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Tuesday, June 3, 2003
BIZNETDAILY COMMENTARY
Big blue Mormon penguins
Updates on the Linux wars
Posted: June 3, 2003
1:00 a.m. Eastern
Editor's note: Russ McGuire is the online director of Business Reform Magazine. Each issue of Business Reform features practical advice on operating successfully in business while glorifying God.
By Russ McGuire
© 2003 Business Reform
Two months ago I told you about The SCO Group's lawsuit against IBM ( "If you can't beat 'em, sue"). Well, since then, it's gotten a lot messier. Microsoft and Novell have jumped into the fray. And rumor has it that even the Mormon church is caught up in the mess.
As background, you may recall that SCO started life as Caldera, a startup company selling a commercial version of the open source Linux operating system. It was started by Ray Noorda, former chairman of Novell. Even today, SCO is 46.2% owned by The Canopy Group, a private capital company founded by Noorda in 1995.
Caldera failed to become the leader in commercial Linux systems. In a bold move, the company purchased the Unix business of The Santa Cruz Operation. In theory, Caldera was buying a robust sales channel and customers for its Linux product line. However, with the package, Caldera acquired intellectual property tracing back to the very origins of Unix in the late 1960s. Unix was originally invented at AT&T Bell Labs. As AT&T was splitting itself into a bazillion pieces, the Unix intellectual property was sold to Novell who then later sold it to The Santa Cruz Operation. Sometime after that deal, Caldera changed its name to The SCO Group and Santa Cruz changed its name to Tarantella.
Apparently, somewhere in time, IBM signed a contract with AT&T related to the Unix operating system. SCO now claims that IBM transferred some of the Unix source code to groups developing the Linux operating system, in violation of terms of that original AT&T contract. SCO is now actively pursuing licensing deals from anyone having anything to do with Linux. In early March, SCO filed a $1 billion lawsuit against IBM.
The highest profile recent shift came on May 19 when Microsoft announced it would license Unix technology from SCO. Microsoft doesn't need Unix technology. They bad-mouth Unix and Linux at every opportunity. Many have seen this as Microsoft attempting to drive a stake into the heart of the Linux movement. Microsoft has clearly been hurt by Linux. Major wins for Linux over Microsoft are announced almost on a daily basis, and Microsoft has been making desperate (maybe even illegal) moves to thwart the threat. However, this also takes us back to the good ole PC battle days when Microsoft's Windows lined up opposite IBM's OS/2 – in case you missed it, Windows won and the rest was history. Could the same story be shaping up for Linux? IBM has clearly been the biggest and most credible proponent of the upstart operating system. Microsoft would love to see both the company and the operating system take a tumble.
However, the more interesting twist has come from Novell. Novell and SCO have many strands weaving them together. Ray Noorda was involved in the start of both companies and played a major leadership role for each during each company's heyday. Two of SCO's board members were previously executives at Novell (Darcy Mott was Treasurer, and R. Duff Thompson was Senior Vice President of Corporate Development). SCO's President and CEO, Darl McBride also has a Novell background. Through Noorda, the ties twist a little tighter. Ralph Yarro, SCO's Chairman of the Board was previously a graphic artist for the Noorda Family Trust and is currently President and CEO of The Canopy Group, the equity firm founded by Noorda. Board member Mott also currently serves as Vice President, Treasurer, and Chief Financial Officer of Canopy.
And of course, the Unix operating system passed through Novell's hands before arriving at SCO. And that's where it gets really interesting. Late last week, Novell announced that it still owns the key copyrights and patents involved in SCO's lawsuit against IBM and it's licensing program. SCO's McBride responded by saying he would be taking Novell to court.
Of course, in case you're worried this case doesn't have enough strange twists, keep in mind that Microsoft nearly put Novell out of business in the late 1990s. Novell dominated the local area networking market until Microsoft developed competing technology and bundled it into every copy of Windows – wiping out Novell's entire target market. Novell has done well to reinvent itself to survive, but it's a mere shadow of the industry giant it once was under Noorda's leadership.
In the short term, SCO's efforts appear to be bearing fruit. The company announced its first profit ever, with a third of its revenue (and all of its profit) coming from the new licensing program. However, SCO is quickly redefining itself as a licensing and lawsuit company. That cannot be good news for its customers, employees, or most of its investors.
It is SCO's largest investor that is playing the most secretive role in all of this. With 46.2% ownership in the company and two seats on the board (including the chairmanship), there's no doubt that The Canopy Group is intimately involved in SCO's planning and legal wrangling. However, there's much that's not known about Canopy. As a private equity company, it doesn't need to disclose much about its investors or its relationships with other parties. Some of the conspiracy theorists believe that Canopy is tightly tied into the Mormon church. Although the "tightly" in that last sentence is unknowable, it is highly likely that Mormons are involved in both Canopy and SCO – but that's to be expected for companies headquartered in Utah. Three of SCO's board members are graduates of Brigham Young University, and Darl McBride worked closely with Stephen Covey before joining SCO.
I haven't yet figured out how religious affiliations really play into a technology lawsuit, but it certainly adds to the intrigue and adventure of it all. This is one geek tragedy that may be worth watching!
Russ McGuire is Online Director for Business Reform. Prior to joining Business Reform, Mr. McGuire spent over twenty years in technology industries, performing various roles from writing mission critical software for the nuclear power and defense industries to developing core business strategies in the telecom industry. Mr. McGuire is currently focused on helping businesspeople apply God's eternal truths to their real-world business challenges through Business Reform's online services. He can be reached at RMcGuire@businessreform.com.