July 25, 2003 3:24 PM PDT

Analysts mixed about SCO actions

By Stephen Shankland
Staff Writer, CNET News

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Analysts labeled SCO's moves as everything from actions that should be taken seriously to extortion that shouldn't affect Linux plans. The variety of responses indicates how wide the spectrum of possibilities are in SCO's actions, which now have expanded beyond its $3 billion lawsuit against IBM to the entire population of companies that use Linux.

SCO said Monday that Linux users must pay the company for a Unix license or face potential legal action. The owner of the Unix intellectual property, SCO contends that Unix code was illegally copied line-by-line into Linux and that companies such as IBM illegally transferred improvements made to Unix into Linux.

On the worried side of the continuum was Gartner's George Weiss, who has previously issued cautionary statements. He advised companies that use Linux not to just "contact SCO to discuss its claims, compensation requirements and your potential future liability" but also to "delay deployments of (Linux) application and database servers if they involve critical applications that must be unencumbered of intellectual property infringement claims."

Weiss also advised Linux users in a research note to see if Unix or Windows can substitute for Linux, to consider outsourced computing operations "that transfer license issues to a third party," and not to "ignore the problem by hoping IBM will win or settle its lawsuit."

But Robert Frances Group (RFG) wasn't so concerned.

"RFG believes corporate users of Linux should not discontinue their deployments, because the merits of SCO's case appear to be extremely thin," RFG analyst Chad Robinson said. "SCO appears to be attempting to extort funds from the Linux market without substantiating its claims in ways that allow users to respond."

SCO, unsurprisingly, disagrees with this assessment. "We're not attempting to extort funds out of users. We're only trying to be compensated for the use of our software in Linux," company spokesman Blake Stowell said Friday. "We have been substantiating our claims, because we showed our Unix source code in Linux to more than five-dozen people, and we're willing to show it to individuals in the future."

Robinson's colleague, Adam Braunstein, believes the issue will be put to rest. "The open-source community, IBM and other vendors will find some way to right all of this, and it is extremely unlikely that any users will have to cut checks to anyone for anything."

Research firm Illuminata maintained the skeptical tone it's had since SCO launched its lawsuit against IBM in March. SCO's actions are neither too trivial to be dismissed nor too significant to spur changes in plans, but SCO and its lawyers have "many, many legal hurdles...to overcome," Illuminata's Gordon Haff said. "That SCO's claims are not laughable but merely enormously suspect is no reason for corporations to start a Chicken Little routine at significant cost."

Forrester Research's Stacey Quandt said companies must proceed according to their tolerance for risk, but that so far SCO hasn't shown enough information to convince companies that they need to sign up for a Unix license. "Signing a license based on allegations and not facts just doesn't make sense," she said.

But SCO argues it's already prevailed in some cases. "We've had several companies indicate that, when we begin offering this license, they plan to take out a license," Stowell said.

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