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What SCO Wants, SCO Gets - (Linux Assault)
Forbes ^ | 06.18.03, 12:00 PM ET | Daniel Lyons,

Posted on 06/18/2003 4:12:48 PM PDT by Ernest_at_the_Beach

NEW YORK - Linux vendors are under attack. In March, IBM was sued for $1 billion by The SCO Group, of Lindon, Utah, which claims IBM has put SCO's Unix code into Linux, the open-source software program. SCO also has sent letters to 1,500 large companies warning them that if they are using Linux, they may face legal problems. Though IBM is the only company named in SCO's lawsuit, other Linux vendors, like Red Hat and SuSE Linux, could suffer collateral damage.

Why You Won't Be Getting A Linux PC

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Boies' Take On Linux

PeopleSoft Jumps On The Linux Train

Oracle's Linux Lineup

The Cult Of Linux
So how are the Linux companies fighting back? IBM (nyse: IBM - news - people ) put out a statement saying it will fight SCO's (nasdaq: SCOX - news - people ) claim and has issued bulletins to its sales force, providing talking points to use with customers. Red Hat (nasdaq: RHAT - news - people ) is posting pro-Linux commentary and analyst reports on its Web site. SuSE Linux, a German company, claims customers aren't scared by the SCO lawsuit. "Everyone has seen through this," a SuSE spokesman says.

In other words, like many religious folk, the Linux-loving crunchies in the open-source movement are a) convinced of their own righteousness, and b) sure the whole world, including judges, will agree.

They should wake up. SCO may not be very good at making a profit by selling software. (Last year the company lost $24.9 million on sales of $64.2 million.) But it is very good at getting what it wants from other companies. And it has a tight circle of friends.

In 1996, SCO's predecessor company, Caldera, bought the rights to a decrepit version of the DOS operating system and used it to sue Microsoft (nasdaq: MSFT - news - people ), eventually shaking a settlement out of the Redmond, Wash., software giant. In 1997, Darl McBride, now SCO's chief executive, sued his then employer, IKON Office Solutions (nyse: IKN - news - people ), and won a settlement that he says was worth multiple millions. (IKON acknowledges the settlement but disputes the amount.)

McBride joined Caldera as chief executive in June 2002. Two months later he changed the company's name to The SCO Group, based on the name of an ailing Unix product that Caldera had purchased in 2001 from its creator, The Santa Cruz Operation, of Santa Cruz, Calif. The Santa Cruz Operation now calls itself Tarantella (nasdaq: TTLDC - news - people ).

As with the 1996 DOS lawsuit against Microsoft, in the current lawsuit over Unix and Linux this company aims to take a nearly dead chunk of old code, bought for a song, and parlay it into a windfall. Not only is the strategy the same--so are some of the players.

SCO is basically owned and run by The Canopy Group, a Utah firm with investments in dozens of companies. Canopy's chief executive, Ralph J. Yarro III, is chairman of SCO's board of directors and engineered the suit against Microsoft in 1996. Darcy Mott, Canopy's chief financial officer, is another SCO director, along with Thomas Raimondi, chief executive of a Canopy company called MTI Technology (nasdaq: MTIC - news - people ). In this cozy company, SCO even leases its office space from Canopy--a fact disclosed in Securities and Exchange Commission filings, along with the fact that SCO's chief financial officer, Robert Bench, has a side job as a partner in a Utah consulting firm that last year billed SCO for $71,200.

Canopy companies sometimes share more than a common parent. They form joint ventures and buy and sell one another's stock. Last November SCO formed a joint venture called Volution with Center 7, a Canopy company. In 2000, Caldera sold off part of its business to EBIZ Enterprises (otc: EBIZQ - news - people ), a Texas company in which Canopy holds a controlling interest and whose board boasts three Canopy execs, including Mott, according to SEC filings. Previously, Caldera bought shares in two other Canopy companies, Troll Tech and Lineo, and later wrote off the Troll Tech investment but sold the Lineo shares at a profit, according to SEC filings. In 1999, Caldera sold its own shares to MTI, then bought those shares back last year, according to SEC filings.

