August 28, 2003

SCO: Inside the hurricane

by Steven J. Vaughan-Nichols with additional reporting by Joe Barr

Between hate mail from open source supporters and love notes from investors, life isn't easy inside SCO. There have been more hated technology companies; IBM and Microsoft immediately come to mind. But they weren't pounded earlier this week by a successful Distributed Denial of Service (DDoS) attack despite the efforts of open source leaders like Eric Raymond to stop it. And no one's written a Nigerian spam parody for their CEOs. At the same time, though, some stock buyers love SCO's aggressive Unix intellectual property stance and its Linux licensing schemes. Say what you will about the merits or demerits of the case, life at SCO is like being in the eye of the hurricane.

Darl McBride, SCO's CEO, couldn't agree more. "It's interesting to wake up in the morning because you never know what will happen on a given day. You realize you're in the middle of the hurricane. I was brought in to run this company, and then when we decided to start protecting our IP, our first decision was whether we were going to fight or get taken out early. Since we made that decision to fight for our property rights, as we unravel the yarn, it just becomes bigger than you thought it could possibly be going in."

McBride also compares working at SCO to riding a roller coaster. "The highs and lows get you hardened and toughened and take on a steady tone. You realize that life may be really good today, it may be really bad the next day." Eventually, he says, you learn to "hunker down and think like a fire fighter. Early on, it was fairly unnerving for employees, but now people are really tough on and see that SCO has taken an IP leadership position."

You might think that employees would be leaving SCO, but according to McBride, despite everything, "there's been no lawsuit-related turnover." Indeed, "we get lots of people wanting to come aboard." He also comments that 320 out of the 330 SCO people focus on SCO's products, it's the other ten who are the ones living in the middle of hurricane.

One of the storm-tossed wretches is Blake Stowell, SCO's director of corporate communications, who just had his fifth child on August 25. He went to work that morning, joined his wife for the birth, then was back to work on the 26th. As he puts it, "I've never worked harder at a job in my life."

He confesses that he's "a bit tired," but "for the most part, we've managed the communications pretty well over the last six months," even though he believes that "there are some people -- press, open source companies, and opinion leaders, like Eric Raymond, in the industry who don't know what's going on."

Still, he says, "I don't find it frustrating. It takes a lot of work and I look it as a challenge. Every time the open source community fires back with an issue I have to reply and that takes up bandwidth on my side. [But] I think it's been a good exchange of opinions. I think each side understands the other's viewpoint now even if they don't agree with each other."

McBride insists that IBM is the root of SCO's Problems

McBride thinks that a lot of SCO's public problems don't stem from SCO's actions, but from a loosely organized disinformation campaign masterminded by IBM. "IBM has a vast reach to a large number of people in open source. IBM doesn't touch hundreds of thousands directly, but with their strong reach and influence to companies and people in the open source community, in particular Linus Torvalds and Eric Raymond, IBM gets its message out." He goes on to say that "Novell is trying to get in [the attack] by trying to co-coordinating with IBM along with Red Hat and SuSE."

Specifically, "companies have approached me and told me that IBM had tried to get them to stop working with us, even companies that are competitors to IBM. We've also had customers come up and say IBM will penalize us if we keep working with SCO." McBride explains that, for the most part, these haven't been SCO resellers or customers, but mostly software developers. He adds, "We're in the discovery stage and this will be part of the filing and we will show direct information that IBM is the source of some of these attacks coming at us."

What people don't understand, McBride insists, is that SCO's legal actions aren't just about SCO's IP, Unix, and the GPL anymore, it's a broader issue that includes music, video, and anything that can be digitized and distributed on the Net. To McBride, the real issue is "the future of IP rights in the 21st century."

McBride isn't the only SCO employee who feels that way. Communications director Stowell says, "I once worked for a company involved with the Open Source community. I enjoyed the time that I worked there trying to build a business around contributions from a development community. I joined that company when the 2.2 kernel was in wide distribution." But, he says, "Since coming to SCO and reading over the contracts held with other licensees such as IBM, Sun, HP, and many others, I too have come to the realization that SCO intellectual property has indeed been contributed into Linux. I haven't been just drinking the SCO Kool Aid. I understand the company's case, I've read every word of each contract, every exhibit in our case, and I understand that there are people and organizations that have issues with our viewpoint. I believe in what we are doing in protecting our intellectual property. I hope at some point we can find a solution where SCO can be properly compensated for its IP and the Open Source community can move forward unhindered in creating great software."

Drew Spencer, former CTO of Caldera from September 1998 to May 2002, who no longer has any interests in Caldera/SCO, sees it differently. "My sense of SCO's action of late is that it has formulated a strategy by which it intends to extract the most value it possibly can from the IP it purchased when Caldera bought SCO in order to either liquidate it (as occurred with Caldera first generation) or re-launch the company as something totally different. With the R&D expense involved with trying to keep two operating systems up-to-date with the hardware development and what amounts to the destruction of any business development opportunities with the hardware vendors and ISVs, it's probably pretty safe to say that SCO doesn't want to be in the OS business anymore."

One way in which some SCO employees are extracting value is from SCO's lofty stock price. SCO was trading at a near 52-week high of $14.36 on August 27, and company executives have been selling stock. John Ferrell, founding partner of Carr & Ferrell, LLP, a Silicon Valley intellectual property and corporate law firm, "was interested to see that SCO insiders [the other] week were selling SCO stock at greatly inflated prices. If in fact IBM has misappropriated and infringed SCO code, SCO shareholders will deservedly be handsomely compensated. If, however, we come to learn that SCO management is falsely creating turmoil in this struggling tech economy for the purpose of jacking and dumping their stock; SCO's legal troubles will be just beginning."

Financial and IP issues aren't the only ways SCO has been making headlines recently. Spencer thinks that SCO opponents who DDoSed SCO's site are only hurting their cause. "In order to win in court, particularly with a jury trial in Utah, baiting the community into DoS attacks, protests, etc., merely serves to substantiate the case that the community wants to destroy SCO financially and the jobs that come with it. With the loss of jobs in the IT sector, particularly in Utah, where Novell, Caldera/SCO, and others have struggled as of late, a jury will likely be sympathetic to SCO's problems even if the community is able to dispute SCO's allegations of theft." In short, "SCO is the 'troll' and the community has been keeping it well fed."

That said, Spencer adds, "Could I or would I have taken the approach they are? No."

Other former Caldera/SCO employees agree that they're not happy with SCO's current path,
but SCO's current staffers continue to stick to their position despite the slings and arrows of outraged open source advocates.

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