decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books

Gear

Groklaw Gear

Click here to send an email to the editor of this weblog.


You won't find me on Facebook


Donate

Donate Paypal


No Legal Advice

The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

Here's Groklaw's comments policy.


What's New

STORIES
No new stories

COMMENTS last 48 hrs
No new comments


Sponsors

Hosting:
hosted by ibiblio

On servers donated to ibiblio by AMD.

Webmaster
A Change in SCO's Self-Description - Pruning the Puffery?
Friday, September 01 2006 @ 03:41 PM EDT

This seems worth noting, given that our goal is to record all details of the SCO saga in Groklaw's living history litigation project. I don't know what it means, if anything, but it is something I haven't seen before. SCO appears to be pruning some of the puffery in its press releases.

SCO has an intriguing new description of the company in a press release on Yahoo! announcing the 3d quarter conference call on Sep 6, 2006. Normally, SCO calls itself "a leading provider of UNIX software technology" or words to that effect, and in fact on Wednesday, that is what another press release said, adding that the company was a leading provider of "mobile services". I haven't seen any evidence of that being so. In any case, the new press release says merely that "The SCO Group, Inc. provides UNIX-based products and services." They don't call themselves a leading Unix provider.

That seems to match reality. Take a look at IDC's recent report on the server market. The leading provider worldwide in terms of revenue is IBM. Then HP is second, and then Sun. As for Unix, take a look at this IT Jungle analysis:

In terms of platforms, the Unix server market declined by 1.6 percent to $4.3 billion and unit shipments of Unix boxes declined by 1.8 percent to 166,000 units. But, Unix still edged out Windows as the dominant platform--if only by a smidgen. The volume segment of the Unix server market--driven by Sun's revival of Solaris on both Sparc and X64 platforms, HP's aggressive marketing of Integrity systems and its HP-UX operating system, and IBM's continuing price/performance improvements in its System p5-AIX platform, helped bolster Unix sales. If IBM, HP, and Sun were not delayed with their product rollouts and processors in the Unix space, it is reasonable to guess that Unix would have done a lot better. But Power5+, UltraSparc-IV+ and Opteron, and dual-core Itanium 9000 processors will all be shipping in the IBM, Sun, and HP Unix product lines in the third quarter, and Unix should see an uptick.

Well, well. A Unix uptick, with IBM aggressively selling AIX and doing fine. And here SCO told the court that IBM donated code to Linux to try to destroy the Unix market. How ironic. That should complicate SCO's pathway to riches.

I think these figures, assuming they are accurate, may come into play in the damages phase of the SCO v. IBM litigation, as well as in Red Hat. If the purpose of the IBM lawsuit was to depress Linux uptake and boost Microsoft in the server market, as some have said, did it work?:

The Windows platform, which has been jockeying for dominance with Unix for the past several years in the server market, accounted for $4.2 billion in sales in the second quarter, according to IDC, and increase of 3.1 percent....

Somewhat surprisingly, Linux seems to be running out of steam a little. After nearly four years of double-digit revenue growth, the Linux server sub-market accounted for only $1.5 billion in sales in the second quarter of 2006, an increase of only 6.1 percent.

Linux is still increasing, but could it be that SCO's media trash talk in fact did depress growth, in favor of Microsoft? That is what all those experts will have to sort out, and that's not what IT Jungle or IDC trace it to, but if it did, the damages phase is designed to redress any harm done. Here's the full "About SCO" section in the new press release:

The SCO Group, Inc. provides UNIX-based products and services. Its products include OpenServer and UnixWare. The company’s OpenServer supports multiuser, transaction and business applications, communications gateways, and mail and messaging servers in both host and client/server environments. Its UnixWare is a deployment platform for industry standard Intel processor systems. The company’s other services include software development and programming, migration tools and services, and assisting customers with modernizing and integrating legacy applications with Web services. It assists end-user customers and solution providers in planning, creating, implementing, and deploying business application solutions. The SCO Group sells its UNIX software products to small-to-medium sized businesses and franchisees or branch offices of Fortune 1000 businesses; and original equipment manufacturers. The company’s products are sold through distributors and independent solution providers. The SCO Group was co-founded by Doug Michels and Larry Michels in 1979. It was formerly known as Caldera International, Inc. and changed its name to The SCO Group, Inc. in 2003. The company is headquartered in Lindon, Utah.

