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SCO wants Linux users to pay it for licenses, currently charging $699 for a single-processor Linux server. And it's backing up its demands with legal action: The Lindon, Utah-based company this week began suing users of the Linux operating system, starting with AutoZone and DaimlerChrysler and preparing litigation against Bank of America.
SCO announced in August that a Fortune 500 company had signed a license, but it wasn't until this week that SCO publicly identified its first licensee, EV1Servers.net.
The lawsuits, as well as other litigation, have sent shock waves around the computing industry, which has eagerly embraced the open-source operating system. Thus far at least, though, many Linux users remain unfazed.
The SCOsource effort hasn't been terribly lucrative recently, bringing in $20,000 in revenue in its most recent quarter, compared with costs of $3.4 million in the quarter--due in part to lawsuits involving IBM, Novell, Red Hat, AutoZone and DaimlerChrysler. But SCO expects revenue from SCOsource to increase.
The company is eager to proclaim success with the licensing effort, Illuminata analyst Gordon Haff said. "What SCO wants to get chief information officers and the like thinking is exactly what you've heard from a couple of these people who have bought licenses," that they made a business decision not to risk a lawsuit.
Questar spokesman Chad Jones was one such person. "The rationale was that Linux is such a minor part of our operations and that our usage is so small and isolated, it made business sense to pay the license fee they were asking rather than risk potential litigation," Jones said. "This was purely a business decision to stay out of court."
But Jones said his company, in the oil and gas industry, didn't sign the agreement because it supported the legitimacy of SCO's claims. And it didn't pay much: Seven of the company's 100 servers run Linux, and Questar paid about $5,000, he said.
Terry Roberts, project manager for Leggett & Platt's information technology department, confirmed that the company "did license a small amount of systems," but declined to offer further details.
Computer Associates, which has begun making its management software available on Linux, acknowledged it had the license, but took pains to distance itself from SCO's methods.
"CA disagrees with SCO's tactics, which are intended to intimidate and threaten customers. CA's license for Linux technology is part of a larger settlement with the Canopy Group. It has nothing to do with SCO's strategy of intimidation," said a statement from Sam Greenblatt, senior vice president and chief architect of CA's Linux Technology Group.
Greenblatt has been an outspoken Linux fan. "The whole world is going to unite around a single operating system, and it's going to be Linux," he said in a keynote address at the LinuxWorld Conference and Expo in January.
The settlement that gave CA the Linux rights took place in August, CA spokeswoman Michelle Healy said. In that settlement, CA agreed to pay $40 million to Canopy and Center 7, a company in which Canopy holds a majority ownership, according to a SCO filing with the Securities and Exchange Commission. Center 7 sued CA in April 2001, alleging a breach of contract of a software license agreement, CA said in a filing with the SEC.
SCO spokesman Blake Stowell declined to comment on specifics of CA's intellectual property agreement with SCO that resulted from the settlement, but he said CA requested the license. "All I can say is that they requested licenses for their Linux servers and they obtained them and SCO received license fees for them," Stowell said Thursday.
In May, shortly before the settlement with CA, an attorney for Center 7, Ryan Tibbits, became SCO's general counsel. In an earlier interview, Tibbits said Canopy Group directed SCO to hire in-house legal staff rather than relying on outside representation.
And in another tie between the two companies, SCO became in April 2003 a worldwide distributor of Center 7 management software called Volution, according to an SEC filing from SCO on April 30.
The Canopy Group is SCO's largest investor, holding 38.7 percent of SCO's stock, according to a Feb. 27 SEC filing from SCO.
