Gartner predicts SCO will be forced to let lawyers call the shots

By Matt Whipp

Posted on 21 Nov 2003 at 17:41

Gartner has predicted that the 20 per cent cut SCO is giving its lawyers will channel power into the legal firms' hands as they seek to make the most of the deal.

SCO's recent announcement that it would deploy Boies, Schiller & Flexner to pull its targeted top 1,500 commercial Linux users through the courts will add to the pressure SCO faces in coming up with settlements with which to pay off its lawyers, according to George Weiss, of Gartner Research.

He advises Linux users to 'keep a low profile', not to 'divulge details on Linux deployments' and not to 'permit SCO to audit your premises without legal authorisation.'

Indeed, SCO's 'expanded arrangement' to let its legal firms pursue its Linux licensing initiatives could be seen as something of a shock tactic when you consider that barely a month ago, SCO said it had stopped issuing invoices to companies because it was already 'very satisfied' with the way things were going.

Even during the teleconference announcing the new deal for SCO's lawyers, SCO CEO Darl McBride described a 'pipeline [that is] is very healthy... We have done additional signups for Linux end-user licenses. We haven't published those at this point'.

But SCO's PR Director Blake Stowell told us that the legal firms would get a 20 per cent cut of licence money from Linux users that pay up, even if they volunteer to buy the licence without any court proceedings. So why is SCO so ready to deal out 20 per cent of licence fees when it's giving every indication of Linux users flocking to sign up of their own accord?

Weiss predicts that in order to satisfy SCO's law firms' appetites then 'SCO will likely pursue claims against Linux users quickly.' In the teleconference McBride said we could expect the first big Linux user on the wrong end of SCO's licensing initiatives to be announced within 90 days.

Weiss says that these moves along with ongoing litigation, the dilution of share value from investment and share issues 'compromise SCO's mission as a software company'.

Stowell insisted that SCO's commitment to its software operation remained strong. 'Out of the 330 employees that we have, there are 325 that are working on sales, marketing, engineering, etc., around our core products, and there are about five that are focused on our current litigation with IBM. We have about 98.5 percent of the company and our funds invested toward developing our product portfolio.'

He said there will be new versions of at least four Unix products this year, with new versions of OpenServer and a 64bit version of Unix on Intel for 2005.

The case with IBM is also due in court in the spring of that year. And Weiss points out that SCO's SEC filings indicate the company will struggle unless it can find additional funding. All the while SCO will have to satiate its legal firms - which ultimately stand to take a 20 per cent cut of proceeds should the company be sold.