What's the point of all this horse trading? McBride says he has no idea, since those deals happened before he joined Caldera. "I wasn't involved in those transactions," he says.

Yarro says the investments were made based on each company's belief in doing what's best for itself. "There's no hidden agenda," he says.

Yarro won't apologize for the IBM lawsuit. "I'm not a guy who goes away quietly in the night. I fight," he says. "If you take something from me, if you break a promise, I'm going to come after you."

And he doesn't give up. In 2001, Canopy and Center 7 sued software giant Computer Associates (nyse: CA - news - people ) in a squabble over a business partnership that turned sour. Two years later the litigation continues.

The IBM lawsuit could bring a windfall to Canopy, which owns 46% of SCO. Another beneficiary could be John Wall, chief executive of Vista.com, a Redmond, Wash., company that last August struck a licensing arrangement with SCO. Wall got 800,000 shares of SCO stock in the deal and still holds 600,000, making him SCO's biggest individual shareholder after Canopy. Those shares, which were worth about $1 each when Wall made the deal, now trade above $10.

One team that won't benefit is the folks at Tarantella, the company that sold its Unix code to Caldera in May 2001. After the deal, Tarantella still held 3.6 million shares of Caldera. But last year Caldera bought back all of them, paying 95 cents apiece for most. All told, Tarantella was paid a mere $36 million for its Unix code--the same code that Yarro and McBride now hope could generate $1 billion from IBM.

These guys in Utah are no dummies. The crunchies in the Linux community should be paying more attention.


TOPICS: Business/Economy; Extended News; News/Current Events; Technical
KEYWORDS: aix; ibm; linux; sco; techindex
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To: Nick Danger
You disagree this case is about stealing software?

Well, that's exactly what it is about. But even further, it's about (allegedly) taking what was stolen, and giving it to others while claiming they can not only have it, but they can give it to as many friends as they like, too. Sorry if it bothers me. I guess I was mistaken thinking it would bother other freepers, too.

61 posted on 06/19/2003 1:47:06 PM PDT by Golden Eagle
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To: Golden Eagle
Sorry if it bothers me.

Why does it bother you? It hasn't been proven yet. Once it's proven, then it will bother me. However, that step is still a LONG way away. Personally, I don't think it will happen.

62 posted on 06/19/2003 1:59:30 PM PDT by ShadowAce (Linux -- The Ultimate Windows Service Pack)
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To: Golden Eagle
You disagree this case is about stealing software?

Yes. Until I am shown otherwise, I am going to believe that this is a shakdown and extortion exercise being perpetrated by some IP lawyers who are hoping to get lucky with a judge.

These same guys tried this same thing on Microsoft. Microsoft found it convenient to give them a bag of money to go away. Maybe they thought IBM would do the same thing. Lawyers play that game every day, and it often is cheaper to buy them off than to screw with them. But it's just a big extortion racket, and everybody knows it. It's why so many people hate lawyers; they use our justice system as a personal-enrichment device. They have become a plague of locusts with briefcases.

If this were the original SCO — which was a bunch of geeks out in Santa Cruz — or even the original Caldera, I might be more inclined to believe we had some technical guys beaten up by the Big Boys. But SCO has been a lawyer-driven extortion house for quite a while now. It's what they do for money... they sue people. Piss on 'em. I hope IBM breaks their pick and countersues the bunch of 'em into personal bankruptcy.

By the way, you mentioned Project Monterey. Do you know when that was? Do you know when the Journaled File System first appeared in AIX? Do you know when Sequent first shipped the NUMA-Q machines? Before you bring up Project Monterey again, look up those dates. I say this only to help you avoid looking like a fool in public.

63 posted on 06/19/2003 2:36:07 PM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: Nick Danger
Nick - you obviously seem to have lost any respect you may have ever had for myself, unfortunately I'm starting to feel the same way about your commments.