I know. They are not, from all I know, the orginal Santa Cruz Operation (SCO), started by Doug Michels and Larry Michels in 1979. That company changed its name to Tarantella and eventually got bought by Sun Microsystems. That's the way I heard it, and Magistrate Judge Brooke Wells already ruled that there was not a complete transfer of assets to Caldera in the oldSCO-Caldera asset transfer. But where is the Me Inc. puffery in the new press release?

Here's the full description in Wednesday's press release:

The SCO Group (Nasdaq: SCOX - News) is a leading provider of UNIX software technology and mobile services, offering SCO OpenServer for small to medium business, UnixWare for enterprise applications, and Me Inc. and EdgeClick for mobile services. SCO's highly innovative and reliable solutions help millions of customers grow their businesses everyday, from SCO OpenServer on main street to UnixWare on Wall Street, and beyond. SCO owns the core UNIX operating system, originally developed by AT&T/Bell Labs and is the exclusive licensor to UNIX-based system software providers.

Headquartered in Lindon, Utah, SCO has a worldwide network of thousands of resellers and developers. SCO Global Services provides reliable localized support and services to partners and customers. For more information on SCO products and services, visit www.sco.com.

A lot of water flowed under the bridge between "a leading provider of UNIX software technology and mobile services" and "The SCO Group, Inc. provides UNIX-based products and services." I guess this is may be a more interesting conference call than I thought.


  


A Change in SCO's Self-Description - Pruning the Puffery? | 76 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Off Topic Replies here please
Authored by: fredex on Friday, September 01 2006 @ 04:07 PM EDT
So they won't clutter up the entire place

[ Reply to This | # ]

Corrections Here
Authored by: Trollsfire on Friday, September 01 2006 @ 04:14 PM EDT

Please collect any corrections to the article here so that they may be fixed.

--Trollsfire

[ Reply to This | # ]

Linux Steam
Authored by: Anonymous on Friday, September 01 2006 @ 04:34 PM EDT
I wonder how well sales figures relate to actual use. If I'm running a Windows
farm and I add a machine I need another license. If I'm running a Redhat or
Suse farm and add another machine I'm not sure I need a license as I may not
need more support.

[ Reply to This | # ]

is this really SCO's text?
Authored by: ggiedke on Friday, September 01 2006 @ 04:58 PM EDT

In the SCO press release that announces the conference call they still talk as usual about being a "leading UNIX provider" and "owning the core UNIX operating system".

I have the impression that the link in the article from which the more modest description is taken is actually Yahoo's description of SCO, not SCO's self-description.

It would be great, though, if they would now admit to not owning UNIX ;-)

regards Geza

[ Reply to This | # ]

They're pretending to be Santa Cruz again
Authored by: rocky on Friday, September 01 2006 @ 04:59 PM EDT
That whole bit about founded in 1979 is just an outright lie. It bugs me that
they can keep lying like this in SEC filings. This has been very clear that
they are not the same as the original Santa Cruz Organization, and I'm surprised
to see them state this so forwardly and officially. Have they been doing this
before?

[ Reply to This | # ]

A Change in SCO's Self-Description - Pruning the Puffery?
Authored by: Anonymous on Friday, September 01 2006 @ 05:21 PM EDT
I have been thinking that the real target was AIX, rather than Linux, and Linux
was just a handy stick. It makes more sense as the reason to go after IBM rather
than Red Hat etc.

Tufty

[ Reply to This | # ]

A Change in SCO's Self-Description - Pruning the Puffery?
Authored by: spectrum on Friday, September 01 2006 @ 05:23 PM EDT
They are providing "mobile services".

They have moved out all their Linux/Unix techies, and moved in all the Lawyers.


---
dave.

[ Reply to This | # ]

A Change in SCO's Self-Description - Pruning the Puffery?
Authored by: ssavitzky on Friday, September 01 2006 @ 05:26 PM EDT
I suspect that Linux's decline in <em>revenue</em> is mostly due to
the decline of RedHat and Suse relative to Ubuntu, Debian, OpenSuse, and Fedora.
I noticed at LinuxWorld that HP is shipping their thin clients with Debian
these days, which makes perfect sense. Thin clients don't need expensive
service contracts.

---
Never anger a bard, for your name sounds funny and scans to Greensleeves.

