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Tech Industry

SCO's soap opera

CNET's Michael Kanellos follows the money as he lays out the possible endings to this tech industry novella.

The SCO Group's legal foray against Linux users has angered open-source advocates and created looming liability problems for thousands of corporations.

On the other hand, it's awfully entertaining.

Last week, for instance, it emerged that SCO may be contemplating a suit against Bank of America. A complaint SCO filed against automaker DaimlerChrysler was produced with Microsoft Word, which tracks all revisions--and early versions of the complaint identified BofA as the defendant.

SCO is represented by David Boies, the lawyer who took on Microsoft in the antitrust trial launched by the U.S. Department of Justice. Of all the word-processing software packages available on the market today, his firm--Boies, Schiller & Flexner--had to choose that one.

Memos that potentially connect Microsoft to the SCO litigation also surfaced last week. SCO has acknowledged the authenticity of an e-mail sent Oct. 12 by Michael Anderer, the CEO of Salt Lake City venture firm S2 Partners, to its vice president, Chris Sontag, and its chief financial officer, Robert Bench.

"Microsoft will have brought in $86 million for us including BayStar," stated the e-mail, which was posted by the Open Source Initiative on its Web site. BayStar Capital invested $50 million in SCO in October, so the implication--assuming "us" refers to SCO--is that Microsoft helped the Lindon, Utah-based company get funding. Both SCO and Microsoft have denied any relationship beyond a licensing deal and have called the S2 note a "misunderstanding."

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Senior department editor Michael Kanellos scrutinizes the hardware industry in a regular Enterprise Hardware column that ranges from chips to servers and other critical business systems.

But it's not like S2 is an alien entity. For example, Anderer used to be a reseller with Ikon Office Solutions. (I know this only because I used to cover integrators and resellers back in the mid-1990s--mostly from a lifestyle perspective--and spoke with him all the time. In the interests of full disclosure, I can state that Anderer was one of the more intelligent and helpful guys I interviewed in the channel.) Darl McBride, SCO's chief executive, also used to work at Ikon--as a senior VP. That is, he did until he filed a $10 million lawsuit against the company.

Before Ikon, McBride worked at Novell. Novell, of course, is now a Linux advocate and in a hotly contested legal dispute with SCO. Ironically, Ikon was a major proponent of Novell software back then.

Then there is the history of the ownership of Unix. AT&T invented the operating system, which it sold to Novell, which in turn sold it to SCO in 1995. Along the way, various elements of the technology were released for academic research and general consumption.

Did Linux derive from those elements provided to universities? Open-source advocates say no, claiming that the elements of Unix that live in Linux stem from code that AT&T, the inventor of Unix, released in the wild back in the '80s.

In the hardware world, you could play Six Degrees of Enrico Pesatori and pretty much connect him with anyone who has ever touched a PC.
SCO denies this claim and has displayed selected pages of evidence that purport to show that commercial software developers, whether accidentally or intentionally, lifted protected code.

If SCO loses its legal campaign, it may well collapse. If it wins, the 300-employee company could be worth billions of dollars.

Charles Dickens couldn't come up with a plot like this. The legal dispute in many ways underscores one of the operative principles of the high-tech industry: Namely, that it is really one big junior high school cafeteria. Everyone knows one other, but the alliances change all the time.

In the hardware world, you could play Six Degrees of Enrico Pesatori (an executive who has served in pivotal positions--including CEO--at no fewer than seven companies) and pretty much connect him with anyone who has ever touched a PC.

In the software world, Kontiki Chairman Mike Homer eerily pops up in a lot of company rosters--and he never seems to age.

The Novell threads in the SCO suit are mind-boggling. Back in 1994, then Novell CEO Bob Frankenberg showed little interest in the company's budding Linux technology. Feeling unloved, Novell employee Ransom Love left to found Caldera Systems. Around the same time, Frankenberg sold Unix to SCO's predecessor, the Santa Cruz Operation. McBride left Novell about then, too.

Fast forward to 2001: Caldera buys SCO. In 2002, the company hires McBride--who Love knew back at Novell--from calendar maker FranklinCovey. McBride then initiates the litigation strategy.

Think about it--if Frankenberg had shown more interest in Love's work, or if Love had recruited someone else to be Caldera's CEO, or if Novell had sold the rights to Unix to anyone else but SCO, the whole chain of events may never have happened.

To top it off, there has been speculation that Google may become the target of a SCO suit. (SCO denies this.) The search company is run by Eric Schmidt, who was previously CEO of Novell.

The only person who seems to have escaped the Novell vortex is Joe Marengi. Schmidt pushed out Marengi as Novell's president in 1997. Since then, he has become co-general manager for Dell's operations in the Western hemisphere. (Weirdly, one of the candidates listed as a possible replacement for Marengi back in 1997 was Homer.)

You could call it a conspiracy--but most likely it's just good melodrama.