I guess to you all lawsuits are just fishing expeditions, and small entrepreneurial companies better just stay out of the way of the "Big Boys". In fact, if they ever dare even claim that they are being abused, it's obviously just an extortion attempt. A company like IBM has the purest motives in the world, and complete control over every action of their employees I guess.

You're wrong. This lawsuit has been something that everyone in the IT industry has been expecting would eventually happen ever since the rip off Linux appeared on the market. The Linux bigots just didn't expect when it finally happened it would be such a swift kick in their balls.

64 posted on 06/19/2003 3:26:13 PM PDT by Golden Eagle
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To: Nick Danger
If you do not wish to appear to be an absolute idiot, do not try to tell us that IBM licensed UNIX from AT&T for internal use. Don't even go there. It's ludicrous.

Right Nick, Especially so since IBM was selling/distributing AIX before AT&T sold/spun off UNIX. It's not like they didn't know what IBM was doing with the code. Both of those companies take their IP, and the IP of others very seriously. IBM has to be holding some aces. And if they do, I wouldn't be surprised if they played this to their advantage [i.e., counter suit to SCO Group busting them and in the process and getting the rights to UNIX.]

65 posted on 06/19/2003 4:35:53 PM PDT by AFreeBird
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To: Golden Eagle
I guess to you all lawsuits are just fishing expeditions... You're wrong.

There used to be a rule on Usenet that the first guy who used Hitler in an argument lost, by definition. What you just did should have been the second rule. It is just so lame to put words in somebody else's mouth, and then criticize what they never said. Do you have better tricks than this, or are you done now?

So far you've tried name-calling, stating as fact things that are not so, stating as fact things that you cannot know, tossing red herrings on the table, and now the old put-words-in-their-mouth trick. I think you should quit while you imagine that you're ahead.

66 posted on 06/19/2003 4:41:25 PM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: Golden Eagle
I would find it almost impossible to believe that ATT (and subsequent lineage) ever granted a license to the Unix source code that allowed the licensee to take the source code and re-release it under a different name, and under a different license that claimed it was free to further copy.

From the Origins and History of UNIX....

A 1974 paper in Communications of the ACM [Ritchie-Thompson] gave Unix its first public exposure. In that paper, its authors described the unprecedentedly simple design of Unix, and reported over 600 Unix installations. All were on machines underpowered even by the standards of that day, but (as Ritchie and Thompson wrote) “constraint has encouraged not only economy, but also a certain elegance of design.” After the CACM paper, research labs and universities all over the world clamored for the chance to try out Unix themselves. Under a 1958 consent decree in settlement of an antitrust case, AT&T (the parent organization of Bell Labs) had been forbidden from entering the computer business. Unix could not, therefore, be turned into a product; indeed, under the terms of the consent decree, Bell Labs was required to license its non-telephone technology to anyone who asked. Ken Thompson quietly began answering requests by shipping out tapes and disk packs — each, according to legend, with a note signed “love, ken”.

And that's how BSD (who distribuuted their own version of UNIX and others got started and created the fractured UNIX environment. UNIX code had been shared back and forth amongst researchers, scientists, students etc, for so very long I wouldn't be surprised if you could find "line by line" sections of its code in just about any OS and or application.

67 posted on 06/19/2003 5:21:58 PM PDT by AFreeBird
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To: Nick Danger
Nick you can sit on your apparent throne all day long for all I care, but you've done little to convince any reasonable person of anything other than your belief that IBM could have done no wrong in anything they've done in the history of the corportation.

Whether you can deal with it or not, past history, current evidence, recent opportunity and motive sure look like they are up to no good. But you can continue your blind allegience for them for as long as you like, it won't affect me or this trial one iota.

