SCO Linux licensee has second thoughts on deal

Less than one month after becoming the first publicly announced purchaser of The SCO Group Inc.'s controversial intellectual property license for Linux, Houston-based Internet service provider Everyones Internet Ltd. is reconsidering the benefits of doing business with the Linux community's enemy number one.

EV1Servers.Net (EV1), the hosting division of Everyones Internet, announced on March 1 that it had licensed SCO's intellectual property (IP), saying that it was looking to offer its customers stability in the wake of SCO's protracted battle with the open source community. SCO claims that the Linux operating system violates its own intellectual property and that users of Linux could be sued over these claims unless they purchase the Lindon, Utah, company's Linux license.

The deal with SCO not only would prevent EV1's Linux hosting customers from being sued, it also would take both EV1 and its users "out of the current fray," said Everyones Internet CEO Robert Marsh on the day of the announcement.

As it happened, the licensing deal placed Marsh's company in the very center of the SCO Linux dispute. SCO portrayed EV1 as a model client for its licensing plan -- a company that had recognized the "importance of SCO's valuable IP asset," according to SCO CEO Darl McBride.

Reaction from Linux users, however, was negative, and the deal was widely criticized on EV1's own online discussion boards. "Had you wanted to stay out of this, you'd not have agreed to go public and become SCO's poster child," wrote one member in EV1's user forums, the day after the deal with SCO was announced. "I am looking into other hosting alternatives specifically due to your stance with SCO," the member wrote.

"We got the hate mail, we got the group of people who interpreted our agreement as validating SCO or endorsing SCO or any number of things," said Marsh.

"All of a sudden we went from being reasonably good guys to being, in some people's eyes, akin to the devil. And that's certainly something that weighs heavy on our minds, because we always want to do the right thing," he said.

So how does Marsh feel about the deal nearly a month later? "Would I do it again? No. I'll go on the record as saying that," Marsh said. "I certainly know a lot more today than I knew a month ago, in a lot of respects."

Though Marsh admitted that EV1 has lost some hosting business since the deal, he said it is not out of line with the number of sites EV1 loses in a typical month.

On March 25, Internet research company Netcraft Ltd.'s Sites on the Move section reported that EV1 had lost 1,080 Web sites in the previous 30 days, but according to Marsh, a loss of 800 to 1,300 sites per month was normal for EV1. Because of new business, EV1 had experienced a net gain of more than 3,300 sites during the same period, he added. "We churn a lot of sites," Marsh said.

The big loser in this matter may be SCO, said Dion Cornett, an analyst with Decatur Jones Equity Partners LLC, an equity research firm based in Chicago. Having their first publicly announced customer express second thoughts over the deal so soon after its announcement may make it difficult for SCO to sign up other customers, he said.

"For Robert (Marsh) to say that he would not do the deal again, that's certainly going to be heeded by anyone that SCO talks to in the future," Cornett said.