In SCO's recently filed 10K, the one where SCO admitted its litigation might never reach a jury, it sang a sad song, about losing business because of Linux:
Sales of our UNIX-based products and services have been declining over the last several years. This decline in revenue has been primarily attributable to significant competition from alternative operating systems, particularly Linux.
We anticipate that our OpenServer and UnixWare products will continue to provide a future revenue stream for our UNIX business. However, unless there is a change in the current operating system environment, we expect revenue from these products will continue to decline.
It chanted the same dirge at the conference call. Dan Goodin at The Register carefully checked the transcript, and reported he couldn't find "a single sentence that addressed the claim that SCO's own missteps made bankruptcy imminent."
I think that will come up at trial, SCO's misteps, if there ever is one, though. Here's why. There's an article in Information Week today about a new report that finds that Unix is booming, not dying.
Here's what the report found:
A new study from the Gabriel Consulting Group shows that use of Unix, particularly in high-end systems, is on the rise in the enterprise, according to Dan Olds, a principal analyst with the research and analysis firm. More than half of the data center managers surveyed reported that they will be increasing their use of high-end Unix systems, with only 30% saying that's not in their plans.
"These results tell us that the Unix market is healthy and likely to grow in the future," said Olds in his report.
But, I hear you (SCO) say, that's only high end, and SCO's business was low end. Look at this, from later in the article:
When it comes to small Unix servers, the numbers aren't so clear, said Olds. Overall, he pointed out, the survey shows that low-end Unix is holding steady.
The big increases seem to be coming from the high end.
Why isn't SCO Unix at least holding steady, then, with the rest of them? If SCO is losing business, when no one else is, is competition from Linux really to blame? I won't dignify the claim that it's Unix code inside Linux that has caused SCO's troubles, but it's in the 10K:
In reviewing our intellectual property rights during the year ended October 31, 2003, we became aware that parts of, or modifications made or relating to, our UNIX source code and derivative works have been included in the Linux operating system without our authorization or appropriate copyright attribution....
We believe that the inclusion of our UNIX code and derivative works in Linux has been a contributor to the decline in our UNIX business revenue because users of Linux generally do not pay for the operating system itself, but for services and maintenance.
I guess we can discount that theory, and in so many ways. But if the claim isn't true, then there are no damages, and this is all an exercise in silliness or anticompetitive use of litigation. Maybe someone needs to tell SCO the real problem is it has bad breath.
Incidentally, in Comes v. Microsoft, the antitrust litigation going on currently in Iowa, Microsoft's attorney (one of them), Steven L. Holley, said something of interest about litigation and big business which you can read for yourself in the January 25th transcript, [Update: which was originally at http://www.iowaconsumercase.org/1.25.07_transcript.txt, before the site was removed on settlement of the litigation]. Microsoft had asked a question last Friday of the witness now on the stand, who is an ex-Novell guy, and the plaintiffs' lawyer objected, so this snip comes from the part where Microsoft is trying to justify the question, to try to avoid the judge giving an instruction to the jury about it:
Holley: So it is not a fair inference that
because the government investigated Microsoft
that Microsoft had done something wrong.
As the Iowa Supreme Court has said in
State against Monroe, when lawyers make
tactical choices that create inferences that
help their clients, they open the door to
rebuttal by their adversary.
So if Plaintiffs make a choice to
suggest through the testimony not only of
Mr. Bradford, but also of Mr. Alepin, that
Microsoft has been subjected to numerous
government investigations and private lawsuits
-- and the Court will recall that Mr. Lamb took
Mr. Alepin through numerous lawsuits that have
been filed against Microsoft in the course of
talking about Mr. Alepin's credentials.
So the jury has heard all about Sun
suing Microsoft and RealNetworks suing
And the clear implication of this is
that where there's that much smoke, there must
And that -- if that suggestion has
been created in the minds of the jurors, it's
perfectly appropriate for Microsoft to counter
that door opening by noting that other
companies that are successful in the
marketplace and acquire large market positions
are sued by their competitors.
It is a routine practice in American
business, there is an entire field of study
about the strategic use of antitrust litigation
against competitors, so it's our position, Your
Honor, that there was nothing improper about
the question and therefore no need for an
So, I gather we not only must swallow the concept that malware hits Microsoft products more than others because Microsoft is popular, not because it has security issues, but we are also to believe that it is also sued not because it misbehaves, but because it's a success. That is all found on page 10406. If you keep reading, you'll see Microsoft trying to show that it was Novell's misteps that caused its troubles with DrDOS, by the way, if you'd like to see a brief example of what I am predicting will be an issue in SCO v. IBM
I don't know about you, but I find that statement about litigation being routinely used for anticompetitive purposes a bit shocking. I don't know if it's true that all companies misuse the court system that way, but the statement certainly implies that Microsoft does so. If not, why would it claim it's routine? That raises thoughts about the money that ended up going to SCO, doesn't it?
I can't help but wonder what SCO's "experts" told the court about Unix, if what they wrote matches this new Gabriel report. Hardly likely. So, I think we can safely rely on it that we will see these kinds of reports coming up, and SCO witnesses being asked if anything SCO did contributed in any way to the decline of its business.
Here's an idea to run up the flagpole and see if anyone salutes: Suing your own customers rarely builds a business. I think one could argue that it drives customers away in droves. Do you think that could be SCO's problem? And speaking of Linux, how foolish was SCO to stop distributing, just as Linux was really taking off?
Incidentally, IBM tops all Unix vendors in a recent preference survey. I'm just guessing, but I can't help but think that its dignified behavior during the SCO attack has to have something to do with that. There seems to be something to the expression that you reap what you sow.