SCO Blames Linux For Bankruptcy Filing

Stony Stevenson writes "SCO Group CEO Darl McBride is now claiming that competition from Linux was behind the company's filing of Chapter 11 bankruptcy. 'In a court filing in support of SCO's bankruptcy petition, McBride noted that SCO's sales of Unix-based products "have been declining over the past several years." The slump, McBride said, "has been primarily attributable to significant competition from alternative operating systems, including Linux." McBride listed IBM, Red Hat, Microsoft, and Sun Microsystems as distributors of Linux or other software that is "aggressively taking market share away from Unix.""

Caldera to SCO: Backing the wrong source

[Kelson]

Okay, I'll grant that competition from Linux distributors probably has taken business away from their Unix offerings. (Not that there's a problem with that, it's just the way markets work.) Of course, I'm sure their "we'll sue our customers!" antics didn't help, as the distributors behind such Unix varieties as Solaris, AIX, HP-UX etc. don't seem to be in quite such dire straits.

But let's not forget that a few years back, this SCO was known as Caldera. They were a Linux distributor. They were a founding partner in UnitedLinux [unitedlinux.com]. Then they bought Unix -- well, they bought something -- and changed their name to sound like the old SCO (Santa Cruz Operation), and refocused their business on Unix and lawsuits.

Anyone want to bet that if they'd stuck with Caldera Linux as their primary business, they'd be doing a lot better today?

To pull out an old analogy, it's like they started out as an automobile company, and then decided to switch to the buggy-whip business -- and now they're blaming the automobile companies for their business failures.

He will blame...

[AltGrendel]

...everyone but himself. What an ego.

Microsoft distributing Linux?

[querist]

Since when have Microsoft been distributing Linux? I suspect that Mr. McBride is mistaken or perhaps this is simply a despirate grab at anyone who has money. (Note he did not go after Ubuntu, etc. - only "deep pockets")

"Staying the course" eh ?

[unity100]

STILL stiff neck and scheming up until the end.

lawyers of this company should be hanged in order to prevent more exploits in u.s. legal system.

Translation for those who don't know...

[Anonymous Coward]

corporate cop-out speak:

McBride listed IBM, Red Hat, Microsoft, and Sun Microsystems as distributors of Linux or other software that is "aggressively taking market share away from Unix."


We would like to blame other entities for our inability to make a quality product that can compete in a competative marketplace. Simple put they are responsible for our incompetance.

Re:Tough noogies

[nomadic]

I fail to see the part of law where he's guaranteed to have a business model that works no matter what may compete with him.

I fail to see where he's claiming that he's guaranteed one. All he's describing in the bankruptcy filing is why SCO failed.

Or Maybe, Just Maybe...

[StickyWidget]

..the bankruptcy had something to do with the de-emphasis on the marketing, development, support, and other attributes of OpenServer and UnixWare, and the emphasis on filing lawsuits. Surprisingly enough, they didn't start doing this till Darl McBride became CEO.

Cause -> Effect.

~Sticky
/Just a thought, just a thought.

Re:Tough noogies

[Major Blud]

I wish someone could explain that to the RIAA.

Sun sells Unix

[khb]

As best I can tell, and it's certified http://docs.sun.com/app/docs/doc/802-1953/6i5uv2sif [sun.com]. I'll bet HP-UX and AIX are too. So is Daryl's claim t that his Unix isn't as marketable as other people's Unixes??

Re:Caldera to SCO: Backing the wrong source

[Anonymous Coward]

I don't know that if they'd stuck with the Caldera name and business model that they would have succeeded. After all, how much space is there really for commercial support in the Linux space. Maybe they'd have succeeded, maybe not - but their legal antics and operatic press releases made them look like maniacs. And that is entirely their own fault.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Re:Tough noogies

[gowen]

Nobody's said otherwise. A bankruptcy filing is a statement of "here's why this company went under." And "we got outcompeted by X, Y and Z" is a pretty damn common reason.

