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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
We have a vested interest to ensure that SCO does not win in its attempts of litigation. We have created a shadow company that hosts our Linux servers. So if someone gets sued by SCO it will be the newly-formed company which will simply fold and we as the customer will be able to get to our data and purchase UNIX or Windows servers to continue the work.
Which is nice.
SCO convinced Ren
Ren was always easy, it was Stimpy that was always a stickler for details.
Sorry.
Intelligent Life on Earth
... where a couple of scientists are looking at a blackboard. The left and right sides have formulae. The center part says "Then a miracle happens".
One scientist says to the other, "that middle step seems a little fuzzy."
(Okay, that was paraphrased from memory, but the sentiment fits).
it is hard for me to believe that anyone would have bought into the idea that the case would already be settled. There is no real incentive to settle until a trial date has been set and discovery has started. Even if SCO's claims were rock solid, IBM would force them to spend gobs of money in prolonged discovery before they even thought about trying to settle.
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 a gamble, with a potential return of 100/1. What the hype is leaving out is that most people/businesses will simply switch, if that happens sell at a peak and still expect a potential 20/1 return.
3. Raise the stock value.
4.Dump the stocks and escape from the sinking ship.
SCO is trying evry trick to make some money.
Tha's all this lawsuit is about.Cashing in on other people's hardwork
I do hope SCO's claims get trashed.
Any sensible person with a moderately fair background in Unix/Linux can see through SCO's claims
Maybe someone from SCO is a /. subscriber. Since they would get to see the story earlier than the rest of us, they could DDoS any site they didn't want us to see.
I want to believe.
I was not touched there by an angel.
...when the SCO buble finally "bursts" and angry investors go back to institutions like Ren, Ren can say "we were deceived", and maybe we will yet get the fraud trial that the executives of SCO deserve to live through.
Well, it would be not entirely unplausible that SCO happens to want to score some money for such actions from Microsoft, as to sue Linux and probably BSD out of living. Or make commercial life doing products related to any unix system very uncomfortable, and far more dangerous then it already is.
Well thats my bit.
ta ta.
perlpimp
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.
The litigious nature of this society is drawing it into a very frightening pattern of litigating for profit. What happened to the idea that people must take responsibilty for their own actions? Could this be the start of a "my company is failing . . . I need to find someone to sue FAST!" campaign?
StyleChief
Strange women lying in ponds distributing swords is no basis for a system of government! -M. Python
Serious, as much fun as SCO is, is anybody else feeling their faith in humanity drain away, little by little, day by day, because of morals like these?
No, not all of humanity just corporate executives... but they're species has always been questionable anyway.
There Stock price was less than $4.00 before this crap, and now it's over $17.00. I guess there BS is worth something more than the effort of all the Open Source Programmers who actually wrote code. Another shinning example of the Amerikan dream. Not too mention Michael P Olson(VP) has filed for a proposed sale of more than half his outstanding ownership(30K) shares on 11/11/2003. Wow when is somebody going to prosecute these people for fraud. IMNSHO --Greg
When work feels overwhelming, remember that you're going to die.
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.
And according to recent SEC filings, wasn't it revealed that the only SCOsource licensing revenue they got last quarter was from Sun & Microsoft? Hardly a raving endorsement from the marketplace...
Stop by my site where I write about ERP systems & more
You'd think that venture capitalists would have gotten smarter (and pickier) about where they throw their money. This sounds like giving the neighborhood bully some money so he can invest in a nice aluminum bat to make it easier to collect from the rest of the kids.
This is my sig. There are many like it, but this one is mine.
VC is always a bit of a gamble, since 2001, a very large gamble. However, it smells like they didn't examine SCO's claims very well. They were undoubtedly hoping for an exit via a trade sale to IBM but, it appears they have underestimated the reaction that "All your Unixes belong to us" has brought. They probably weren't even aware of the BSD settlement (maybe not Darl either).
Actually, I think in the Bible they cast out demons, instead of spawning daemons.
Crap, forgot to paste in the link.
I know people seem to be sick of reading SCO stories all the time, but I think it's exciting to be witnessing the unfolding of such an epic unix war.
It's just like the old days that I missed except now it involves linux and it's therefore even more exciting.
Maybe we should go back to the tactics of the old unix wars: We should catapult a plague-ridden cow into SCO's castle. Hmm. I think that's how it went.
graspe
JGG
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
If Ren says "we were deceived", then Stimpy can just say "We sure were, Ren!", and... wait, somebody's already done that one.
Where does accountability for gross incompetence come into the equation though? Since IANAL, I can't begin to address this in a legal sense, but if I tell you "kicking your little brother's head in will make him smarter and transform him into Megatron" (which has a lot more backing it than SCO's claims, from what I hear), then you do it and he dies, obviously I'm a bad person for filling your mind with utter lies. When do you become liable, though? You either have to be lying when you say that you didn't expect the kid to die, or a complete idiot to have believed me. Well, Ren is kicking their kid brother (by telling investors that SCO is a good investment option, really!) and when the kid (the investor collective) dies a horrible death, it seems like the same thing to me.
