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SCO & Linux: "OS Agnostic" Anderer Comes In From the Cold

SCO & Linux: "OS Agnostic" Anderer Comes In From the Cold

S2's CEO, strategic consultant Mike Andererer - author of the infamous memo of October 12, 2003 to Chris Sontag, Vice-President and GM of SCOsource, copied to SCO Group CFO Bob Bench - has emerged from the shadows to share with readers of NewsForge his thoughts on the whole episode.

Here is how Perens characterized the leaked memo:

The e-mail details how, surprise surprise, Microsoft has arranged virtually all of SCO's financing, hiding behind intermediaries like Baystar Capital. SCO spokesperson Blake Stowell has admitted that the email is real, but called its implications a "misunderstanding", while Microsoft softly called them "not accurate". We'd hear stronger denials if there wasn't some truth there. This was followed by a comment from the the Securities and Exchange Commission that, yeah, they're interested. Mr. Anderer, expect to see lots of subpoenas with your name on them.

Now Anderer himself comes forward and, describing himself as "OS agnostic - the more there are the better," says "my background is integration...I will file close to 20 patents this year for companies in many spaces, including homeland security, anti-terrorism, several grid computing and virtual machine patents."

"I have helped many companies and individuals who run companies in the GNU/Linux, BSD, and Unix world as well as those in the Microsoft world," Anderer writes. 

"I admire the good parts and despair the bad parts," he adds.

As he is under a non-disclosure agreement he can't say very much about the $50 million PIPE deal, he notes, but what he describes as a "licensing project" is not his main gig:

"I would state that this licensing project represented only a small fraction of my time over the last year and has completely gone away in recent months. This was a job for me, and licensing IP has been an increasingly significant portion of my work."

What he writes next will send shudders down many a spine:

"I think one real issue, that people are skirting, is who will be the ultimate guarantor of IP-related issues in a world that is governed by the GPL and GPL-like licenses. I could easily see IBM, HP, Sun, and many of the other large hardware players solving this problem tomorrow by settling the dispute with SCO and maybe even taking the entire code base and donating it into the public domain. I know this is what I originally thought would happen, at least the settlement part. I am not certain what people who paid tens of millions for licenses would say if what they paid for was now free, but that is a different issue.

In a world where there are $500 million dollar patent infringement lawsuits imposed on OS companies (although this is not completely settled yet), how would somebody like Red Hat compete when 6 months ago they only had $80-$90 million in cash? At that point they could not even afford to settle a fraction of a single judgment without devastating their shareholders. I suspect Microsoft may have 50 or more of these lawsuits in the queue. All of them are not asking for hundreds of millions, but most would be large enough to ruin anything but the largest companies. Red Hat did recently raise several hundred million which certainly gives them more staying power. Ultimately, I do not think any company except a few of the largest companies can offer any reasonable insulation to their customers from these types of judgments. You would need a market cap of more than a couple billion to just survive in the OS space."

"Nobody wants to be the ultimate guarantor for software that was free (or close to it)," acccording to Anderer. "I think the dispute with SCO would have been settled a long time ago if everybody knew this was the last one," he writes.

"The world of software is changing," he adds. 

"I think everybody sees that part on the product side, but the economic underpinnings are changing too. It used to be you included R&D and patent development costs into your license add your costs and a markup and you could make a living. We relied on cross-licensing, licensing, and innovation, and our ability to prevent other people from copying our work without permission. Now things are shifting, but I am not certain anybody has completely figured out this new model, and if you think it is just any one company that is concerned about this, you are wrong."

So in the World According to Anderer, whales like Microsoft - either directly or through proxies - will sue open source minnows until basically they either asphyxiate through lack of cash or are forced into some kind of cross licensing agreement with Microsoft and/or other companies acting in the same fashion.

Not if Pamela Jones and the Groklaw brigade can help it, mind you. In a scathing essay yesterday entitled "Anderer's 'Old Think' Tries to Justify A Dying Business Model," she declares why:

Because there are millions of people in this world who love GNU/Linux software and despise SCO's way of thinking and their business model and are willing to stand up and say no. We're willing to research and testify and produce evidence and leak memos and use our considerable talents, for no money and at considerable risk, I might add, to defeat this monstrously ugly attack. SCO can't buy this at any price. Not even Microsoft can buy it, with all their billions. It's not for sale.

"So far," Jones says, "we're winning by a mile." She adduces as evidence the fact that SCO is only still alive through the cash infusion that was the subject of Anderer's intervention. "Without MS propping them up," she writes, "where would [SCO] be today?"