So, let me get this straight....

[downix]

You dropped your Linux support, now you're complaining that Linux is beating you? Would that not be akin to trading your ticket from a steam transport for a luxury suite on the Titanic?

Re:SCO's reason for lawsuits?

[MightyMartian]

To be fair to them, SCO Unix was heading towards extinction, largely because of the competition from Linux, all the BSDs and Microsoft. Heck, IBM knew this and that's why they started putting so much effort into Linux and moving away from their own *nix operating system (AIX). That being said, guys like Sun seem to be doing alright, so it really comes down to business model, period. Caldera/SCO got taken over by a rather litigous bastard who altered the business model from "produce, maintain and sell support of operating system" to "try to extort licensing fees from IBM, or even better, simply get bought out so we can all get out of this mess".

I'll wager SCO was finished with or without the lawsuit. Without the lawsuit they may have a few more years, but SCO Unix died the death that some operating systems do; better and/or cheaper alternatives.

Re:Tough noogies

[mhall119]

And "we got outcompeted by X, Y and Z" is a pretty damn common reason.

Sure sounds better than "We abandoned product X to sell product Y. Then other companies proved that selling product X was more profitable than selling product Y. We then spent a whole bunch of money suing those companies for selling product X and our own customers for using product X without paying us for our product Y, only to be told we didn't actually own product Y, and owed ass-loads of money to Company Z."

Stop complaining!

[mce]

Indeed. And what's wrong with that? They filed for chapter 11, so now they naturally have to explain why. Competition that they cannot beat is the reason. The real one. What's wrong with little Darl saying that, other than that it probably is the first accurate business related statement coming out of his mouth in years and that he should have said it a long time ago?

I truely don't understand why you guys are screaming so much about this one. What McBride said is true amd he has to say it: Linux is the thing that ruined their business. It was doing that back in 2003 already. The fact that SCO used the dirty method they did to try to escape from the inevitable, does not change the basic facts. Get over it. You should all be happy, for $YOUR_DEITY_HERE's sake! So stop wasting time on such blahblah and get back to work, making Linux even better. SCO is history.

Re:Tough noogies

[gowen]

Oh, I agree. Bankruptcy filings get written by the soon-to-be-outgoing board. Unsuprisingly, they rarely say "This company folded because the outgoing board is almost completely incompetent and abandoned its core business in order to give all the company's assets to its lawyers."

Funny, that.

Re:Caldera to SCO: Backing the wrong source

[vthokie69]

They would at least have the cash that they used on the lawyers.

They couldn't find an effective business model

[Anonymous Coward]

The problem for a company operating in the Linux environment is finding a way to make money off free software. SCO used to be Caldera. Caldera had one of the first Linux distros. Their business model was to sell the distro. There were a couple of problems: 1 - their distro 'wasn't ready for the desktop' and 2 - you can't make money selling free stuff.

Red Hat was in a similar situation to Caldera and it has become profitable. Its business model is to sell services. That's also IBM's model. It is very profitable.

So, in the face of a non-working business model, Caldera decided to do something else. Remember that there was recent experience suing Microsoft over DOS. Lots of money was made. It seemed logical to sue IBM over Unix. Oopsie, IBM wasn't Microsoft. Now Caldera/SCO had a tiger by the tail and we have all been entertained by a few years worth of brouhaha. The grand finale is upon us (well sometime in the next year anyway) and I'm not sure what we will do for entertainment when it's all over.

Gambling as a Business Model

[HexaByte]

Too bad nobody ever told Darl that Gambling isn't a good business model.

He gambled that, by suing for their "stolen code" that was in Linux, he would either get someone to buck up or get IBM, Novel, etc. to buy them up. Maybe he was even hoping Bill Gates would make an offer, so that he could kill Linux.