68 posted on 06/19/2003 5:33:15 PM PDT by Golden Eagle
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To: AFreeBird
FreeBird I see no relevance in what a court required licensing of property has anything to do with taking that property that was licensed, renaming it and redistributing it under a different license. Unix Unix Unix, all of them you mentioned. This is about Linux, a (claimed) totally separate property.
69 posted on 06/19/2003 5:37:25 PM PDT by Golden Eagle
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To: Golden Eagle
other than your belief that IBM could have done no wrong in anything they've done in the history of the corportation.

I will ask you a third time not to put words in my mouth.

70 posted on 06/19/2003 5:41:58 PM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: Nick Danger
Sorry I've got you pegged.
71 posted on 06/19/2003 5:56:04 PM PDT by Golden Eagle
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To: Ernest_at_the_Beach
"These guys in Utah are no dummies."

The hell they aren't.

They picked the WRONG company to f**k with.

72 posted on 06/19/2003 6:48:46 PM PDT by RightOnline
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To: Golden Eagle
Sorry I've got you pegged.

I've got you pegged, too. In #45 you tell us, "it looks (to me) like it is a strong case, as they are now even giving more background into where some of the infringing code may have originated from, such as "RCU".

Is SCO claiming that RCU is their property? I don't believe them, and I think they will have a Hell of a time convincing a judge that IBM "copied" it from UNIX, like they claim in that article.

This is the quality of crap that SCO is throwing out there. They are telling people like CNET that IBM "copied" from them code that IBM owns a copyright on, and has a patent on. IBM is going to walk into the courtroom, plop down a copyright and a patent awarded 8 years ago, and ask the judge to dismiss SCO's claim. Then they're going to do the same thing on the NUMA stuff. And then the journaled file system.

It turns out the journaled file system is an especially interesting case. There are two versions of it. The older one was developed for AIX. The newer one was written for OS/2. I just found out that the OS/2 version is the one that got GPL'd and put into linux. That means it has no UNIX heritage. Let's see SCO convince a judge that they own that.

The fact-checkers have been busy the last few days. SCO is peddling some heap big bullsh*t here. At the rate they're going, they may fold before they even get to court.

73 posted on 06/19/2003 10:07:03 PM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: Nick Danger
SCO is claiming anything that has portions of their original source code as their property. IBM's patent could be in question, if it was improperly awarded.

You must *have* been busy this evening. Your long term prediction has already changed from a long drawn out affair of retrials and appeals to SCO folding before the thing even starts.

See you later.

74 posted on 06/19/2003 10:21:18 PM PDT by Golden Eagle
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To: Nick Danger
I own a software company, so I do know a little something about distribution agreements.

IBM not only signed a distribution agreement for DOS, originally, but they allowed MS to retain actual ownership of the licenses. There is such a thing as license for use with instructions for distribution.

You don't know, I don't know, and Eagle doesn't know either, what the actual agreement is for and what IBM actually did with it, and whether or not it was kiped. It is going to be fun to find out.

As for Microsoft FUD, I hate to say it, but we would not be here as a software company without a standard set of rails to ride. They have their problems, but you can't sit there and tell me that they and Intel didn't create the equivalent of the industrial revolution.

What they did for consumers is make the PC affordable, and moreover they made applications and file formats that have made the US the most productive economy in the world. IBM lacked the vision to see it, and so did Xerox. By the way, so did the Unix community, Sun, Burroughs, DEC, and others, and they were there when MS was in Dallas supplying OS's to little hobby computers.

UNIX came WAY before DOS. Why didn't one of you high minded collectivists decide that "You know, software really is for the people, so I'm going to create a GUI for it and enable my mom to use a mini-computer." Sun could have, but they were too busy selling big iron to colleges and GE.

You are worse than a liberal. Instead of being arrayed against a common enemy, the Bar, you are anti-Microsoft. I can't figure out why? Intuit has a better product than MS and they are out there kicking MS's ass. So does Crystal Decisions, and so does Citrix.

I don't plan on putting my company in the hands of the collective anytime soon. If the dot.com's had, in the majority of cases, no clear business plan holding up the proposition of a $50M venture capital infusion, then what business plan holds up the value proposition of using a free hobbyist-built operating system to run my critical applications?

