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A Dose of Reality for SCO
Monday, September 26 2005 @ 04:31 AM EDT

Here's a nice dose of reality for SCO. And you know how much they love that. It seems that, despite SCO's claims in its Second Amended Complaint that IBM is contributing to Linux in a dastardly plot to destroy Unix, here comes the news in The Austin American Statesman that Unix is still going strong and in fact, IBM is making much dinero from AIX.

Oops. How'd that happen?

I guess when SCO told the court and the SEC that Linux has been destroying its Unix business, it may not have plumbed the analytical depths to reach the real source of its difficulties.

Here's one reason. Folks don't want to do business with litigious companies. They also tend to prefer it if you tell them the truth.

It's probably been a while since you read SCO's Complaint, but here is what they said about IBM and what they will have to prove:

77. In furtherance of its plan to destroy its UNIX competitors, IBM has announced its intention to make Linux, distributed to end users without a fee, the successor to all existing UNIX operating systems used by Fortune 1000 companies and other large companies in the enterprise computing market. . . .

IBM’s Scheme

84. As market awareness of Linux evolved, IBM initiated a course of conduct with the purpose and effect of using Linux to unfairly compete in the enterprise market. At that point in time, four important events were occurring simultaneously in the enterprise software computing marketplace:

a)Intel chips were becoming widely demanded by enterprise customers since Intel’s processing power had increased and its cost had remained low;

b) SCO’s market power in the enterprise marketplace was increasing based on the combined capabilities of SCO OpenServer, SCO UnixWare and SCO’s unique position as UNIX on Intel;

a) Sun and Microsoft's market share in the enterprise market continued to grow; and

b) IBM was in the process of evolving its business model from software technology to services.

85. In the process of moving from product offerings to services offerings, IBM dramatically increased its staff of systems integrators to 120,000 strong under the marketing brand “IBM Global Services.” By contrast, IBM’s largest historic competitor as a seller of UNIX software, Sun Microsystems, has a staff of approximately 12,000 systems integrators. With ten times more services-related personnel than its largest competitor, IBM sought to move the corporate enterprise computing market to a services model based on free software on Intel processors.

86. By making the Linux operating system free to end users, IBM could undermine and destroy the ability of any of its competitors to charge a fee for distribution of UNIX software in the enterprise market. Thus, IBM, with its army of Global Services integrators who earn money by selling services, would gain a tremendous advantage over all its competitors who earn money by selling UNIX licenses.

87. To accomplish the end of transforming the enterprise software market to a services-driven market, IBM set about to deliberately and improperly destroy the economic value of UNIX and particularly the economic value of UNIX on Intel-based processors. . . .

110. IBM is affirmatively taking steps to destroy all value of UNIX by improperly extracting and using the confidential and proprietary information it acquired from UNIX and dumping that information into the open source community. As part of this effort, IBM has heavily invested in the following projects to further eliminate the viability of UNIX:

a)The Linux Technology Center was launched in 2001 with the intent and foreseeable purpose of transferring and otherwise disposing of all or part of UNIX, including its derivative works, modifications and methods, into an open source Linux environment;

b) The IBM Linux Center of Competency was launched to assist and train financial services companies in an accelerated transfer of UNIX to Linux with the advertised intent and foreseeable purpose of transferring and otherwise disposing of all or part of UNIX, including its derivative works, modifications and methods into open source.

c)A carrier-grade Linux project has been undertaken to use UNIX source code, derivative works, modifications and methods for the unlawful purpose of transforming Linux into an enterprise-hardened operating system;

d) A data center Linux project has been undertaken to use UNIX source code, derivative works, modifications and methods for the unlawful purpose of transforming Linux into an enterprise-hardened operating system; and

e)Other projects and initiatives have been undertaken or supported that further evidence the improper motive and means exercised by IBM in its efforts to eliminate UNIX and replace it with free Linux.

Sounds terrible, until you hold up a little reality to the claims. Look at what the article in the Statesman says:

With a subpar product in a dying market, IBM Corp. simply did what any rational company would do — double its billion-dollar investment.

It was the late 1990s, and Big Blue's underperforming Unix servers were getting pummeled by rivals such as Sun Microsystems Inc. To make things worse, servers using desktop-computer technology were on the rise. And many figured the halcyon days had come and gone for proprietary Unix machines — the servers that do much of the heavy computing for businesses such as databases.

What better time to put up billions of dollars?

"Like a lot of things at IBM in the late '80s, early '90s, we kind of lost our way," said Adalio Sanchez, general manager of IBM's pSeries business, which includes the Unix servers and Power microprocessor technology developed mostly in Austin. "So we made a multibillion-dollar commitment at the turn of the century to regain our leadership. . . .

The company has nearly doubled its share of the Unix server market in the past six years. . . .

"It would be tough to find an organization in (information technology) that has performed as well as IBM's pSeries group over the past few years," said Charles King, analyst at Pund-IT Research in Hayward, Calif. . . .

In fact, while the sales of Unix servers have grown at a moderate pace overall, sales of higher-end Unix systems have been growing more rapidly, said Bozman, the analyst at IDC. Worldwide sales of more expensive, high-end Unix servers grew 19.2 percent in the second quarter, and midrange Unix servers increased 15.6 percent.

Sales of the least-expensive Unix servers — those that overlap the market for industry-standard machines — dropped 19 percent, but the overall Unix revenue still grew about 3 percent thanks to the top end.

"The good days of Unix are back," IBM's Sanchez said. "Growth is back, and we're leading that growth. And it's all about the amount of investment we're making and innovating in areas that matter to our clients."

Investing billions in Unix in order to kill it? Scheming to kill off Unix when they are selling it themselves and it is doing so well for IBM? Tell *that* to the jury and watch them laugh in your face. SCO, as Caldera, failed in the Linux business, and as long as I've known them, their Unix business has been in decline. Yet other Linux companies are doing just fine, thanks, and companies are making money with proprietary Unix, too. IBM is doing well with both Linux and Unix. What does that tell you about the underpinnings of SCO's legal claims?


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