Geeks on Bikes: The SCO Group/Caldera Product Development Plan

Yesterday,
I wrote about some initial reactions I had to the announcement that
Caldera had changed its name to The SCO Group. Today, I'm going to
explore some of the repercussions of the announcement.The change by Caldera to leverage the SCO brand and SCO
products has a sound foundation but some short-term problems. These
problems revolve around the fact that neither Caldera nor device
manufacturers are spending much in the way of resources to support
SCO Open Server or UnixWare products. The bottom-line is it's an
old OS. It's going to take time for the new SCO Group to re-assess
and then come out with a new version of the main SCO products. So,
what does a company do to get its channel re-invigorated and its
house in order?Well, if you are Darl McBride, the new CEO of The SCO Group,
you use Harley-Davidson as a model. The famed maker of road bikes
fell on hard times after being sold to AMF. H-D management and some
of the old Harley family bought back the company in 1980, but they
faced a tough battle to save the company and the brand.Darl has adopted a business resurrection model similar in
many ways to the one used by the H-D team: generate revenue from
the brand, improve the core product and be more responsive to the
needs of the people who sell your product and the people who buy
your product. Simple concepts, but they're harder to do than they
sound.Harley launched their corporate resurrection with the
surprising step of creative licensing and announced a brand name
based primarily on clothing. The SCO Group does not have this type
of opportunity, but they do have a significant wealth of
intellectual property. McBride was at Novell when they purchased
SCO/AT&T Unix for a little over a billion dollars. A few years
later, Caldera purchased SCO from Novell for a little over $100
million. "In theory", stated McBride, "there should be some value
to that property--somewhere between a million and a billion
[dollars], right? I just wanted to know what real, tangible
intellectual property value the company held."The then-Caldera legal team was appointed the task of coming
up with a review of the history of Caldera's intellectual
properties and their status. The review turned up a stack of
license agreements that had gone uncollected for years. To date
(remember, McBride has been on board as CEO for only a few weeks),
Caldera has already come to agreements with holders of these old
licenses that will generate $600,000 in recurring revenue.The intellectual property fishing expedition has provided The
SCO Group with the legal due diligence to now lay claim to UNIX
itself. According to Opinder Bawa, new Senior VP of Technology, "we
own the source to UNIX; it's that simple. If we own the source, we
are entitled to collect the agreed license fees."To my fellow folk in the Linux community, you need not fear.
I specifically asked if, in making that broad a statement about
UNIX, The SCO Group was making any legal claim
to Linux. According to McBride, "obviously Linux owes its heritage
to UNIX, but not its code. We would not, nor will not, make such a
claim."So while the legal team is working on new intellectual
property revenue streams, what is going with regards to improving
the core product? That is a tougher subject, one that, like
re-engineering the Harley motor, will take time. What does the new
SCO Group intend to do in the meantime to pump up the troops? What
else--they're starting a dot-com business.This move both makes sense and is a huge gamble. The core of
this new business is a service called SCO BIZ, a partnership with
Vista.com and their e-commerce development platform. It will put a
product into SCO dealers' hands that allows them to offer an
ASP/VSP service to their clients and potential clients. The concept
is the e-commerce engine is capable of harvesting data from an
existing SCO Open Server product, allowing the dealer to sell a new
service to an existing client. With the new version of SCO Open
Server being released in the fourth quarter of 2002, the service
will be an aid in selling new SCO products.But are people even considering buying SCO as a new or
replacement solution? According to financial information released
this week, this past quarter was the first up-tick in sales for SCO
in the last five quarters. So, yes, customers will buy new SCO
products because of their reliability. But, the jury is still out
regarding the numbers in which they will come to buy the
product.The risk is significant. Dozens, maybe hundreds, of ASP-style
services already are selling very good e-commerce solutions on the
Internet. Even with a high quality, already successful partner such
as Vista.Com, it remains to be seen if this gamble will work or if
it will dilute the existing efforts of their dealer group.It should be noted that The SCO Group is not making this
service offering without analysis. This kind of service is exactly
what the channel partners have been asking for as a tool. The SCO
channel must not have experienced (suffered from) the dot-com
bust.Jeff Gerhardt is the host of
The Linux
Show.