Captain McBride and the SCO Titanic
Comment What's the difference between Edward John Smith, the Captain of the Titanic and Darl McBride, CEO and President of SCO. Well, for one thing, Captain Smith didn't steer his doomed ship towards the iceberg, he hit it by accident.
The prospects for SCO now appear to be not much better than they were for the Titanic as it encountered the iceberg. As a Unix business, SCO is sinking quickly. Its revenues for the fourth quarter of fiscal year 2004 were $10,075,000, 59 per cent down on the same quarter in the previous year, primarily due to a decline in SCOsource license revenues from $10,316,000 to $120,000 (that would be a decline of just under 99 per cent – possibly a record of some kind). Competitive pressure from Linux is clearly a factor in this, but in all probability there are now a whole set of customers and partners who no longer wish to do business with SCO.
It may not have escaped the notice of SCO customers that, of the two Linux users it chose to sue, DaimlerChrysler was actually a customer of SCO and AutoZone had been until 2002 (it ran SCO Unix on its point of sale systems). Someone should have told Darl that adversarial legal action doesn't amount to good CRM.
Aside from that, the experience of web hosting company, EV1Servers of Houston, which actually paid the fee that SCO was charging for its Linux license and thus became the SCO poster child for its fledgling Linux license business, was far from positive. Within a month or so of doing the deal, CEO Robert Marsh was regretting the move and saying that if he had the chance to do it again, he wouldn't. No surprise then that the fledgling never flew.
"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."
And this is the point. From a legal perspective, Open Source licenses and intellectual property may be a valid point for debate and legal action, but from a fashion perspective, taking on Linux and Open Source is a stupidity, and severely damaging to an organization's brand – as SCO has proved quite comprehensively. Open Source is an idea whose time has come. Whether it turns out to be a positive commercial force remains to be seen, but there is no doubt that it is a driving trend in the software business. It is the iceberg that Darl McBride steered SCO into.
All that seems to be left for SCO now is to try to rescue itself through the courts. In fact SCO is now more a legal case than a software company. But even as a legal case, its prospects don't look good. In 2003, SCO Senior Vice President Chris Sontag claimed that "there are millions of lines of offending code involved". Strange then that SCO has not been able to make even a few of those offending lines of code public.
In his recent pronouncement on the IBM v SCO case, U.S. District Judge Dale Kimball chose not to dismiss SCO's case against IBM, but was fairly scathing in commenting on SCO's media pronouncements and its inability or unwillingness to furnish any evidence. It seems likely that direct comparison of SCO's Unix code with Linux code (a comparison that SCO has always been able to make) has not provided proof of anything. SCO now has the chance to survey billions of lines of IBM Unix code in order to try to unearth some IP or copyrighted contribution to Linux, and even then it will still have to prove that such a contribution violated IBM's contract with SCO – which is not a slam-dunk.
According to a posting on The Motley Fool, CEO Darl McBride received over $1m salary and a $750,000 bonus, plus thousands of shares and options in 2003 – a healthy reward it seems, for steering SCO into the iceberg. Captain Smith, by the way, went down with his ship.
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