If they honestly say that they were deceived, they're much too dim to be in business. If they can't say that honestly, they're crooks. Would you like to be a thief or a mouth-breathing moron today, sir?
"Linux doesn't exist. Everyone knows Linux is an unlicensed version of Unix"- Kieren O'Shaughnessy
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
Notice that IBM doesn't feel compelled to publicize every exchange between SCO and Groklaw as if it's the discovery of life on Mars....
What I'm listening to now on Pandora...
http://www.livejournal.com/users/groklaw/40692.htm l
I won't lie and say I've completely kept up with this SCO thing, but I was always under the impression it was a handful of lines of code in question - like maybe IBM put them there by accident. SCO is telling Renaissance that all of Linux is a branch of UNIX. So is SCO really alleging that there's tons and tons of lines of UNIX code? Or was that just a lie for Renaissance, and they're giving a different story as to why they need $699 from everyone?
Schnapple
It's easy to work something out once you know about it.
But if you never knew it was coming? Imagine you ran a hobby site on a 2Gb per month, $10 per extra 50Mb deal. You might only find out 6 hours later, by which time you'd been hit with a bill of $500 or something. Nice, eh?
Not to mention it's absolutely useless if no-one at all can get to the story.
Get your own free personal location tracker
Idiots.
They didn't bother to check any of the information presented.
They did do any research into the market or Linux or SCO. None. Nada. Zero. Zilch. They took SCO's press releases as gospel.
They're idiots and anyone who invests based upon their advice is also an idiot.
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
SO, by this argument, companies that want a "normal business plan" are going to switch leased vehicles, package carriers, trash haulers, office suppliers and all other things each time there's only a press release about legal action. Not a suit, and nowhere close to a judgement.
You, sir, are completely deluded to the merit of SCO's claims. They have none. IBM, Groklaw, FSF, Torvalds, HP and countless editorials concur.
SCO's ideals don't feed your employees. Money does, and the Linux OS is still free last time I checked. Say it with me sir, F-R-E-E.
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.
What a co-incidence! I am the CEO of a ginormous fortune 1 company that is doing exactly that! Joe, is that you? Don't even think of showing up to work on monday!
Since anyone can sue anyone in a civil suit, it's likely you could still be sued and held accountable. Think about it: you've formed a shadow company after SCO makes claims about linux, it's wholly owned or controlled by you and has no other customers.
It would demonstrate that you knew you were vulnerable and you engaged in a conspiracy to mask your vulnerability.
IANAL, but I don't think you can shirk that easily. Perhaps if the shadow company had other customers unrelated to yours *and* there were no ownership links between you and the shadow company this might be a viable idea.
Then buy HP Linux servers. HP has idemnified their customers, so you can't go "bancrupt" because of using their Linux. And by the way, how much is SCO paying you to post on /.?
"Freedom means freedom for everybody" -- Dick Cheney
While it's all easy to sit back and call Renaissance dumbasses, they probably bought SCOX at < $1, and now own a ~ $20/share stock. I know, I know, it's ill-gotten and short-term gains, but if they were to sell now and make ~$19/share they have made a HUGE profit that is fair-and-square according to the laws of this country - after all, they honestly (if stupidly) believed SCO was a good investment. That's a little different than the pump 'n dump scheme many of us suspected.
I'm not standing up for SCO or Ren. But the louder we screech how stupid they are, the harder they laugh on the way to the bank.
"Stop throwing the Constitution in my face, it's just a goddamned piece of paper!" - George W. Bush Nov. 2005
...GRIEVOUS abuse of CAPITALISATION...
Don't let THEM immanentize the Eschaton!
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.
Today, we just got a memo from the CEO of our firm. Starting next Monday, all open source software that we use and any development taking place using open source tools (this includes GNU tools) must be removed and all OSS related projects will cease. The CEO got a "tip"...
Nice troll, or plant. I really like the parts where you say they are wrong, but what can you do, it's a sound business decison.
Are you the same guy that posted the Our company is switching again post?
Assuming this anecdote is true:
-- It will expose them for what they are and it's going to end in a PR disaster.
-- They won't be able to use apache or sendmail and such in SCO's Unix which would make it worthless. So it would imply an MS only environment. If anything, it would be the ultimate argument to go fully non MS instead.
So I'd say, good, let 'em bring it on.
FREQUENT spelling errors, BLATANT pro-Linux/anti-Microsoft attitudes
[snip]
You must be new here.
I'm not a prophet or a stone-age man,
I'm just a mortal with potential of a super man.
>>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.
If their logic were correct, then by the same logic, Unix is a derivative of Multics, which in turn is a derivative of GCOS. Thus, by SCO's logic, General Electric owned the whole trunk, but sold it to Honeywell, who sold it to Bull of France.....
Maybe it is time to trade in my GE stock for Bull stock?
Guessing that IBM would have settled is like assuming that a bear would not shit in one particular acre of a woods because you told him not to.
This sig no verb.
Darl, is that you?
I pray SCO marches this document into court. It does not mean what they think it means.
