SCO has decided to "turn the tables" on IBM and the Linux community by asserting that IBM has deliberately set out to destroy it and that Linux contains significant portions of code that belong to SCO. I doubt that SCO will achieve the results that it is looking for and believe that IBM and Linux are very unlikely to suffer significant damage as a consequence of SCO's actions.
The most likely downsides for SCO are a long and bitter legal dispute, a huge loss of confidence and loyalty in its customer base and, ultimately, failure. Realistically, the most likely "upside" for SCO is that it will reach a settlement with, or be acquired by, IBM for a sum that is a fraction of the $1bn claimed in the lawsuit.
SCO's action has all the hallmarks of desperation, rather than being a well thought out commercial move. While the merits of SCO's case are as yet unclear, it is unlikely that the case will ever see a final judgement in a court of law. SCO's action represents an enormous gamble, which has a limited upside and a disastrous downside.
The best that SCO can hope for is an out-of-court settlement or acquisition. The financial scale of these resolutions cannot be predicted but it is worth considering that SCO has a market capitalisation that is roughly 5% of the $1bn claim that it has made against IBM.
Threatening to sue 1,500 companies in one fell swoop is generally ill-advised. While most will accept that the deliberate copying of proprietary software is wrong, it is generally agreed that going after people with a gang of lawyers is among the last tactics you should consider. Threatening to take action against 1,500 large end-user firms for unintentionally using proprietary software will have inevitable consequences. It doesn't take a masters degree in brand management to predict the likely impact on customer loyalty that this type of behaviour is likely to produce.
Claiming that support for open source is "anti-competitive" is a losing argument. Part of SCO's claim is that IBM, in supporting Linux, has behaved in an "anti-competitive" manner. This is a tough case to make for any supplier, but even tougher since SCO was acquired by Caldera, which, when floated, said, "Our goal is to become the leading provider of Linux for e-business."
SCO's allegation will have no material impact on Linux adoption or use. Some commentators will seek to raise the level of FUD (fear, uncertainty and doubt) by attempting to create the impression that you are in immediate danger of legal action. This is nonsense. You are not in immediate danger, and you can rest assured that IBM's lawyers will be doing plenty of groundwork for you.
Even if SCO's legal arguments do have merit - and it will be months or years before that question is answered - if there is offending code within the Linux kernel, it will be fixed very quickly. Indeed, the Linux community is already calling on SCO to identify the code that it claims to own so that it can get to work on replacing it. If you are currently using Linux, continue to do so. If you are evaluating Linux, continue to do so.
The conclusion that SCO's customers are entitled to draw is that SCO is not a safe partner. SCO is engaged in practices that conflict directly with the interests of its users. These practices will have a detrimental effect on the ability of SCO to acquire new customers and consequently the long-term viability of the company itself. If you currently use SCO Linux, plan to migrate away from it.
SCO's strategy with respect to the lawsuit is better described as a bundle of tactics. By initially asserting that it had no intention of pursuing Linux, then changing its mind, SCO has done little to convince me that it is operating to a plan.
Gary Barnett is IT research director at analyst firm Ovum
The SCO Group has abandoned its Linux business and warned commercial Linux users they may be financially liable for intellectual property violations which, it alleges, exist in the Linux source code. Darl McBride, SCO's chief executive, said the company was determined to defend its Unix intellectual property which, it claimed, has been incorporated into Linux. For Linux suppliers, "the decision to continue to ship would be at their own peril," McBride said. SCO is "putting everyone on notice that this is tainted and that users are, potentially, carrying the risk".
This was first published in May 2003