Microsoft finds odd ally to compete with Linux

SAN JOSE, Calif. -- It's touted as the high-tech world's best hope against Microsoft Corp. domination. Built largely by thousands of volunteer programmers worldwide, the Linux operating system is cheap, reliable and doesn't pad Bill Gates' wallet.

But just as Linux is catching on with business and governments, a small Utah company is making claims that some of its intellectual property has been copied into Linux without permission.

If courts agree, the SCO Group Inc. could undermine the foundation of the open-source software movement.

Big loss

SCO is demanding a slice of the action, which could turn into a juicy revenue stream for SCO, a big loss to businesses that sell or run Linux systems touted as low-cost, and a windfall for Microsoft's proprietary offerings.

SCO's tactics -- a $3 billion lawsuit against IBM Corp. and warning letters to 1,500 of the world's largest corporations -- are ruffling more than a few feathers of Linux fans, whose mascot is a penguin named Tux.

Linux activists, whose faith in open source is as strong as their hatred of proprietary software companies, say it amounts to an old-fashion shakedown.

SCO hasn't publicly revealed what specifics from its Unix operating system might be illegally copied. So its critics wonder whether SCO is merely trying to extract cash from nervous companies before the courts force it to reveal an empty hand.

Targeting individuals

SCO is not just targeting system builders like IBM or distributors like Red Hat Inc. Taking a page from the recording industry's tactics against music swappers, SCO says it can go after individual users -- whether it's a company running a server or someone with a device embedded with Linux such as a TiVo personal video recorder.

"For the first time in the history of the industry, we have a major operating system platform that's being pushed on end users and at the same time the users take it, they're being told buyer beware -- you own all the inherent intellectual property risks with this product," said Darl McBride, SCO's chief executive.

The charge stems from the GNU General Public License, which has been adopted by Linux and countless other open-source projects. The license ensures that code is not kept secret and is freely distributed.

Matthew Szulik, chief executive of Red Hat, a leading Linux distributor, says that openness is the only protection users need. He says anyone can see -- and remove, if necessary -- any offending code.

The ultimate arbiter will be federal courts in Utah and Delaware. That offers little solace to the Linux movement since the IBM case isn't scheduled until April 2005. In the meantime, uncertainty and doubt could discourage major migrations to Linux by corporations and governments.

Other baggage

And even if SCO's allegations are baseless, the company has opened up the possibility that Linux might contain other baggage.

Wall Street certainly hasn't written off SCO, which was trading above $10 per share on Thursday. That's up from $2.21 in March, the day before it sued IBM.

Before SCO sued IBM, it was known for its now-discontinued Caldera Linux and what seemed a moribund Unix variant. It posted a net loss of $24.9 million in fiscal 2002.

Yet the 330-employee company understandably cast a long shadow over this week's LinuxWorld convention in San Francisco, where analyst reports showed Linux is spreading like wildfire.

First Red Hat launched an attack, filing suit against SCO in an attempt to make it put up or shut up. Then IBM fired back, accusing SCO of violating the General Public License and also of infringing on IBM patents. (SCO's suit against Big Blue claims IBM's Linux version uses code for which SCO owns the rights).

McBride, meanwhile, offered the Linux world the chance to "clean up" its copies of the operating system by paying SCO. Galling Linux adherents, SCO offered introductory licenses for server versions of the operating system starting at $699 and, $199 for desktop computers.

, at $199.

A new copy of Microsoft's Windows XP Home, by comparison, is available at Amazon.com for $189.

SCO licenses

At least two very well known companies -- Sun Microsystems and Microsoft -- have recently bought SCO licenses.

Microsoft said it did so because it still has to make Windows work with Unix and Linux.

Its SCO license has a side benefit. If Linux looks like it comes with extra baggage, companies might take a look at its proprietary offerings. Microsoft denies this was the reason.

A second licensee, Sun, has its own Unix operating system, Solaris, which is free of any SCO claims. Though Sun "embraces" Linux, its SCO license doesn't protect the Linux distributions Sun uses, Red Hat and SuSE. Solaris can be offered as a legally clean alternative.

IBM, Sun and Hewlett-Packard Co., another vendor of Linux-based servers, deny that business is down because of the sticky situation.

"There are risks in any environment, anyone's software that you buy," said Mike Balma, HP's Linux systems strategist. "People have choices, and we're seeing that they're continuing to vote with their feet."