The only problem was, no one rolled over and played dead, depriving Darl of a buyout and golden parachute, or a "Linux Lottery Lawsuit Goldmine". (TM)

Maybe, Darl, you'd have better luck taking your paycheck out to the local riverboat.....

Re:Caldera to SCO: Backing the wrong source

[MBGMorden]

I don't know. Maybe I'm just looking at the past with nostalgia, but I used Caldera for a while and it certainly wasn't too bad. I remember the install being rather easy and it was very easy to get Wordperfect working on it.

In contrast, the first distro I ever tried was Debian and 12 years later despite being extremely proficient at Linux now I still get a little skeerd at the thought of installing Debian (so instead I use Gentoo :S). Lets just say that for a kid who knew only MS-DOS (I had Windows 3.1 but spent little time in that environment - it was pre-internet for me and the DOS terminal programs just worked so much better :)), and found this "Debian Linux" thing as a set of 7 floppy images on a local BBS, it wasn't very user friendly (I DID get it installed, but after it booted up to the prompt I was stuck with a nagging feeling of "Now what do I do?" :). Luckily it wasn't too much longer before I was able to get ahold of an early copy of Redhat on CD, which was a lil easier to get up and going (and connected to the net!). Once I had access to the internet Linux got easier :).

Fine then

[nuzak]

Maybe you're dead because you sued your own partners and customers. Who cares? In your fantasy world, you're dead because you couldn't compete. Fine.

Just stay dead. The world doesn't even owe you a eulogy.

Re:Other choice quotes

[Anonymous Coward]

Regardless of SCO's legal actions, it looks like McBride and team have utterly failed at running this business. As a customer, I would never want to be engaged with a company that's headed by McBride... clearly they sunk SCO, and there were likely many long-term customers who felt the harsh pain of their mismanagement.

I'd much rather be a customer of IBM, or Novell, where I know that they'll stick behind me, the customer.

SCO is more than just bankrupt. SCO has lost all value to its current, former, and future customers. McBride- time to retire and move overseas.

Re:Caldera to SCO: Backing the wrong source

[Monchanger]

As has been mentioned over and over, the SCO business model of recent seems less about product development and more about legal + accounting maneuvering.

The SCO strategy has been fairly consistent: call themselves as a victim and look for someone to pity them. Fortunately, few bought the act, and most have recognized the cheap trick for what it is. Hopefully, this new tantrum won't yield better results for them.

McBride, there's no crying in business.

Re:Caldera to SCO: Backing the wrong source

[foobsr]

Anyone want to bet that if they'd stuck with Caldera Linux as their primary business, they'd be doing a lot better today?

Yes.

"Ransom Love, the immediate successor to Sparks, engaged in a famous spat with Richard Stallman, after Love had announced that Caldera would drop the GNU GPL (General Public License), the most common free software license, for future products because it was holding back its business. Love claimed: "We add value to Linux, so it can become successful. We integrate Linux in back office systems and we do all the marketing that's necessary. Did Richard Stallman ever invest $100 million (£50 million) in Linux? We did." Love asserted that the free software movement had "no clue" about marketing, and doesn't realise that "someone must pay for it", to which Stallman's curt response was that "Caldera's not a free software company at all. They are just a parasite.""
(c.f. [itpro.co.uk], emphasis mine)

CC.

almost every post here is playing in his hand

[superwiz]

He did, in fact, claim that SCO's downfall was due to the natural market forces and the company's inability to compete with other Unix vendors. His claim, actually, doesn't seem to make too much of a boogy man of the competition... he didn't say they sold child porn... he just said they were provding alternative which the market place prefered.

The reason he is being this (almost) honest is that he now needs to downplay the fact that SCO completely lost their ability to gain new business because of the lawsuits. Without even mentioning whether the lawsuit has merit, the rule of the market place is if you can compete you compete, if you can't compete you go away or sue (see Sun Tzu's "...if the enemy is weaker than you fight him; if he is equally matched, irritate him; if he is stronger evade him..."). Suing, of course, is meant to be the irritating distraction.

