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SCO channel chill bodes ill for Caldera

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The day after Caldera cut 17 per cent of its staff (including OS/2 and Java vet Nick Petreley), we found ourselves musing how urgently the Utah-based Linux distro needed the stability of SCO's revenue. Caldera is expected to complete the merger next week.

But, um what stability ... and what revenue? Those questions are posed by one SCO reseller in a chastising message to us. His tale, if typical, doesn't bode well for the merged Unix company:-

We're a SCO reseller ... or rather we're a SCO reseller who're not selling any SCO product any more because customers and prospects are universally saying "can we run your application under Linux" and when we say we can they go the Linux route. Even long standing SCO users are switching to Linux when they upgrade. Given the difference in price this is hardly surprising.

Talking to other SCO resellers I've found that this is happening to them too. Given this I'd expect to see Caldera's revenue from SCO UnixWare and Open Server to be plummeting at the moment.

It's also clear to me from conversions and communications we've had with SCO/Caldera that Caldera believe that by buying SCO they're positioning themselves at the "enterprise" end of the Linux market by grabbing into SCO's strong IA32 Unix customer base but our customers are saying "who? Why aren't you selling us RedHat?". So we do.

The reason, he adds, is that SCO OpenServer binaries now run so well on Linux that customers consider the $1000+ license fee an easy saving, and do without.

Scaldera urgently needs a predictable regular revenue stream because it's one of the few companies left standing that's burning through cash as if it was still the height of the dot.com bubble economy. Caldera's revenues were static at $1m in the last quarter, but the company ran up $9m in costs.

If our correspondent is remotely correct, Caldera needs to do some urgent, high profile rebranding of its Linux distros. Assuming that SCO's reseller channel would simply become Caldera resellers always was one of the shakier points of the merger. Caldera could discover that in a business as competitive as PC Unix, keeping its new VARs happy is as thankless as herding cats. ®

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