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SCO CEO Calls Red Hat a Fraud
James Morris
writes "A story at Newswire reports that SCO CEO Doug Michels considers Red Hat selling Linux to be 'a Fraud' because it was developed
freely. Sounds like he forgot his medication again. "
I suppose it's an interesting point-but I think the angle
SCO takes is a probably a wee bit different.
My employer at the time made the transition in spring of 1996. SCO had discontinued Xenix by then, and our customers were VERY unhappy about the thought of paying massive per-user fees when we upgraded their old Xenix servers (Xenix was unlimited user). I tried running our database engine under iBCS2 on Linux and guess what? It actually ran FASTER than on SCO Unix!
When the bid season started, my boss looked at the per-user charges for Linux, looked at the per-user charges for SCO Unix, asked me what the downside was, and all I could do was shrug and say "I don't know, I've been doing my development under Linux for the last three months and then porting it to SCO, everything seems to work right and work faster."
One trial school district later, and it was official: Linux was more stable and more feature-ful than SCO Unix, and ran like a scalded cat even on lowly IDE drives (SCO Unix runs like a bored tortoise on IDE). Porting our SCO Unix application to Linux was basically a case of re-compiling and fixing some minor printer issues in our code (since Linux uses the BSD print spooler while SCO uses the Sys V print spooler).
Y2K hurried the move to Linux too, since all the older SCO boxes had Y2K issues.
I know for a fact that SCO lost over $250,000 in sales from that single move to Linux. Multiply that by every other SCO VAR that is looking at Linux or has switched to Linux, and you can only conclude that SCO would have at least twice the revenue that they have today, if not for Linux.
-- Eric
Send mail here if you want to reach me.
Posted by Just Another Perl Slacker:
I posted the following comment to SCO using their website feedback form at http://www.sco.com/feedback/index.html.
Regarding your CEO's comments about Red Hat, he doesn't know what he's talking about. Red Hat has devoted many hours to developing the Redhat Package Manager (RPM) which most of the other Linux Distributions use, free of charge. Red Hat also devoted many hours to developing Gnome, what is quickly becoming the nicest looking and easiest to use Desktop for Linux. In addition, as with most Linux distro's, anybody can download Red Hat Linux for free from many different FTP mirror sites. Anybody who pays Red Hat for a cd of Linux (which I intend to do with Red Hat 6.0) is choosing to support this company for all the great work they've done in helping to make Linux as good and as accessible as it is. This is a loyalty base any company would love to have, including yours. You could learn something from Red Hat instead of slamming them in the news.
RedHat is not selling Linux or GNU tools it is convenient to think so but in reality it is plainly not true.
I do not buy RedHat CD's because they have the latest greatest Linux or Tools on them but because they are easy to install and maintain.
RedHat sells the work they but into putting all these utilities together in a convienient and usable format. I would gladly pay the the $50 for that. It's a lot of work and I think they are doing a great job and obviously 400 000 other people think the same thing.
Also I am willing to buy my RedHat CD because I know that that money does not just go into pockets but are actually used to advance the cause of Linux and to help fund other projects that make Linux a better project.
The GNU License says that you cannot sell the software for an unreasonable amount of money. RedHat is not doing that. I do think that SCO is selling their product for an unreasonable amount of money and that is why I'm not using it.
I believe that the Linux community is not anti capitalism or even believe you should not be paid for work you do we just believe that you should not get paid an excuberant amount of money for inverior work.
I also believe that someone outside the Linux community have no say in what RedHat does with Linux or the GNU tools that come with it. But I do believe that they are towing a very thin line and that the Linux community will keep them there.
SCO just doesn't get it.
It appears that Red Hat is doing quite well, thank you, with their business model.
In Liberty, Rene
SCO UNIX lost and so rather than admitting defeat or, God forbid, improving their product the CEO whines about Red Hat. The FSF license terms have always made it possible for a third party to sell distributions or support. It bothers me a bit that a lot of people who have contributed code to the Linux kernel, or to the nuts and bolts that makes a Linux operating system work (silly little things like command line utilities, compilers, windowing systems) don't get beans. It's almost like the distribution and support is valued over writing code.
SCO positioned itself to be a niche player though, they aimed at small businesses that may need a UNIX. Linux pretty solidly took away that niche by being free, but also by being a better product. Red Hat still makes their product, with source code no less, available free for the download. They have to, and this is also how they generated enough good will and recognition for their product. My first linux install was some version 1, slackware and was downloaded entirely via a flaky 2400 baud modem. Painful barely begins to describe the experience. Later on I upgraded to a Red Hat distribution and was very impressed with the install technology. It made the Windows install look like it was the product of not infinite monkeys banging away at a keyboard, but about 12. I still did it over a modem, this time a zippy 14.4K and it was still painful, but from that point on I was willing to pay a nominal fee for a distribution.
As an aside does anybody have numbers for Red Hat installations broken up by free distributions and commercial distributions?
The big problem for SCO here is that even if SCO UnixWare were a good product, it could never deliver the value of Open Source Linux.
Unfortunately, SCO UnixWare is NOT a good product. I should know--I've worked with two revisions of SCO UnixWare, and Univell UnixWare itself since version 1.
