SCO's Plan Examined
kevin@ank.com writes "In the best expose I've read since the original Halloween documents, Groklaw has links and analysis of Renaissance Ventures' rationale for investing in The SCO Group. Among other misrepresentations, SCO convinced Ren that SCO owned the root of the entire UNIX tree, and that Linux was just one branch of that tree. Linux gets a SCO tax... forever; or worst case, if Linux gets killed in the process, then so be it. Renaissance also estimated that IBM would have settled with SCO last April under the strength of SCO's claims, and the threat of terminating their UNIX license. Oops."
-jls
Techno-pagan
When SCO CEO Darl McBride wrote his open letter last week, he seemed to indicate a hope there could be a viable future partnership between his company and Linux. There is more than a hint as to what that partnership might be like in two research papers prepared back in March and April by Renaissance Ventures, a VC firm that invested in SCO.
The first document is an explanation of Renaissance's reasons for thinking SCO was a good investment. I know you've been wondering what in the world those folks in the stock market have been thinking. The second is an analysis of the SCO v. IBM lawsuit. They are both so blazingly wrong in both facts and conclusions that I fully grasp for the first time how some people may have invested in SCO, based on such misinformation.
First, the investment document. It is based on SCO's telephone conference call in February of 2003. You can listen to it yourself on mp3 here. Renaissance thought it sounded like SCO's bottom line was about to get "prettier" because they believed what SCO reportedly told them in that phone call, namely that most companies were reacting to the new SCOsource licensing program in a positive way.
Renaissance also bought the story -- hook, line and sinker -- that SCO owned the UNIX tree trunk, so to speak, and that all other versions of Unix were branches, or derivatives, off of their tree, including, so they imagined, Linux. (I'm using their language, by the way. They actually mean GNU/Linux, the kernel plus the applications, not Linux the kernel.) They planned on hijacking the GNU/Linux applications and if that meant the death of Linux, so what?
That's their business proposition? And GNU/Linux gets what out of this, other than ripped off and ruined?
Their original strategy was based on the fantasy that the world was clamoring for the ability to stay with UNIX and yet run GNU/Linux applications, and there they'd be, like a troll hiding under the bridge, ready to exact a toll on all those wanting to cross.
SCO, in their daydream, thought they could be the gatekeeper making it possible for companies already on UNIX to sort of transition to Linux, which they knew everyone wanted to do, without leaving their UNIX environment behind. Next step? Backcharge for UNIX shared libraries they believed had been used inappropriately and start scooping the money up in royalties for UNIX code.
Why they imagined companies would rather follow that convoluted, expensive route instead of just running Linux itself is one of those mysteries the tech community can never solve, because it's not based on technical realities but on financial yearning. The tech makes no sense at all. But the ka-ching started ringing in Renaissance's ears, and you know how compelling that can be, like when your telephone starts ringing and you think you have to answer it. But the whole structure is based on a lack of technical knowledge and not enough true facts and a grievous miscalculation about the market. If ever there was a situation illustrating the importance of CEOs and financial analysts comprehending tech, this story is it. Money got invested in a dream that isn't coming true.
Let me let you read it for yourselves, because it's beyond my descriptive abilities to capture all the repulsive nuances, not that this is a subtle document. They begin by describing the conference call and then explain the math potential as they see it:
"We believe management's forecasted $10 million of SCOsource revenue in 2Q represents near-term settlement of possible license violations in arrears (related to heretofore unlicensed use of the SCOsource shared libraries) from one or more large vendors of Linux solutions, but we are unable to glean more specifics at this time. . . . SCO management also stated . . . that the vast majority of interactions with customers and other software vendors with respect to the SCOsource initiative were positive. Our view is that lumpy, and possibly large, bookings of SCOsource license fees will continue for several quarter
Mod me down with all of your hatred and your journey towards the dark side will be complete!
It's also been discovered that our favourite clueless "analyst", Didio, has known McBride and Stowell for some fifteen years. Yeah, not like that could affect her "analysis" or anything.
''Pass the hookah please!''
Belief is the currency of delusion.
there = He is over there.
their = Their days were numbered.
they're = They are a bunch of uneducated morons.
Crap, forgot to paste in the link.
While Groklaw has been slashdotted...
From their "about us" page: (emphasis mine)
We believe the best investment opportunities for realizing outsized returns migrate from sector to sector over time: from buyout, to venture, to public markets, to conglomerates or pure plays within certain industry sectors, in public or private markets - in our view, in no particular order but contrary to the most recent, firmly established trend. We believe investors have a choice: either following the trend in hopes of jumping off early and profitably, or investing contrary to trend in search of outsized returns.
Renaissance subscribes to contrarian theory and believes the best opportunities now exist in microcap public companies that are orphaned from Wall Street with no institutional sponsorship. We will invest in mis-priced public securities and take an activist role in enhancing returns or sponsor management buyouts of undervalued public companies with high intrinsic value. Few investment groups are now equipped to source investment opportunities with enterprise values below $50 million, either due to their larger capital base or otherwise, which presents an opportunity for us. Aberrational pricing in the public markets often correlates with a despondent, disheartened and perhaps uninformed shareholder base, which helps reduce premiums paid while acquiring securities or entire companies.