So the market place came to see the company as admitting defeat because of the lawsuits. This is what he trying to divert attention from. And everyone here seems to be playing his hand.

Re:Tough noogies

[Zeinfeld]

Granted, that's all proven totally false, but there is some consistency to his hallucinations.

That is not quite accurate. McBride's allegations have neither been proven nor disproven. In fact they appear to fall into the category of 'not even wrong' as in 'not a testable legal theory'.

Re:Gambling as a Business Model

[Trespass]

Gambling is a fantastic business model, provided you're not the one doing the gambling.

Yep. Hardware, not unix.

[Anonymous Coward]

Basically Sun and IBM (and formerly HP, DEC and SGI) sold big fast RISC-processor hardware that was what the enterprise needed for big heavy-duty database operations. Unix was the necessary O/S for such hardware because that's what the top database vendors (Oracle, Informix and Sybase) developed for back then.

Eventually it all boiled down to who could establish the 64-bit platforms with massive I/O thruput (Sun and IBM) and the rest died out from hostile takeover or outright extinction (DEC, and then SGI, and now finally the HP-PA-RISC is dead). HP-UX on Itanium is also late for it's own funeral. There's only two players left: Sun and IBM, and things aren't looking so good for Sun after 2007. I predict that IBM will be the last remaining "big iron" Unix H/W vendor left by 2010. The viable market then will consist of only IBM on the top-end big heavy proprietary Unix and everybody else will be Linux running on commodity-type hardware. And your realistic database choices on such a platform will be down to only Oracle and open source too. Nobody is interested anymore in IBM's DB2 or Informix, and Sybase is also a dead player too.

Your other platform in the marketplace will of course be Microsoft Windows-based systems.

Re:Caldera to SCO: Backing the wrong source

[PitaBred]

Linus Torvalds owns the trademark for Linux. He has copyright on large portions of the kernel code as well, but that's a different matter entirely. Anyone who has code in the Linux kernel has a partial copyright for it, even though it's released under the GPL. There's no assigning of copyright to Linus when you submit code to the kernel.

Re:Caldera to SCO: Backing the wrong source

[sjames]

The old line about polishing a turd comes to mind. Caldera was one of the poorest distributions around.

I was at an enthusiasts meeting once and a rep from Caldera was there. That was the first and only time I've ever seen anyone unable to GIVE copies of any Linux distro away.

Their big idea at the time seemed to be recreating the "great" idea of the Windows registry as a combined config file in /etc. IIRC, the distro itself looked very much like the previous version of RedHat with the logos changed (perfectly legal) and nothing added but extra support for mounting a Novell server.

Re:Caldera to SCO: Backing the wrong source

[Anonymous Coward]

Or (probably more realistically) they came out with DirectX to create a single hardware agnostic Windows-specific development platform for games to make it easier to crank out more games faster and ensure they only ran on Windows. OpenGL wouldn't do because it was cross-platform.

There, fixed that for you.

Re:Caldera to SCO: Backing the wrong source

[Simon Brooke]

The old line about polishing a turd comes to mind. Caldera was one of the poorest distributions around.

As one of Caldera's first paying customers, I disagree. It was not a lot different from RedHat at the time, but had a good (Motif based, as I remember it) commercial desktop (this was before KDE or Gnome, remember), Word Perfect (this was before Open Office, remember), and a number of other good, useful, stable commercial UN*X packages bundled as well. Applixware was available at reasonable price (I know, I bought that too) and gave an office application suite as good as contemporary MS Office. OK, it wasn't a geek distro, but it was a really good commercial users distro.

The whole system was solid and stable and easy to use and to administer, and was more than a match for contemporary Microsoft operating systems. OK, Linux has come a long way since then - but if Caldera-SCO had put as much energy and money into improving their distro as they have into lawsuits I think they would be solidly successful now.