[ Reply to This | # ]

A Change in SCO's Self-Description - Pruning the Puffery?
Authored by: Anonymous on Friday, September 01 2006 @ 06:39 PM EDT
"SCO is in the "Others" category, as you can see"

I think PJ (and other) make an mistake. IBM, HP et al are all hardware vendors.
SCO, Novell and redhat not. So I don't know is SCO belongs to the 'Ohters'
cateogry, because it is a different market.

Also the hardware sales maybe didn't grow as much, but that doesn't say anything
about the number of linux installs.

zeke

[ Reply to This | # ]

"Leading provider"
Authored by: dkpatrick on Friday, September 01 2006 @ 06:55 PM EDT
My personal experience is that any company that calls themselves a "leading
provider" isn't. I have watched a couple of companies (been with one) that
were out of business within the year after making that statement.

Of course, maybe they ARE but the market is too thin to support them :-)

---
"Keep your friends close but your enemies closer!" -- Sun Tzu

[ Reply to This | # ]

SCO's Self-Description
Authored by: rsteinmetz70112 on Friday, September 01 2006 @ 07:57 PM EDT
I think SCOG has decided to change their focus. Now that they have run off all
of their Unix and Linux customers, they are shifting to Mobile Services. The
good news is they don't have that many mobile customers to run off.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Future Impact
Authored by: sproggit on Saturday, September 02 2006 @ 03:40 AM EDT
I liked PJ's comment, in this article, where she says,

"I think these figures, assuming they are accurate, may come into play in the damages phase of the SCO v. IBM litigation, as well as in Red Hat."

as I happen to largely agree with the sentiment. But, being pedantic, I'd add a few additional observations: -

1. If there's enough of The SCO Group left to get that far. We've talked about a PIPE fairy syphoning more cash into this company, but anyone doing so now would come under some fairly close scrutiny. Despite comments here to the contrary , the SEC will not be ignoring this case. The SEC had their fingers very badly burned by Enron, Worldcomm etc, and will not be looking to repeat past mistakes. Potential future investors in The SCO Group may be few and far between, since [certainly corporate investors] would be wary of making "false" investments in this company.

2. While I think damages in this case are entirely justified, I'm thinking that they may be justified for IBM, as much as, if not more than, The SCO Group. This article discusses the market impacts of this litigation. Let's take a really simplistic view of that and imagine that, as a result of the negative publicity connotations of the court cases, both companies saw a 5% drop in their unix revenues.

In a previous Groklaw article, here, PJ reports that The SCO Group's 1st Quarter 2006 Revenues were $7.34 million, down from $8.86 million for the same quarter the previous years, with the company turning in a net loss of $4.58 million.

Now, the linked Jungle analysis quotes IBM's Q2 unix revenues at $3.808 billion. Yes, billion. To be precise, we need to acknowledge that this is comparing The SCO Group's Q1 performance with IBM's Q2 *nix performance - and while narrowing the IBM numbers down to this specific platform may be valid, I can't say if comparison across two different quarters is entirely fair.

But if we just imagined a flat negative 5% impact to the revenues of each company, [and yes, I do realise just how unscientific this is, but, after all, we do seem to be living in cloud-cookoo-land with this case!] then the monetary losses to The SCO Group would be $229,000 [that's hundreds of thousands of dollars], while the impact to IBM [and note, we're just talking about IBM's Unix sales here...] would be $19,040,000 [give or take] - and in both the cases the 5% downtick would be to their quarterly revenue figures.

Just to compound the un-scientific nature of this comparison, it's probably useful to point out that, at this moment in time, IBM are returning healthy profits, quarter-on-quarter, whilst The SCO Group appear to be accelerating their cash burn with net loss after net loss.

So if this were best described as an apples-to-pears comparison, The SCO Group's pears appear to have gone a little rotten.

Since IANAL and not familiar with US Law, I'm only making an educated guess when I suspect that somewhere in here we may start talking Lanham Act claims, which is, I believe, related to unfair competition.

If we do ever get to those damages that PJ talked about, I'm quite sure that IBM can turn to these industry analysis reviews and pull out some data to show negative impact on their performance.

The thing that must be unsettling for The SCO Group is that 2 quarters' worth of 5% impact on IBM's unix revenues [3 at most] amounts to more than the entire market capitalization of their company...

[ Reply to This | # ]

"Pruning the Puffery"
Authored by: Carla Schroder on Saturday, September 02 2006 @ 09:00 AM EDT
Nice turn of phrase, PJ. Groklaw: start your day with a
chuckle.

[ Reply to This | # ]

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )