March 12, 2004

S2 'mystery man' Anderer speaks on MS, SCO, and licensing

Author: Chris Preimesberger

Mike Anderer was the author of the S2-to-SCO Group memo that comprises the "Halloween X" document that was released to the press by Eric Raymond last week. Anderer, the CEO of S2 and the middleman in the SCO Group's $50 million PIPE transaction of last October 16 contacted us today, and while he is under a non-disclosure agreement and can't say very much about the $50 million PIPE deal, what follows are some of the thoughts he can share.I am certain people would like to know what is happening but I cannot talk to you without permission. I will tell you my background is integration and I am OS agnostic; the more there are the better. I will file close to 20 patents this year for companies in many spaces, including homeland security, anti-terrorism, several grid computing and virtual machine patents, and, ironically, I should have one issued in the expiring and disappearing e-mail arena. It was initiated 4-5 yrs ago.

I have helped many companies and individuals who run companies in the GNU/Linux, BSD, and Unix world as well as those in the Microsoft world. I admire the good parts and despair the bad parts.

Most of my time is currently spent on new technologies on several different platforms. Many of my companies and several of our offices have been merged into other companies, moved or sold as part of a technology deal, some even sold during the deepest parts of the downturn. I helped build the channels for most of the products that corporate America is currently using and some they will be using soon. In several cases, I am finally finding or developing ways to solve problems I have been working on for the last 20 years. The only way I can hide is to work so hard that it becomes close to impossible to track all the companies I have owned, bought, sold, rolled up, or sat on the board of. If you include the ones where I helped entrepreneurs and companies through tough times, or sat on non-profit boards, the list would be even tougher to follow.

Anybody who knows me or really analyzes what they found on the Web will find I don't hide well. I also have a lot to say in most situations.

The following is simply my opinion. This is all I can really give you considering the NDA. As for the PIPE deal, I cannot comment at all, but I also would have nothing of interest to add beyond what has already been made public.

I would state that this licensing project represented only a small fraction of my time over the last year and has completely gone away in recent months. This was a job for me, and licensing IP has been an increasingly significant portion of my work.

Many thousands of licenses have been sold to Unix over the years. I cannot think of any major hardware or software company or even university that does not have a license directly or indirectly. If you see the world moving forward as a (GNU/Linux/BSD/Unix)/Windows world it does not take an MIT rocket scientist to think it would make sense for the largest software company in the world to increase their rights by taking another license (remember they did develop and own a portion of the code originally sold as MS Xenix). In fact I saw several postings on Slashdot hammering them for including what people saw as BSD property (with proper copyright attribution) in some of their products. It was also no secret that Microsoft licensed and even purchased companies in this arena over the last several years (look where Windows Services for Unix came from). They developed some pretty incredible functionality into things like SFU 3.5 (which I just got for free with a systems magazine). If you consider this licensing an indirect financing of SCO, then everybody (or at least the thousands of licensees) is responsible at some level. The licenses in some cases exceeded $100 million, so these were not even close to the largest ones. The hard part for me was finding somebody who was not already a big licensee.

Just as I see Microsoft developing stronger interoperability from their side, I see a huge community developing stronger connectivity from the GNU/Linux/BSD/Unix side. We will work from both sides and hopefully contribute to making things more functional for customers whatever they choose. The only really interesting point here is that people finally benefit from more stuff working together. It still takes work, but things are getting better in many areas.

I think one real issue, that people are skirting, is who will be the ultimate guarantor of IP-related issues in a world that is governed by the GPL and GPL-like licenses. I could easily see IBM, HP, Sun, and many of the other large hardware players solving this problem tomorrow by settling the dispute with SCO and maybe even taking the entire code base and donating it into the public domain. I know this is what I originally thought would happen, at least the settlement part. I am not certain what people who paid tens of millions for licenses would say if what they paid for was now free, but that is a different issue.

In a world where there are $500 million dollar patent infringement lawsuits imposed on OS companies (although this is not completely settled yet), how would somebody like Red Hat compete when 6 months ago they only had $80-$90 million in cash? At that point they could not even afford to settle a fraction of a single judgment without devastating their shareholders. I suspect Microsoft may have 50 or more of these lawsuits in the queue. All of them are not asking for hundreds of millions, but most would be large enough to ruin anything but the largest companies. Red Hat did recently raise several hundred million which certainly gives them more staying power. Ultimately, I do not think any company except a few of the largest companies can offer any reasonable insulation to their customers from these types of judgments. You would need a market cap of more than a couple billion to just survive in the OS space.

Since the GPL type license agreements push the liability to the users, who do you go after? I think this is a key problem. Nobody wants to be the ultimate guarantor for software that was free (or close to it). I think the dispute with SCO would have been settled a long time ago if everybody knew this was the last one. The problem is there will probably be hundreds or even thousands of these disputes in the future and the targets will be the companies with the deepest pockets. Even if the large vendors disclaim all responsibility initially, I do not think the customers will accept this from their vendors for very long. In the meantime, I don't see anybody being in a hurry to write the first big check.

The world of software is changing. I think everybody sees that part on the product side, but the economic underpinnings are changing too. It used to be you included R&D and patent development costs into your license add your costs and a markup and you could make a living. We relied on cross-licensing, licensing, and innovation, and our ability to prevent other people from copying our work without permission. Now things are shifting, but I am not certain anybody has completely figured out this new model, and if you think it is just any one company that is concerned about this, you are wrong.

I do think things will work out, and the sooner the better. I believe the software industry is in an incredible renaissance and that means maybe there will be a lot more people out there making things better and a couple fewer people with enough spare time to flame under five separate handles, all registered as underage so they can exploit the better privacy laws we afford to children.

I do appreciate all the effort and help people have provided by digging up old sites and even stuff I had long forgotten about. I am still hoping people dig up some of the more positive projects I have been involved with. I have also had several long lost friends contact me. I think they thought I might need some support.

-- Mike


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