McBride Bullish on the Battle Over Unix

By Peter Galli  |  Posted 2003-08-18

McBride Bullish on the Battle Over Unix

LAS VEGAS—SCO does not agree with the notion that software is supposed to be free, and is fighting for the industrys right to make a living selling software, SCO CEO Darl McBride said in his keynote address here on Monday morning at the start of SCO Forum 2003.

"We have been pushed into a corner, and we will fight back," he said. "We find ourselves in the middle of the battle of the century and will continue to be subject to attack. There are rumors of pies in the face for McBride and [senior vice president Chris] Sontag here," he said, quipping that there were also rumors of SCO protesters on the Strip carrying signs saying "SCO to Hell."

Citing the background to the lawsuit SCO filed against IBM in March, McBride said that when SCO started charging for its Unix class libraries earlier this year, Big Blue was vocally opposed to this and threatened to stop working with SCO and to get its partners and customers to stop supporting SCO if it proceeded with that plan.

As soon as SCO announced that class library intellectual property initiative, "IBM stopped working with us and cut us off. We were thus backed into a corner and decided to fight back," he said.

McBride said SCO is not just talking about a few lines of Unix code finding its way into Linux; it is talking about the very technologies that have made Unix what it is today. "The very DNA of Linux is coming from Unix," he said.

"The attacks will continue, and we will fight back. We are on a hill, and we intend to fight this until we have it beat. We are not going away," McBride said, adding that the question underpinning SCOs actions is whether software should be free.

Free software "will have a negative impact on us all. When the list price is zero, the margin doesnt matter. SCO is fighting for the silent majority, and what happens here will affect you all," he said.

While the notion of an open-source community is a "good idea; when companies step across contractual lines and even totally erase the line, then we have a huge problem. In a nutshell, that is what has happened here," McBride said to loud applause.

In regard to Novells recent claim that it still owns the copyright to Unix, McBride said it took SCO just four days to press the eject button on that claim.

"After attacking us, Novells CEO [Jack Messman] was then irate that we had not told him there was an amendment to the contract between us that clarified our copyright ownership of Unix. He seemed to believe that we knew about it but werent telling them so they could attack us and look foolish. Go figure," he said.

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The SCO Group based the theme of its SCO Forum 2003 event here on James Bond, with signs everywhere saying "Mission: Trained to sell."

A tongue-in-cheek movie clip here Monday morning at the start of its SCO Forum 2003 event, purporting to show an average day in the life of McBride, consisted of actual footage of Pierce Brosnan from a James Bond movie.

In his keynote address, McBride explained that there are striking similarities between SCO over the past year and a Bond movie. "The past year had been much like a Bond movie, with attacks and counter attacks, but in the end Bond never dies," he said to applause.

In a report card update on the company over the past year since he joined, McBride said he had acheived his first mission, which was to increase company value. A year ago the stock was trading around $.66 and the company was capitalized at some $8 million. Days after McBride took the helm at SCO, the Nasdaq sent a delisting notice informing SCO that it needed to get its stock price above $1 again to avoid being delisted. This raised customer concerns about the financial security of the firm and its viability.

SCO now has a market capitalization of more than $130 million, McBride said. A year ago the company was sitting on just two quarters of cash and was about "to go out," but a belt tightening effort and aggressive sales campaign had changed that.

"We have tripled our cash position over the past four months. SCO is actually going into business, not out of it, and we have turned the company around. We are proud of that, and the future going forward is bright. We have no long-term debt, cash balances are improved and we have reduced costs," he said.

Last year the company also brought the SCO brand back and got the message out that SCO equaled Unix, McBride added. "Windows and Unix are the two big brands out there," he said.

SCO is now looking at how it can create money for its partners and their businesses. The way it will achieve this is by giving customers great products. "Our friends at the Nasdaq told us that with the recent blackout in the North East[ern United States], SCOs servers had "popped right back up," he said.

The company, which will roll out its product roadmap later today, is focusing on new business opportunities. SCO is going to reinvest in its operating system and move these forward, McBride said.

SCO will also roll out more of the components of its SCOx Web services initiative this week.

"Is SCO going out of business? No, were going back into business. We will also increase shareholder value over the next year," McBride concluded.

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In another keynote presentation, SCO Senior Vice President Chris Sontag and Mark Heise, a partner at Boies, Schiller & Flexner LLP, the primary law firm representing SCO, presented what they claimed was proof that SCO clearly owned all the intellectual property, copyrights and trademarks for Unix.

Presenting what he claimed was a literal copyright infringement in Linux of Unix code, Sontag showed examples of identical registration of variables, lines of code and comments in the same sequence.

In terms of obfuscating code, Sontag said SCO has gone through millions of lines of code and developed methods to find similarities. "We have rocket scientists who have applied their spectral recognition and pattern analysis to software, which has yielded amazing results. We have found needles in the Mount Everest-sized haystack," Sontag said.

Sontag noted that a copyright case law also made clear that the quantity of code is not at issue, but rather how important that code is.

Turning to derivative works that have found their way into Linux, Sontag said these include NUMA (non uniform memory access), Read Copyright Update (RCU), Journal File System and schedulers. "A number of entities have violated their contracts and contributed inappropriate code to Linux. Thats how Linux has advanced so quickly and found its way into the enterprise so soon," Sontag said.

"We have an improbable Linux development process. The current 2.5 kernel contains features and functionality that took years and years to be developed in Unix. With Linux weve seen it develop from a baby to a race car driver in three or four years," he said.

SCO could also go after end users who are improperly using Linux for actual damages and seek an injunction to prevent further usage of the infringing material, Heise said, adding that this is playing out as the case of the century as it looked at rights, copyright and usage in this Internet and Web age.

Sontag said Linux customers have several choices: stop running Linux or scale back to version 2.2; find another platform that has the appropriate licenses and usage rights; or pay SCO a licensing fee to run Linux in binary form with the appropriate IP from SCO.

"We have a very strong case, we have the evidence, we have the contracts and are confident of our position and the rights to defend ourselves," Sontag said.

By selling Linux itself, SCO has not assigned all of its copyright ownership to the GNU General Public License. "SCO did not put a copyright into the GPL and authorized the usage of that code in Linux," Heise said.

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