long as its relationship with Microsoft holds out, Microsoft benefits as well.  Novell's commitment to SuSE also protects the GPL from any and all challenges related to SVR4.  Most other UNIX variants have long since freed themselves from their original AT&T code-base so it looks like clear sailing for Linux to me.  What do you think?