Thursday, September 11, 2003
SCO's "Olive Branch" = Your Money or Your Life
Computer World has an interview with McBride, in which he "explains" what he wants and what he meant in his open letter to the open source community.
All he wants is money. He wants to be able to tax Linux for the allegedly infringing SCO code, so he can ride on Linux's coattails and attain unimaginable wealth from the labor of others. He has observed that Linux is popular, it seems.
What he fails to grasp is, we don't want his code and would like him to tell us where he thinks it is, so it can be removed. We don't want to pay for SCO code, because we don't want SCO code. Is that so hard to grasp? Here is his position:
"Q: What is your best possible scenario to come out of the letter?
"McBride: It would be to have our intellectual property [IP] that we feel has been misappropriated into Linux getting valued, and we're then able to move forward. We're recognizing the clout that Linux is developing, the fact that it's a worldwide phenomenon and the fact that this can really be a new standard for computing in the business environment. To the extent that we're able to get recognition for what we feel is a significant amount of contribution ... we move forward together, and Linux is able to live and we're able to get recognition for our IP."
So that's his "olive branch", an offer you can't refuse without risking your life. Now there's a business model: force people to buy your product, even though they don't want it, Or Else. I think the Mob might have a patent on that business model already though. Sorry, SCO.
McBride still mistakenly thinks the GPL means free as in beer (he is so slow to catch on to things):
"If we're going into a new business environment around Linux, well, let's ask the question right upfront: Does the free business model work? Everything we've looked at, whether it's free Internet, free telecom, free music, all of these things tend to, for one reason or another, not work over an extended period of time. Clearly, the free model just about killed our company, and I would argue that it's going to kill a lot of other software companies if the GPL [General Public License] is able to gain a foothold and run rampant throughout the industry."
First of all, there is no "we" in this picture. Linux isn't going to partner with SCO under any circumstances. He needs to let go of that fantasy.
He also talks about SGI and the "attacks" and a number of other points in the interview, but I see no reason to give him space to spew his nonsense. I wish to set a good example for other reporters who just print whatever he says whenever he says it.
He reads Slashdot, he indicates, and it's apparently not his favorite part of the day. He can bear it, though, because:
"We believe we've got the moral high ground in this case, so that's what propels you forward."
? ! ? the moral.. sputter...the high...gasp...huh?
You know, I have a sister who doesn't understand the law. We are co-trustees on a trust. It's not a trust that benefits us. At least it isn't supposed to. No matter how many times I try to explain something to her, she still persists in thinking it's a different way, if she reeeeally wants it to be different. I guess money can twist your thinking. It's the bane of my life, because of the high frustration level and the sheer boredom of explaining the same thing over and over, to no apparent effect. McBride, however, has just taken the crown away from her for flat-out, knock-down illogical reasoning. The moral high ground in which alternate universe?
Maybe it isn't a lack of logic skills. Maybe it's like a cat I used to own. She was so sneaky and determined. If I had, say, fish on the counter, that cat would do simply anything to get it. She would try to jump up on the counter, and I'd spank her and say no, and she'd meow in protest, and then she'd walk away as if the matter was settled. But if I left my guardpost for one little minute, she'd be taking her chances and leaping for it again. In a cat, it was funny. Greed is funny in a cat, because you don't expect morals in a cat, so the more blatant they are with their determined greed, the funnier it is. They will go after what they want, no matter what, right or wrong. SCO is like that. They want to make some dough off of Linux. That's it. Take it or leave it.
Or maybe Linus is right. McBride just needs to grow up. Here's what Linus wrote in his Dear Darl letter:
"Thank you so much for your letter.
"We are happy that you agree that customers need to know that Open Source is legal and stable, and we heartily agree with that sentence of your letter. The others don't seem to make as much sense, but we find the dialogue refreshing.
"However, we have to sadly decline taking business model advice from a company that seems to have squandered all its money (that it made off a Linux IPO, I might add, since there's a nice bit of irony there), and now seems to play the US legal system as a lottery. We in the Open Source group continue to believe in technology as a way of driving customer interest and demand.
"Also, we find your references to a negotiating table somewhat confusing, since there doesn't seem to be anything to negotiate about. SCO has yet to show any infringing IP in the Open Source domain, but we wait with bated breath for when you will actually care to inform us about what you are blathering about.
"All of our source code is out in the open, and we welcome you point to any particular piece you might disagree with.
"Until then, please accept our gratitude for your submission,
Ah, the brushoff. Sorry, Darl, your "olive branch" has been officially declined. And with style and a sense of humor. But that invitation to show the code is serious, and you'd be well-advised to respond long before this goes to court. That's my opinion, which you are free to ignore, and, sigh, like my sister, you probably will.
What's In It for Darl?
Here is a revealing little tidbit from SCO's April 24, 2003 DEF 14A filing with the SEC, their Proxy Statment. It seems to explain why we get press releases from Utah with such regularity, threatening everyone and their little dog too. After each threat, the stock seems to shoot up. Why does Darl do this? What's in it for him? Take a look at what he gets if he manages to have four profitable quarters:
"In setting the total compensation payable to the Company's Chief Executive Officer for the 2002 fiscal year, the compensation committee sought to make that compensation competitive, while at the same time assuring that a significant percentage of compensation was tied to the Company's performance. The compensation committee reviewed industry compensation surveys for chief executive officers of comparable software companies to determine an appropriate compensation level. During fiscal year 2002, the Company hired Darl McBride, a seasoned technology veteran, to succeed Ransom Love as the Company's Chief Executive Officer. During fiscal year 2002, the base salary for Darl McBride was $250,000, which was later reduced to $230,000 as a result of salary cuts in the Company. Mr. McBride was also eligible to receive a quarterly performance award for reaching financial targets. The primary goals established for Mr. McBride included the successful attainment of revenue, and net income targets as established in his offer letter. These targets have been set very aggressively and will allow for Mr. McBride to earn from 20% to 300% of his base salary as a quarterly performance award based on attainment. During fiscal year 2002, Mr. McBride did not receive any quarterly performance award payments.