No, I'm New Here
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
And yet if they sold all the shares now they'd be making over 400% in about a year. This looks to me like they were in on the whole pump-and-dump scheme. See who's left holding the bag after these guys unload their stock -- that's the sucker.
-- It only takes 20 minutes for a liberal to become a conservative thanks to our new outpatient surgical procedure!
I'd really like to know what kind of diligence Ren did in this case. VCs (at least, those with any brains) don't just take a company's word for it. They look into it *in depth*. I've worked for a variety of startups, and that's how things work (gee, just like you'd expect them to work!)
So at least one of three things seems to have happened:
1) Ren didn't do very good diligence.
2) SCO flat out lied and presented some major-league bogus evidence.
3) Ren believed as SCO appears to believe - that they could get away with this farce.
Note that these are not mutually exclusive.
More and more, it smells like Enron to me.
Why don't we ask /. editors to change the "Anonymous Coward" username to "SCO/Microsoft plant" instead? It would be a lot more accurate...
"Freedom means freedom for everybody" -- Dick Cheney
I think "3. ????" is actually "Have Slashdot and the rest of the Linux media compulsively give you free publicity and credibility several times a day for months."
Notice that IBM doesn't feel compelled to publicize every exchange between SCO and Groklaw as if it's the discovery of life on Mars....
Last time I looked, Slashdot was a NEWS site, THE premier site for news about Linux and open source software, and the SCO suit is the biggest threat to Linux and open source software in its history.
Given that developments in that suit tend to occur daily or more often, don't you think it's appropriate for Slashdot to mention these developments as soon as they show up?
Meanwhile, IBM is NOT a news organization. It's the defendant in a potentially VERY expensive lawsuit that jepoardizes TWO of its top product lines.
Given that anything it says might be used against it in a court of law, crash its sales, or crash its stock price, don't you think it's appropriate for IBM to keep as quiet as possible?
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
While I agree there are some real idiots sitting on the bench, some of the examples you site are complete BS. In the case of Lee West, his ruling was simply that there was nothing stated in the enforcing agency's charter that would give it the power to enforce a do not call list. You may not agree with the ruling in this particular case, but limiting government agencies to their actual rules and charters is a damn good idea. Congress just added it to the charter, problem solved.
Now as far as the pledge of allegiance is concerned, hell yeah it should be changed. What part of separation of church and state do you not understand? Kids are required to be at school, and required in many schools to say the pledge. If they say the pledge they are acknolodging a god, and dont forget, freedom of religion includes freedom from religion. The pledge as originally written did not even include the words "under god" in it, and the family of the original writer protested its addition during the cold war.
"My head hurts, My feet stink, and I dont love Jesus." -Jimmy Buffett
Have to, sorry:
"Ladies and Gentlemen of this supposed jury, SCO's accusers would certainly want you to believe my client doesn't own the rights to Unix, and they make a good case. Hell, I almost felt pity myself. But Ladies and Gentlemen of this supposed jury, I have one final thing I want you to consider.
Ladies and Gentlemen, this is Chewbacca. Chewbacca is a Wookiee from the planet Kashyyyk who carried a gun and ran from the mob. But Chewbacca lives on the planet Endor. Now think about it. That does not make sense. Why would a Wookiee, an eight-foot-tall Wookiee, want to live on Endor with a bunch of two-foot-tall Ewoks. That does not make sense.
But more important, you have to ask yourself what does this have to do with this case. Nothing. Ladies and Gentlemen, it has nothing to do with this case. It does not make sense. Look at me. I'm a lawyer defending a major Unix company and I'm talkin' about Chewbacca. Does that make sense? Ladies and Gentlemen I am not making any sense. None of this makes sense.
And so you have to remember when you're in that jury room deliberating and conjugating the Emancipation Proclamation, does it make sense? No. Ladies and Gentlemen of this supposed jury it does not make sense. If Chewbacca lives on Endor you must acquit.
I know SCO seems guilty. But ladies and gentlemen this is Chewbacca. Now think about that for one minute. That does not make sense. Why am I talking about Chewbacca when a company is on the line? Why? I'll tell you why. I don't know. It doesn't make sense. If Chewbacca does not make sense you must acquit. Here look at the monkey , look at the silly monkey.
The defense rests."
Aych tea tea pea colon slash slash slash dot dot org slash
Quote me the part of the Constitution that says "seperation of church and state".
You can't. It isn't there. It was "added" by a federal judge.
If we are going to hold regulatory agencies back from exceeding their charter, fine. But let's put the same restraint on the courts. If you REALLY want seperation of church and state, there is a way to add it to the "charter"
Constitutional Amendment.
Corporatism != Free Market
You're completely backwards there. The Pledge of Allegance, teacher-led in a classroom, cannot be considered a "free" act -- it is coerced. Even though technically a student may opt out of it, peer pressure makes this impossible most of the time. As such, the 9th circut's ruling was a blow for the free exercise of relilgion.
You have to remember that the term "religion" means more than just judeo/christian/muslim beliefs. It also encompasses beleif systems in which God is thought not to exist, or at least is not to be worshipped.
"Orthodoxy is unconsciousness" - Orwell