SCO CEO Says Unix Sell-Off Right Deal For Company

FRAMINGHAM (08/08/2000) - After suffering two straight quarterly losses and watching its Unix operating systems get overtaken in market share by upstart Linux, The Santa Cruz Operation Inc. (SCO) threw in the towel last week and agreed to sell its Unix and professional services businesses to Caldera Systems Inc. for about $120 million in cash and stock.

Once the sale goes through, SCO plans to focus primarily on its Tarantella software, a piece of middleware that lets end users access applications running on various server platforms from their Web browsers (see story). In an interview with Computerworld, SCO co-founder and CEO Doug Michels discussed the deal with Caldera and SCO's future.

Q: Any regrets about the deal?

A: No, this is the right deal at the right time, I think. This is the deal that's the best answer for our customers, our employees, our shareholders and the industry as a whole . . . If you combine the recent antitrust actions [against Microsoft Corp.] and the excitement around open-source [software such as Linux], we are really seeing a time now where operating systems are an open question again. People are open-minded, they're looking at choices, they're excited about open source. But they're worried about how do they buy it, and how do they [make sure it's secure]. And I see an opportunity here to really affect the landscape, to have a significant impact on the future of the industry.

Q: Do you think there was a way to keep SCO together?

A: Sure, we could have played the cards lots of ways. [But] when you have an industry going through a major change, you have to steer your company to try and ride that wave. It's a mistake to hide in the corner and say we can [just] keep doing what we've done before.

Q: You've been critical of Linux in the past, describing it as a much less mature product than SCO's UnixWare operating system. Has it been painful to you to see Linux become so successful so fast - and to now see a Linux company acquire UnixWare?

A: Linux is the epitome of the open-systems revolution that has been part of my life for the last 20 years. I mean, Linux is what open systems is all about. I haven't been down on Linux, I've been down on the way people have occasionally misrepresented or overhyped Linux as something it wasn't at the time. Linux is not the answer to everything, it's not going to feed the hungry of the world overnight. We were selling products that did solve some problems, and people would say you could use Linux, [but] at that point in time you couldn't. It's hard sometimes not to get frustrated with mischaracterization. But we've always had great hopes for Linux, and we've always believed that Linux and open source had the potential to change the world in a positive way. It also has some real challenges, [such as] reliability and how do you deliver it and maintain it and support it over the long term. . . . What we're seeing now is [that those issues] are starting to work themselves out.

Q: With Tarantella as SCO's main product going forward, how do you look at the company's future?

A: I think Tarantella also benefits from the fundamental change in the fabric of the industry. Twenty years ago, it was the microprocessor and the IBM PC.

This time, it's the Internet, its ubiquitous connectivity and open standards that are changing the fabric of the industry. That's why open source is possible, because we have tens of thousands of people communicating instantaneously around the world. . . . We're seeing a major shift in the way people want to access computers. They want to do it through the browser, and they want to do it over the Internet and [corporate] intranets. That is so different from where we were even a year ago and radically different from where we were five years ago.

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