Mad as hell and not going to take it

Fed up with weeks of baiting, Red Hat CEO Matthew Szulik tells CNET News.com why he finally ordered company lawyers to take SCO Group to court.

Charles Cooper Former Executive Editor / News
Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
Charles Cooper
8 min read
After weeks of Linux-baiting, the folks at SCO Group finally managed to light Red Hat CEO Matthew Szulik's famously short fuse.

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Red Hat CEO: SCO must end "deception and rumor"
Matthew Szulik, CEO, Red Hat
On Monday, Red Hat slapped SCO with a seven-count lawsuit that Szulik said was designed to head off a "campaign of innuendo and rumor."

SCO earlier this year filed a billion-dollar suit against IBM for alleged copying of its proprietary Unix intellectual property into Linux. The case has ramifications beyond these two companies. If SCO can make its claims stick in court, customers may be on the hook for damages. Indeed, the company has sent letters to about 1,500 Linux customers, warning that they may be infringing on SCO's intellectual property.

Taking a breather during LinuxWorld this week, Szulik sat down for a roundtable discussion with CNET News.com's Editorial Board to provide details about this escalating legal battle whose outcome is destined to indelibly mark the future of the open-source software movement.

Q: On a gut level, what was your reason for filing the lawsuit. Were you simply fed up?
A: Seeing the sacrifice at Red Hat and in the open-source development community, it finally got to a point where we just said enough was enough.

What do you think is at stake for the future of Linux?
I don't know if I have that kind of insight into the future of Linux specifically. There are a couple of important things going on. One is a challenge to the question of intellectual property as it relates to the development paradigm, as it relates to the physical code base and most important, the association with patent law and copyright law to be reviewed within the context of open source and the development process.

Certainly, we felt this was a leadership opportunity and felt a responsibility to step up. At the same time, we would like to find out which companies are truly committed to seeing open source and Linux software advance and which ones will not step up and instead simply exploit it because of the economic association with it. I think that's really important for the public to see.

In other words, you expect to see who are the participants and who are the parasites?
Maybe I would choose a different word. But that should be clear. There are a lot of people who claim to be open-source companies, and Linux may be the strategy du jour. This represents much more than a cute little product and so let's make money on it.

Do you think there is a conspiracy between SCO and Microsoft?
I've heard and read that. For me, the issues that I'm personally focused on are starting with our customers and making sure we continue to execute the way we have.

But what do you think?
What do I think? Well, Tom Clancy--there are a lot of people out there who make their money from this kind of speculation. Nothing would surprise me.

Do you think Microsoft would take the chance considering what it went through during the antitrust trial?
Well, speculation runs wild. Roughly three and a half weeks ago, our name was mentioned by SCO management in a conference call. We will defend the brand aggressively when confronted by rumors, innuendo or unsubstantiated statements.

So what's the next step for you?

Let the facts be put on the table so they can be dealt with honestly. That's the goal.
We would like very much to see the court system provide the facts as soon as possible. We just want to know the truth. Let the facts be put on the table so they can be dealt with honestly. That's the goal. We want to see this resolved as fast as possible.

You haven't been invited to see the allegedly offending code?
The invitation that I think anybody was offered under an NDA (nondisclosure agreement) has been extended.

But you haven't taken them up on it?
At this point, no.

What would cause you to accept the invitation?
I don't know what that would resolve. Signing an NDA and not being able to deal with the facts once they are presented does not really answer the question of the issues of the suggested violation of intellectual property and trade secrets. More importantly, for customers it doesn't bring a resolution as fast as we would like this to happen.

Has this suit brought to light latent issues that inevitably would have to be dealt with by the open-source community?
I'm sure you could speculate about that. With a paradigm shift in the economics of an entire industry, there will always be those who question, those whose livelihoods and franchises are now being put at risk as a result of this activity. They will try to find a variety of means to challenge our ability to deliver this opportunity to bring technology at the lowest possible cost to the consumer.

Is indemnification something the Linux community needs to consider? It seems that SCO is giving indications that end users are going to be the next target.
That's true and it is what they have stated publicly. But what does indemnification mean and to whom? I think it's the very nature of the transparency of the code base that has allowed software developers to make the claims they can. I think therein lay the uniqueness of the riddle because in a proprietary software environment, if you can't see the code how do you know?

Indemnification is an issue that Red Hat will have to look at very carefully. It's now becoming an issue between our customers and us. We'll have to look at it responsibly and deal with it and think about what that means to our customers.