If Linux is a better product than Microsoft's, then it is going to show in market share numbers. However, if the downside to open source is that there is no telling when you could be using stolen code, then that's part of the value argument, isn't it?

But, we are only having this conversation because litigation as a legitimate method of competing was made popular by our friends at IBM, AOL, Sun, and Oracle.

At issue, should you get paid for your ideas, rendered in code, or do we toss the concept of Intellectual Property? You Linux honks and anti-MS whiners are fine with writing code naked in your flats and being part of the great collective.

I'll get my software from folks whom I can stop buying from in the future if I want to. It is not unreasonable to want to make money from software, or to protect your intellectual property.

If you can sit here and tell me that you know FOR A FACT that SCO has no case, then you should simply wait for the verdict.

In this, you are as ignorant as I am. If SCO wins, then I guess they were right in defending their IP, and they have been before with DR DOS. If they don't, then we'll have to see whether SCO was frivolous in the countersuit. If there isn't a countersuit, then we'll never really know.

I just thought it was funny, you calling me ignorant when it is all just speculation on anybody's part until the trial is over.
75 posted on 06/20/2003 9:35:22 AM PDT by RinaseaofDs
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To: Golden Eagle; Nick Danger
You're wrong. This lawsuit has been something that everyone in the IT industry has been expecting would eventually happen ever since the rip off Linux appeared on the market. The Linux bigots just didn't expect when it finally happened it would be such a swift kick in their balls.

Linux is not a "rip off". Your style of argument is unconvincing and perjorative. You may be a bigot, a troll, or maybe an astroturfer. Do you work for microsoft or sco? Do you have irons in the fire? It seems likely. Or are you just a psuedonym for Nick Danger?

76 posted on 06/20/2003 9:52:16 AM PDT by no-s
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To: RinaseaofDs
Someone apparently signed on under your name to post one of those Microsoft-authored rants against "collectivists" in a thread about two companies dueling over the rights to their IP.

I thought you should know.

77 posted on 06/20/2003 9:56:59 AM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: no-s
Linux is not a "rip off".

Sure it is, a direct rip off of US pioneered technology known as Unix by some foriegners starting in Helsinki Finland. Right down to the exact command syntax.

It's like when you go down to Tijajuanna, and pick up some fake Ray Bans for $3. Except these guys have found themselves in US Federal Court because of how widespread it has gotten.

78 posted on 06/20/2003 10:52:53 AM PDT by Golden Eagle
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To: Nick Danger
COLLECTIVISTS - so tell me, is that the newest C-word for the communists, I mean the community that wants to confiscate my own personal IP for the future betterment of all mankind?
79 posted on 06/20/2003 11:01:16 AM PDT by Golden Eagle
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To: Golden Eagle
Oh, but that court ordered licensing is what set the stage, and it is relevant.

Blows Against the Empire: 1991-1995

The first glimmer of light in the darkness was the 1990 effort by William Jolitz to port BSD onto a 386 box, publicized by a series of magazine articles beginning in 1991. The 386BSD port was possible because, partly influenced by Stallman, Berkeley hacker Keith Bostic had begun an effort to clean AT&T proprietary code out of the BSD sources in 1988. But the 386BSD project took a severe blow when, near the end of 1991, Jolitz walked away from it and destroyed his own work. There are conflicting explanations, but a common thread in all is that Jolitz wanted his code to be released as unencumbered source and was upset when the corporate sponsors of the project opted for a more proprietary licensing model.

In August 1991 Linus Torvalds, then an unknown university student from Finland, announced the Linux project. Torvalds is on record that one of his main motivations was the high cost of Sun's Unix at his university. Torvalds has also said that he would have joined the BSD effort had he known of it, rather than founding his own. But 386BSD was not shipped until early 1992, some months after the first Linux release.