If they were contrarian, I would think that they would be selling and go against the people who have bought the price up. But, they said they were looking for a whacked-out company, and they found one. Who knows.. they might buy out management and install some honest people.
But, they said it best.. SCO is at an aberrational price, but its abnormally high, not low. Hopefully they got in in January and aren't in it for the long term.
HIV Crosses Species Barrier... into Muppets
Here you go:
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http://freeserve.i-resign.com/images/mhproof.gi
----- "Blame the guy who doesn't speak English." -- Homer J. Simpson
If you haven't already complained about SCO's conduct to the Federal Trade Commission and/or Better Business Bureau, you really should do so.
The BBB complaints become a permanent part of a corporation's record. Enough complaints can make a difference.
www.bbb.org
www.ftc.gov
(Simply click on "File a complaint" in both cases)
I have filed with both. I believe that SCO's conduct is essentially the same as trying to sell licenses to the Brooklyn Bridge and then threatening those that don't buy a license with lawsuits.
Make a real difference by allowing your voice to be heard. File a complaint.
--
Slash
http://www.livejournal.com/users/groklaw/40692.htm l
I think you mean the famous cartoon by Sidney Harris.
Anand Rangarajan anand@cise.ufl.edu
The orignal tree.
As others have noted, this tree really means nothing in terms of actual code.
For instance, Linux appears to be an offspring of Minix, which in turn is an offshoot of the original Unix.
Now, anyone who's read the preface to Andy Tanenbaum's book (where the entire Minix code is listed) knows that Minix is a clean re-implementation of unix, and contains no UNIX code whatsoever.
Linus, in turn, used some Minix code to get started with Linux, but this was quickly replaced. Linux hasn't contained any Minix code for years.
So this chart, although correct with respect to 'influence' or 'inspiration'
has nothing to do with actual code. Naturally, it doesn't provide any real support to SCO's claims.
That would be something like Digital Research suddenly claiming ownership of Windows, since it's based on DOS, which in turn was based on QDOS, which was a CP/M clone.
google cache
"Go to CNN [for a] spell-checked, fact-checked summary" -- CmdrTaco
Yeah, I see a few of these posts from ACs.
I'll bet these posts are planted by people hoping to make a buck out of SCOX stock or something.
There's a no way a serious company would spend an incredible amount of time and money migrating away from Linux based on SCO's threats.
are available here at Renaissance Ventures site. Pretty amazing stuff. They even have a table calculating how much money they think SCO will make with an IBM settlement.
It's called "Piercing the Corporate Veil" and unless you guys did something really really sneaky this tactic is all but useless to protect you from litigation.
I pray SCO marches this document into court. It does not mean what they think it means.
SCO's position on this is... well, it seems to go something like this:
The original UNIX licenses most companies signed with AT&T stated that modifications to the UNIX codebase would be treated as derivatives of UNIX, and is owned by the UNIX copyright holder (now SCO).
Therefore, anything any UNIX licensee installs in their UNIX instantly becomes a derivative of UNIX, and owned by SCO.
Therefore, any code contributed by any UNIX licensee from their UNIX codebase to Linux is therefore SCO's property.
Therefore, by including this code in Linux, Linux becomes a derivative of UNIX, and becomes owned by SCO.
Now, this is really... creative reasoning at just about every step of the way. But it does seem to explain SCO's statements about millions of lines of code that they own in Linux. Basically, they are claiming that any code that comes from a UNIX licensee is their intellectual property, because it is a derivative of the AT&T-licensed UNIX code.
Or at least, I think that's the story this week.
This is my sig. There are many like it but this one is... Oops. Frank, I've got your sig again! Where's mine?
You are assuming that a JUDGE can see through SCO's claims. Keep in mind, on the Federal bench, we have "great minds" like:
The 9th "Circus" in San Francisco, with it's stupid pledge ruling, and initial ruling that they had the power to STOP AN ELECTION FROM TAKING PLACE, before reversing themselves
Judge Lewis Kaplan of Time Warner (he worked for a firm that represented them prior to being placed on the bench by Clinton), responsible for the deCSS decision, and added the ability to BAN HYPERLINKS to the DMCA...
Judge Lee West, who seems to think that telemarketers have the right of free speech on the property of others, against their explicit will...
I'd not be CERTAIN about anything our fucked up legal system does, until it's DONE...
What is more certain than anything is that SCO will likely run out of money before the IBM suit goes to trial, if enough counter suits are filed against them.
Corporatism != Free Market
Actually, there is an amendment for that... the first one. Try reading the Bill of Rights sometime???
Amendment I
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
What does that bold print say? Why, I do believe that specifies separation of Church and State...