At a minimum, it seems it's impracticable for every potential customer to go through every line of Linux code and make sure it's free of intellectual property problems. Sounds like it would be a tall order for them to assume that burden.

Indemnification is an issue that Red Hat will have to look at very carefully.
That's part of our responsibility. But as it relates to indemnification, there was a time when it was about competition for technical superiority. It's somewhat disappointing that the argument has now moved and those companies with 700 Ph.D.s on the payroll?have moved the argument to one where it's about the legal implementation of a product.

Interesting you would say that, because Microsoft was sitting here a few days ago saying they planned to argue the merits of its technology on a total-cost-of-ownership basis, our stuff versus Linux's stuff.
That's not been my experience with customers over the last three months.

You mean Microsoft is not arguing total cost of ownership?
Definitely not.

What is the argument Microsoft is making?
The argument is moving to the legal risk facing an enterprise customer deploying Linux and open-source software.

Kazaa downloads have subsided since the RIAA began threatening lawsuits. Do you think customers will similarly get weak-kneed and start looking at alternatives?
I struggle to find the relationship beyond the notion that in one case you have people consciously ripping off intellectual property and in the other, those are just unsubstantiated claims being made that are not proven. (Linux) software developers around the world are trying to consciously improve a product honestly and responsibly.

We're not talking about ripping off IP, but the parallel is you have two organizations with world-class lawyers going after people who might decide to knuckle under rather than fight.
We've put our money where our mouth is. This represents not just the development of a single product by a single company but an opportunity to explore new boundaries.

Which is more directly threatened by "Lintel" (the Linux/Intel combination)? Unix and Sun installations or Microsoft Windows installations?
On a time frame, there's no doubt in my mind the threat is to the historical Unix franchise and the proprietary chip architecture associated with it. We're rolling out Red Hat 3 in early October, and the performance we're seeing now on AMD and Intel hardware--why someone would go out and buy a proprietary Unix operating system when that benefit can be extended to that architecture and functionality with enterprise Red Hat 3 is beyond me.

One view of Linux that's persisted over the years is that it's free. Even though that's not fully accurate, Linux has traditionally carried a relatively low price tag. But you've started putting pretty steep price tags on that software. Are you running into any pushback from customers?
Relative to free, everything is expensive up from free...if your question is whether we perceive our pricing as expensive--which is relative to what? The fact that you're getting a 9i rack Oracle cluster, certified on a Linux OS, that runs on six or seven different architectures that will be serviced globally, 7 by 24--jeepers. Expensive as compared to what? As expensive as compared to being able to go to kernel.org and use that implementation to put on your 9i rack cluster? If a customer really wants to do that, great...My view is that we've segmented the product and priced it to meet a specific set of users. We look at the issue every 90 days, and I believe there is a tremendous amount of value in the subscription we market and sell relative to the economic advantage it provides to our customers.

IDC recently said that the cost of Linux deployment is higher than that for a proprietary system. What's your reaction?
It's hard for me to relate to blanket statements that say in this environment, this product costs more than the other.

Forget the environment. I'm asking about the research report about proprietary versus standard. Help us to understand that.
If that were the case, why would we have seen companies like AOL, Verisign and Amazon adopt Linux. Or seven of the nine leading investment banks in the United States now migrating from proprietary Unix to Red Hat Linux. These are very smart people. They are seeing the benefit of choice. The tangible hard dollar savings are inconsistent with that report. Lastly, there are no two operating environments that are alike. So for you to compare CNET's ROI (return on investment) on your deployment on your technology to Red Hat's is reckless. A lot has to do with the deployment and management capabilities.

Microsoft would say the same thing.
I have customers.

They have customers too.

But their technology is not open and yet there seems to be room in the market for both--
And I say that's wonderful.

To protect your turf, do you think you and SuSE will start building proprietary hooks? Just like when Unix developed. At first Unix was open but then seemingly every vendor put its hooks in. How do you see this playing out?
I think it really boils down to the core economic model of how you build your business. And we are a pure play. We are an open-source company. And with that, we will continue to port our technology out under a GPL license...It's been my experience that, once you build hooks and begin to change the complexion of who you are, then the brand promise erodes and hell, we don't look any different than the rest of these nuts that are down the street.

Still, there's going to be a great temptation to put their special sauce into something, won't there?
But then they would have to use an alternative license than the GPL. Then you're back to not being able to leverage the full collaborative power of open source. What makes this so successful is this large breadth of developers in China, Bangalore and Boston advancing the libraries, the kernel and the capabilities. It's that community of use that makes that happen.