The importance of both these projects became clear only in retrospect. At the time, they attracted little notice even within the Internet hacker culture — let alone in the wider Unix community, which was still fixated on more capable machines than PCs, and on trying to reconcile the special properties of Unix with the conventional proprietary model of a software business.

It would take another two years and the great Internet explosion of 1993–1994 before the true importance of Linux and the open-source BSD distributions became evident to the rest of the Unix world. Unfortunately for the BSDers, an AT&T lawsuit against BSDI (the startup company that had backed the Jolitz port) consumed much of that time and motivated some key Berkeley developers to switch to Linux. Matters were not helped when, in 1992–1994, the Computer Science Research Group at Berkeley shut down; afterwards, factional warfare within the BSD community split it into three competing development efforts. As a result, the BSD lineage lagged behind Linux at a crucial time and lost to it the lead position in the Unix community.

The Linux and BSD development efforts were native to the Internet in a way previous Unixes had not been. They relied on distributed development and Larry Wall's patch(1) tool, and recruited developers via email and through Usenet newsgroups. Accordingly, they got a tremendous boost when Internet Service Provider businesses began to proliferate in 1993, enabled by changes in telecomm technology and the privatization of the Internet backbone that are outside the scope of this history. The demand for cheap Internet was created by something else: the 1991 invention of the World Wide Web. The Web was the “killer app” of the Internet, the graphical user interface technology that made it irresistible to a huge population of non-technical end users.

The mass-marketing of the Internet both increased the pool of potential developers and lowered the transaction costs of distributed development. The results were reflected in efforts like XFree86, which used the Internet-centric model to build a more effective development organization than that of the official X Consortium. The first XFree86 in 1992 gave Linux and the BSDs the graphical-user-interface engine they had been missing. Over the next decade XFree86 would lead in X development, and an increasing portion of the X Consortium's activity would come to consist of funneling innovations originated in the XFree86 community back to the Consortium's industrial sponsors.

By late 1993, Linux had both Internet capability and X. The entire GNU toolkit had been hosted on it from the beginning, providing high-quality development tools. Beyond GNU tools, Linux acted as a basin of attraction, collecting and concentrating twenty years of open-source software that had previously been scattered across a dozen different proprietary Unix platforms. Though the Linux kernel was still officially in beta (at 0.99 level), it was remarkably crash-free. The breadth and quality of the software in Linux distributions was already that of a production-ready operating system.

A few of the more flexible-minded among old-school Unix developers began to notice that the long-awaited dream of a cheap Unix system for everybody had snuck up on them from an unexpected direction. It didn't come from AT&T or Sun or any of the traditional vendors. Nor did it rise out of an organized effort in academia. It was a bricolage that bubbled up out of the Internet by what seemed like spontaneous generation, appropriating and recombining elements of the Unix tradition in surprising ways.

Elsewhere, corporate maneuvering continued. AT&T divested its interest in Sun in 1992; then sold its Unix Systems Laboratories to Novell in 1993; Novell handed off the Unix trademark to the X/Open standards group in 1994; AT&T and Novell joined OSF in 1994, finally ending the Unix wars. In 1995 SCO bought UnixWare (and the rights to the original Unix sources) from Novell. In 1996, X/Open and OSF merged, creating one big Unix standards group.

But the conventional Unix vendors and the wreckage of their wars came to seem steadily less and less relevant. The action and energy in the Unix community were shifting to Linux and BSD and the open-source developers. By the time IBM, Intel, and SCO announced the Monterey project in 1998 — a last-gasp attempt to merge One Big System out of all the proprietary Unixes left standing — developers and the trade press reacted with amusement, and the project was abruptly canceled in 2001 after three years of going nowhere.

The industry transition could not be said to have completed until 2000, when SCO sold UnixWare and the original Unix source-code base to Caldera — a Linux distributor. But after 1995, the story of Unix became the story of the open-source movement. There's another side to that story; to tell it, we'll need to return to 1961 and the origins of the Internet hacker culture.

80 posted on 06/20/2003 2:01:20 PM PDT by AFreeBird
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