August 27, 2002

Caldera/SCO plays down Linux with resellers, but insists it's still important

-By Grant Gross -

Is Caldera still a Linux company? In changing its name to The
SCO Group, the company seems to be turning its focus back to the Unix roots of
the old Santa Cruz Operation, the company Linux-focused Caldera acquired in May
The renamed company's Linux agenda was never far away during its
GeoForum for resellers in Las Vegas, where the new SCO has paid to bring
journalists and analysts to mingle with the resellers and soak in all the news coming out of
SCO this week. Company officials insisted on Monday that the rebranded SCO Linux is "very important" to their future, but the new SCO seems to be sending mixed signals about its Linux
products, concentrating instead on renewed development of the OpenServer Unix
OS it's tried
to kill several times and on a complete-ecommerce-site-in-a-box product SCO has invested in and is pitching to resellers.

On one hand, SCO President and CEO Darl McBride talked about an
aggressive development cycle for its three OSes -- SCO Linux (formerly OpenLinux),
OpenServer and UnixWare (which was called Open Unix for awhile, but is reverting back to its
original name).

On the other hand, McBride said during a press conference that SCO
was concentrating on developing two OSes -- UnixWare and OpenServer -- when asked how
the company could support three OSes. McBride told reporters and analysts that
the heavy lifting in the development of its Linux product would be handled by the
UnitedLinux coalition, the four-company group concentrating on a Linux server product.

On one hand, SCO shipped in Judy Chavis, HP's director
of Linux marketing and business development, to speak to the 400 resellers gathered at the
MGM Grand hotel. On the other hand, Chavis, whose employer HP is one of the sponsors of GeoForum, told the audience that SCO's plans to
market OpenServer to small businesses makes sense because she doesn't see the small-
and medium-sized market "moving aggressively to Linux." Instead, she said,
enterprises seem to be where the major Linux growth is.

Chavis also ended up defending to the reseller audience why HP isn't
pushing Linux on the desktop, at least in the United States. She said there's
growing interest of its Linux product in places like China and Latin America, but HP
"needs some very large companies in the United States saying, 'we want that,'" before HP will offer Linux on desktops on its Web site. One audience member suggested it's up to companies like HP to take the leadership.

McBride was asked a similar question in the press conference later Monday: Why
isn't SCO -- and by extension UnitedLInux -- offering a desktop-focused OS? McBride said the old Caldera was spending $4 in marketing for every $1 of Linux desktop sales. "This is a company that's in a turnaround, and you have to choose your battles carefully," he said.

McBride poked a little fun at the popular notion that software companies can't make money with Linux during his Monday morning keynote. He called up an audience member and asked him what he'd pay for a glass of tap water. "Nothing," was the answer. McBride then asked the man how much he'd pay for bottle of brand-name bottled water. "Two dollars."

McBride noted that $2 for a bottle of water works out to about $14 a gallon, yet people complain when they have to pay $2 for a gallon of gas. "I think we have some interesting opportunities," McBride said. "Are we going away from Linux? No. We're going to enhance Linux."

But McBride spent more time talking about the opportunities for OpenServer, now that SCO has decided it will continue to support the impossible-to-kill OS. The biggest applause from the resellers came when McBride announced the name change back to SCO and the decision to not retire OpenServer, popular with resellers' small-business customers.

"Linux is like a first-round draft pick in the NFL," McBride said, playing up to the Unix-friendly crowd. "It hasn't thrown a pass yet, but it gets all the press. We ask people, 'What do you like about it?' They say, 'I don't know but I read about it in USA Today."

When asked at the press conference where SCO sees Linux going in general, Opinder Bawa, senior v.p. of technology, talked about a growing acceptance as a business server and in embedded devices. But he said he agreed with HP's Chavis that Linux on the desktop is "still to be matured."

Responding to the same question, McBride chose to talk about OpenServer instead and how Linux isn't likely to gain traction in the small-business market that sees OpenServer as a proven product that "doesn't break."

In a later interview, Reg Broughton, SCO senior v.p. of worldwide operations, said SCO officials are focusing on the Unix products this week because that's what the "OpenServer bigots" at the reseller show want to hear. But he reiterated the UnitedLinux plan to position its server OS as a competitor to Red Hat's Advanced Server product, which retails at $799 and up. UnitedLinux 1.0, which is due out in the fourth quarter of this year, will be sold on a annual per server license.

Broughton also talked up the SmallFoot Linux toolkit, designed to make it easy to deploy small footprint versions of Linux for hardware such as cash registers. Broughton said SCO sees a good market for small Linux on those point-of-sale devices.

Even though the reseller crowd is firmly in the Unix camp, "they are interested in where Linux is going," Broughton added. "They want to know what products they can build on top of Linux."

Broughton noted that there's significant reseller interest in SCO's Volution Messaging Server, a Microsoft Exchange competitor that can run on Linux, and can potentially drive up resellers' profit margins. "They want to know how they can make money with this stuff," he said.


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