Between 1994 and 1996, I worked for a systems integrator--mostly programming for Linux--and during that time, found myself working on two SCO UnixWare deals. Both were implementation and support nightmares--thanks to both the poor quality of the SCO product, and the equally poor quality of its (very expensive) product support.
1. An accouting firm in Detroit was migrating to UnixWare from pure AT&T 386 SysV (Oracle). Due to undocumented bugs in the SCO PCI implementation, UnixWare 2.11 wouldn't even INSTALL on 5 out of 6 PCI motherboards we tried. Meanwhile, the SCO hardware compatibility list was nearly two years out of date, and SCO reps refused to endorse any vendor's motherboards for use with the product. Once installed, we spent three weeks debugging problems with UnixWare's buggy ethernet drivers--which a reliable source told us were in some obscene manner derived from Netware DOS binaries.
2. Later, someone in our office sold UnixWare as a Novell MHS mail gateway. Too bad the PERL scripts AND the Novell integration were so buggy that a SCO tech support person (whom we paid much money) confided the product was basically unsuable. We had to rewrite portions of the mail gateway ourselves, and never solved intermittent connection problems between UnixWare and Novell.
I do not feel sorry for this company.
Matt
Thank you for mentioning SCO VARs. I hope they all switch to Linux. Here's why:
Last month when I attended SCO's quarterly VAR briefing in Minneapolis as an end-user guest of our reseller, I was astounded by how little regard SCO had for these people who presumably are making them money. We sat through a long, inaccurate PowerPoint presentation on the Y2K problem, presented by "someone from corporate" who had no idea what he was talking about. Then they explained how SCO was going to charge several thousand dollars to evaluate legacy SCO UNIX systems for Y2K compliance, effectively cutting out the VARs from this source of income. You could hear the grumblings getting louder as his talk went on. The presenters were aware of this; midway through, they switched from talking about SCO as "we" to SCO as "them."
My reseller and I walked out before the end. It was a waste of time. There was no talk of new products, not even their "Tarantella" product which appears to do most of what Citrix MetaFrame does. There was no talk about what SCO was doing to compete against Linux or NT. There was nothing to give me confidence that SCO will exist as a company after the year 2000.
With Linux, VARs can be as independent as they choose. They can be their own developers, or they can resell Red Hat, Caldera, etc. They don't have to worry about being the only "SCO-authorized" training center in a 300-mile radius or whatever the limit is.
Thanks, SCO, for spreading FUD about Y2K and FUD about Linux. You've ruined the attitude of this once very happy customer.
Very sincerely,
Carl Patten
Systems Administrator
Trimodal Inc.
(cpatte@trimodalinc.com)
This article was far too short and didn't say much. He never really explained what he meant by 'fraud'. However, I'm assuming that he was attacking RedHat's business model. If this is the case, I think he does have a point. In other words, this is not a company you would want to invest in. Redhat doesn't have any propietary software. 99% of their package is developed by the general open source community, the other 1% by their in house staff. They have no propietary software, I'm not even sure if they have exclusive rights to their own documentation. It can all be downloaded with source for free! Right now their cash cow is the convience factor. They make money by packaging Linux up on a CD in a nice convenient easily installable package with documentation. The problem with this is that when and if Linux takes off, what stops competition from coming in and copying their packages exactly and selling them for 2 dollars? The fact of the matter is that even right now most slashdotters only buy the 2 dollar cheapbytes' versions of RedHat. People new to Linux and RedHat actually buy the 50 dollar CD from RedHat. But eventually this market is going to slip away when the market begins to mature someone going to figure out just how easy it is to pirate RedHat's cash cow. Ok, now from the Linux communities perspective. What can RedHat add, never mind their profit margins. The amount of money that they can sink into Open Source projects like Gnome is extremely limited. They simply can't afford it. The only way they can get a return on their money, is in minor trimmings that get added to their own distribution. When other companies start mirroring these additions you'll see these projects get strangled.
Certainly some of you will clammor that 'RMS says that he doens't mind them making money on support'. This may be true. Theoretically, RedHat could make money by offering support. I've yet to see any proof that this business model even works. Certainly RedHat hasn't shown it. I doubt that their support operations are even breaking even right now. The support operations are even questionable in the long run. What makes RedHat the ideal source to answer questions about Linux? If MS were to suddenly die tommarow and Linux declared THE new OS of the masses, who do you think is in the best position to offer support for Linux? Since there is nothing propietary, nothing secret, in Redhat Linux distribution what makes RedHat any better at support than anyone else? IBM and many other companies are in great positions to jump on markets like these. They just need to train the right people, but they have the resources and the people to do it.
Anyhow, my point is not that RedHat can't possibly make money. I'm sure they're going to make a fair amount of money in the short run. However, I think they're going to fall victim to their own hype. They're going to believe their own line, and they're going to start playing their chips foolishly. I believe the only way that RedHat's investors are going to make out well in the next 5 years, is if they understand their limitations. It may very well be prudent for them to cash out in the next year or so.