"In recognition of the leadership and guidance Mr. McBride brings to the Company, he was granted 600,000 options to purchase shares under the Company's 1999 Omnibus Stock Incentive Plan. Of the options granted to Mr. McBride, 400,000 options vest 25% after one year with the remaining 75% vesting at 1/36 th per month thereafter, until fully vested. Of the remaining 200,000 stock options granted to Mr. McBride, 50,000 options will vest one year from the date of the Company's first profitable quarter (as long as that profitable quarter is before Q4 of fiscal year 2003) and the remaining 150,000 options will vest one year from the date the Company achieves four consecutive quarters of profitability (as long as the fourth quarter is before Q4 of fiscal year 2004)."
Now, this may prove to be very remunerative for Darl, particularly since the options he was granted on the 600,000 shares last year were at 76 cents a share, but is it a good business model? He has had two profitable quarters, thanks to the Sun and Microsoft licenses, and no doubt he'd like to have four. There does seem to be something wrong with an arrangement that puts the short-term personal interests of executives in a company so at odds with the long-term interests of the company itself and against the interests of the public at large.
SCO as a company is committing suicide before our eyes. No one in the open source/free software worlds will want to do any business with them from this day forward. That is a given. I wonder if they know how much business that will cost them? Here is an article on how to persuade your executives to switch to Linux. Here is an article on how to help SCO's poor customers make the switch to Linux, so they aren't left up the creek without a paddle, and notice one of the commenters says he just quietly recommends anything but SCO products, and that so far, just since this all began, they have "lost 58 OpenServer licenses over four customers because of me".
Here is economist Amy Wohl writing that "The Open Source Community Has a Business Model". And speaking of successful Linux business models, IBM has just signed a deal with Red Flag Linux too, just as HP recently did:
"'Given the size of China's economy and the related growth of information technology infrastructure, Red Flag could become the most widely deployed Linux distribution,' said Stacey Quandt, an independent Linux analyst."
Proprietary Microsoft is sulking but also trying to woo China, the article says, using a technique that validates the open source method:
"Microsoft, which has criticized China for not doing enough to curb software piracy, is trying to court Chinese customers, but Linux has the advantage that its core components are available for free. Microsoft also is trying to allay concerns by letting Chinese officials view Windows' underlying source code, a move that acknowledges one advantage of Linux and its open-source development process."
SCO's other buddy, Sun, keeps trying to figure out new ways to graft olde business methods on to Linux. That is, of course, the same mistake Caldera made with its per seat license "brainstorm" that made it impossible to make money from their Linux product. You can't graft the two styles together, but that doesn't stop the dinasaur brigade from perpetually trying, as long as they have any breath in them. Now stuck-in-the-mud Sun would like to offer indemnity from SCO lawsuits, but there is a catch:
"Sun is contemplating adding an unusual provision to some of its Java licenses under which the company would agree to protect licensees from Linux-related lawsuits filed by the SCO Group. . . .
"A Sun representative said the program, if executed, would likely apply only to Java 2 Micro Edition, Sun's version of Java for gadgets including cell phones and embedded devices such as electronic billboards.. . .
"Sun has publicly stated on several occasions that it will indemnify its Solaris customers against any liability. Customers that adopt Mad Hatter, an upcoming Sun desktop software suite, also will be indemnified, Schwartz said. . . .
"When it comes to Linux, however, Sun server customers are on their own. The company does not provide indemnity to Sun server customers who choose to run Linux, rather than Solaris, on its servers. Sun sells servers that run Red Hat's Linux.
"Sun, in fact, will try to erode Linux's growth in the marketplace by promoting a version of Solaris that runs on servers with chips from Intel or Advanced Micro Devices."[emphasis added]
In case you were wondering where Sun stands, now you know. They are desirous of "eroding Linux's growth in the marketplace". Still believe Sun isn't behind this SCO stuff?
As usual in the proprietary software world, there is no honor. And you'd best read the fine print. It seems Sun hasn't exactly explained just how the indemnification will work:
"Sun could request that Java customers seeking indemnity switch from using Linux to Solaris. Sun could also, conceivably, devise a Linux-like OS, or it could pay additional royalties to SCO. . . . However, Sun's license only extends to Solaris, said SCO spokesman Blake Stowell, not to Java related products or any as-yet-created version of Linux from Sun."
Doesn't it just make you want to gag, once you grasp the hustle? You are "indemnified" by switching away from Linux altogether and on to Solaris. What a deal. Thanks, but no thanks.
Those proprietary software dudes are so smarmy. Maybe that used to work, before the internet. But it's going the way of the dodo now. Darl wrote about mainstream values, but the values reflected in proprietary business methods reveal the stream is polluted. Who wants to do business with people like that? Who even dares to?
And now nobody has to. What I love about GNU/Linux is, there is no fine print. There is no hustle. And there is honor. That alone is a business proposition worthy of your consideration.