SCO CEO: No need to sue more customers

As The SCO Group Inc.'s reseller and developer community gathers for its annual SCO Forum convention in Las Vegas this week, one question on many attendees' minds will be whether the company's future will be as a software vendor or as a litigator. Though SCO's lawsuits against IBM Corp., Novell Inc., DaimlerChrysler AG and AutoZone Inc. have attracted a great deal of attention in the last year, they have not helped SCO's bottom line. The company is facing mounting financial losses, which have been spurred by millions of dollars in legal fees, a flagging Unix business, and anemic sales of its SCOsource Linux licensing program, which brought in just $11,000 in revenue during the company's most recent financial quarter.

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In the face of these challenges, SCO has apparently chosen to make the company's core Unix business, and not its legal adventures, the center of this year's show. SCO will spend the week discussing new Unix products, such as the first developer preview of its next generation of OpenServer software, as well as a new developer program it expects to launch by year's end, called the SCO Marketplace Initiative, which will use an online bidding system to attract developers to work on SCO's Unix operating systems.

The IDG News Service interviewed SCO Chief Executive Officer Darl McBride before the start of SCO Forum to get his thoughts on the direction of the company, the likelihood of more customer lawsuits, and his company's recent decision to revive the Unix System Laboratories name that AT&T had used for its Unix business in the early 1990s. This is an edited transcript of that conversation.

IDG News Service: Why haven't more customers signed up for your SCOsource licensing program?

Darl McBride: There have been a lot of third parties that have jumped into the fray and put indemnification programs in place -- big vendors coming out trying to say "Don't worry about it, it's not a problem."

Rather than trying to pound through all of those issues on a daily basis, we've been content to say, "We're going to work our issues through the courtroom, and when everything is resolved there, we'll be good to go, and then customers will know exactly where everything is. In the meantime, customers that want to move now and remove the cloud of uncertainty, we have a program for that. So we're fine with where things are right now.

IDGNS: By saying you're fine with things, do you mean that you don't expect to be launching any new lawsuits against Linux users?

McBride: I think right now we've got the claims in front of the various courts that we need in order to get our complaints heard and to get them argued and to get resolution. With respect to being more vocal or going after new targets at the customer level, we don't see the need for that. We had the need to get the basic issues on the table, but we're fine to argue the merits of what we have out there right now (in) the current litigation setting.

IDGNS: How many people are working on the SCOsource initiative?

McBride: Within the company, less than 10 people. There are occasions where it will be a little bit bigger than that, we'll have a few things come up that will require a bit more horsepower. We do have, obviously, a lot more attorneys than that, who are focused on SCOsource. But the majority of the company resources are very directly pegged to the SCO Unix business.

IDGNS: Would it make sense to split the company in two, with one part focusing on the core Unix business and the other focusing on SCOsource?

McBride: Essentially we have done that internally. We pretty much have those divisions in place right now. The argument that you're bringing up, I have been asked about a fair number of times from the financial community: Does it make sense to have an actual organizational split? We haven't got to that point in our thinking yet, but we continue to look at all of our options as we continue down the road.

I wouldn't rule it out in the future. I certainly understand the positive arguments for it. We haven't gotten to the point yet, where we think that is the play we should be taking on, but it could evolve to that point, and I could see a number of reasons why that would be a good play.

IDGNS: Why did SCO recently decide to file a trademark claim for AT&T Corp.'s old Unix subsidiary, Unix Systems Laboratories (USL)?

McBride: There are a couple of reasons around going back to the USL part of the business. It's really a situation of going back to the future, if you will. We look into the future and fully expect that we're going to have some sort of a win against IBM in the courtroom. We know we've got another year and a quarter before we end up in front of a jury trial here in Utah, but we are preparing ourselves right now that as we move forward and as we do get justice in the courtrooms, what is our business going to look like?

Part of what we're modeling right now is a return to our licensing business. Last year, we had a couple of good licensing deals in the form of Sun (Microsystems Inc.) and Microsoft (Corp.) You're now hearing those guys talking about incorporating the Unix technology into Longhorn. Sun's been able to do things with it. We have other licensees that are off doing things with the core Unix System V technology.

We think that there's a very bright future in the company to return to the model that we had in the past with Unix Systems Laboratories.

IDGNS: Would that be a division within your company, or a separate company that did this licensing?

McBride: Both are possibilities. We're still doing what USL was doing. We have the same offices back in Murray Hill, New Jersey, right across the street from AT&T Bell Labs; we have the same great kernel-level programmers that are on our team that came out of AT&T; we have the core licensing business intact. Really the only thing that's not there is the brand, which was associated with USL.

IDGNS: But don't you already have licenses with all the Unix vendors today?

McBride: Around technologies that we've had up to this point, but we have new things we're working on, and are seeing an opportunity to continue to advance it in the form of upgrades.

IDGNS: In what areas?

McBride: Unix kernel development. Let's go back to the 64-bit side of things: 64-bit on Intel (Corp.) was why IBM had come in and partnered up with us on Project Monterey (IBM and SCO's aborted effort to jointly develop Unix for Intel's IA-64 processors). We have a lot of development know-how around that. We have other things that we're focused on that we'll talk about in the future. Primarily, as you look at the new higher end chipsets coming out on the AMD (Advanced Micro Devices Inc.) or the Intel architecture, we expect that we can add some real value in that space.

IDGNS: So what do you see for SCO in the year ahead?

McBride: To quote Mark Twain, the rumors of our death are greatly exaggerated. I don't believe Unix is dying, I think it's actually going to grow. I think you are going to see more opportunities for Unix in the future. As we look at SCO's version of Unix, we expect to come out and put even more emphasis behind the future growth of the industry-leading platform that has been UnixWare.

On the software developer side of things, I believe there's going to be a move to a develop-for-fee model, rather than develop-for-free, which is currently in vogue. One announcement that we are making at the show is called the SCO Marketplace, and that's a marketplace exchange whereby we are going to allow developers to come and bid on work-for-hire projects that we have, to fill in the gaps where we're going with our development plan.

We think in the future, software developers are going to be more motivated by getting paid for their work rather than contributing and not getting paid.

IDGNS: What's the budget for the SCO Marketplace?

McBride: To start off, it will be in the millions of dollars. If we see a courtroom victory against IBM, than obviously that number will jump up significantly.

IDGNS: So you expect to spend millions of dollars over the next year?

McBride: We're going to have a budget in place. We don't have an exact number yet.

IDGNS: How many projects will be up for bid on this marketplace?

McBride: We're going to have more details of that as we get into the fall time frame.