1) this article does not say many things about why Red Hat selling free software is a fraud. Of course the main argument is obvious. But the article is a bit short to be really valuable.
;-)
2) anyway, it seems to me that Michels is only afraid of Linux selling model, since RH begins to be attacked here and there (or at least some people look at it with attention), then it is easier for SCO to attack it. Michels will not attack a smaller / RH competitor... You always attack the bigger... when the bigger is not anymore the most appreciated... like Windows
3) Michels should read the license. Even though it might be considered unethical by some people to sell the free work of others, that's legal given GPL. Therefore Michels' claim has no basement. There is no fraud.
Michels should have think before he talked. Now he appears dumb. That's not good advertisement for him...
The world belongs to those who get up early. - I'm far from being the king of Earth then
In 1994, I was programming SCO systems at work, we were an SCO shop.
Early in 1994, I read an article stating that Linux 1.0 had been released, the first "stable" release.
I had heard little things about Linux, and decided that it was time I checked it out.
I got myself a Slackware distribution and installed it on my home PC.
Having been the veteran of already 5 or 6 SCO installs at the time, my first impression was of how simple the install was. I had a working system in a half hour or so. I was particularly impressed with the fact that this thing had installed from my proprietary interface Mitsumi CDROM drive, all the commercial UNIX's at the time required a SCSI CDROM. I had PPP and X working after a couple of evenings of fiddling with the system. Much easier than SCO and most impressive!
Remember, this was 1994. After a little experience with my home Linux box, it became apparent to me that there was NOTHING we were doing at work with SCO that we couldn't also do with Linux. We would have to replace some commercial apps we were using with SCO with freeware equivalents, but clearly the functionality was there.
I floated a few trial balloons at work about migrating from SCO to Linux. I work for a pretty good employer, they were met with some interest.
The first Linux box we set up at work was a little server built out of discarded parts for the purpose of letting SCO developers run Netscape Navigator on their desktops. You see, in 1994 and 1995, there was still not a port of Netscape to SCO. We ran Navigator on the Linux box and displayed the display on the SCO desktop, it worked great, we called this machine our "Netscape Server", even though, of course, it was not running the software, "Netscape Server", but was "serving" netscape client sessions to the SCO developers!
Long story short: by early 1996 we had migrated completely from SCO to Linux for our application (a factory automation system) and there's been no looking back.
SCO is the least stable, least intuitive, hardest to configure, hardest to scale, crashingest, and buggiest of the commercial UNIX distributions. Linux kicked its but in 1993 and does so even more today.
Mr. Michels' comments are transparently the remarks of a CEO who's company is in it's death throws and needs a scapegoat to blame.
But, they truly have no one to blame for their situation but themselves.
...because it seems obvious to me that no-one sells *linux*, they sell the value added stuff they produce, like easy installation, manuals, support, etc.
The raw materials, the kernel, GNU, and GPL apps are "free" but it's a non-trivial thing to put them all together and produce a working computer. I don't have the time (or prob. the ability) to do this so I can choose to pay RedHat, SuSe, Debian, Caldera, etc, for their particular packing of everyting into a neat bundle.
In fact since I can download the distros via ftp or purchase them at 2UKP per cd, i.e. get them for free or next to free, this is a particularly strange kind of fraud.
Come on everybody spell it with me...F...U...D (only this time the F is for Fraud)
grek
>there is nothing propietary, nothing secret, in Redhat Linux distribution
Yes, isn't it wonderful!
What you seem to be pursuing is the answer to this question: How can Redhat differentiate themselves from other distribution vendors in a significant way within the context of a sensical, effective business model?
The answer is obvious as Redhat has already done it. They differentiate by adding value to Linux and aiming their marketing at the Linux newbie. Linux newbies aren't going to know about $2 CDs generally and are going to want the manual that comes with the CD -- a good deal for $50 (especially since it provides some initial handholding which is often a good thing for newbies.)
Once the newbie gets past the newbie stage and graduates to a more involved distribution, he's already shown his system to his friends and talked up Linux to just about anyone who'll listen and has helped generate a new batch of newbies, some of whom will buy Redhat Linux for $50.
To augment newbie creation via word of mouth from happy ex-newbies, Redhat funds certain development tracks (Enlightenment, Gnome, etc.) which, in addition to providing great new software, generates huge amounts of goodwill within the general community where the denizens are happy to direct newbies to Redhat Linux as a good place to start. To further augment newbie creation, Redhat advertises in those few magazines which the Linux curious are most likely to buy, as well as advertises on certain websites the Linux curious might hit when looking for information on which to base a purchasing decision.
Redhat has shown nothing but excellence with their marketing/positioning (*bow* Bob Young) and have maintained an exceptionally high ethical standard of behavior with the Linux community. Even if I don't use their product (I'm a content Slackware junkie) I do very much admire Redhat and feel they have made great contributions to the advancement of Linux overall. Redhat has proven themselves generous yet judicious in spreading the wealth around the community where it helps foster growth in the direction Linux most needs to grow -- the
general-purpose computer user (coming soon to a computer near you!)
My compliments, kudos and gratitude to the Redhat Linux folks.
Everything in the Universe sucks: It's the law!