The company BayStar gave its $50 million to, in other words, has as yet produced just $20,000 in Linux license revenue. But then, alas, the software patent wars are perhaps only just beginning.

The one hope is possibly the Federal Reserve's Alan Greenspan, who gave a speech last month regarding intellectual property rights which - while noting that protection of IP is a good thing - could be interpreted as mooting the idea that protection for IP should get weaker, not stronger, if the US economy is to keep growing.




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Most Recent Comments
penguinbrat 03/13/04 03:40:55 PM EST

The essence of the GPL is to provdide a protected way to share knowledge and ideas, and to encourage such a freedom. At the intellectual level, this is the best thing to come along since boxed bread. However, at the business level there is no inherent value of the GPL simply because of the fact that the end user(s) of the resulting products, may very well never know who authored the said product and consequently there could conceivably never be any return on the hard work.

Take the revised XFree86 license that essentially just expects acknowledgement of their hard work.

The big difference between XFree and IBM/Novell/Redhat/etc.. is that the later would conceivably see a return from their efforts with supporting the entire system that they help build, while XFree would never see such a return because they only help build it and to the enduser they are never acknowledged.

Perhaps what the open source community needs to consider is a way to acknowledge the given author(s) if so required - for example in the configuration the X server, acknowledgement of XFree86 and the comercial video driver manufacturer (NVidia/ATI/etc..) could be linked back to their respective sites or something.

Without this acknowledgement, the open source community is essentially alienating the software business world (the community itself will figure out how to support the given product and likewise make any business efforts moot to a certain extent), and these tif's and battles with companies such as SCO and Microsoft are going to be inevitable.

The open source community needs to make every effort to bridge this gap between the intellectual and business worlds - other wise these battles and wars will just get worse, and consequently just as threatening...

the banker 03/13/04 03:38:57 PM EST

There are a lot of things that Anderer stands for that I despise, however someone like IBM doing what he suggests would actually be good for the community in that it would settle a lot of the licensing murkiness around Unix that has hung like a pall over it for years (AT&T, BSD, Novell, SCO, SCO/Caldera, etc...).

I think this would prove next to impossible in a practical sense, however, as I am sure that other companies would claim that IBM doesn't own *ALL* of Unix and sue on that basis.

The bottom line is that I don't see Unix license issues ever disappearing completely - the best we can hope for is a clear judgement against SCO that prevents any other company from trying similar tactics

tabgeldawad 03/13/04 03:33:02 PM EST

Actually Anderer himself says he's surprised that the quick solution - buy the source to Unix then place Unix source in the public domain - hasn't happened:

>I could easily see IBM, HP, Sun, and many of the other
>large hardware players solving this problem tomorrow
>by settling the dispute with SCO and maybe even taking
>the entire code base and donating it into the public

LinuxAdvocate 03/13/04 03:21:09 PM EST

I wonder how many SCO shares the Linux community would have to buy in order to take control of the company and stop this madness. What would it really cost? Could IBM, HP, Red Hat, Oracle and all the Linux folks buy enough stock to throw out the people in change and then open-source all of Unix?

AndererDisgustsMe 03/13/04 01:50:26 PM EST

$500 million?

Isn't that either a $5 or $1.50 judgement per instance of Explorer that MS sold?

That lead to

1) This is an internet browser issue, not an OS issue
2) $500 million judgement could only happen to RedHat if Redhat were to have a nearly 90% market share for several years

It now seems to me that Anderer is in the same clique with Enderle, DiDio, Skiba and Lyons and that all of them read from the same FUD playbook.

Pretty pathetic.

monkelectric 03/13/04 01:11:13 PM EST

This is probably the doomsday scenario for linux... We in the OSS community have been saying, "Linux is good, linux is the revolution, linux is freedom and freedom is inevitable. Besides, what can MS do?" And now we have the answer to that question.

The problem with the legal system is it's stacked against the small guy from start to finish. This is how it's stacked: Consequences. There are *NO* consequences for setting out to ruin somebody. None whatsoever. What are the consequences for MS and SCO for this fraud so far? Lots of money. The money train will end, but it will still have been a nice trip for them. We in the OSS revolution need to make sure MS and SCO get their clocks cleaned.

If the SEC/DOJ won't step up to the plate, we need to be prepared to do real damage on our own. -- which is going to suck because there's no legal way to accomplish that -- court rooms and the halls of government are their venues.

Azureflare 03/13/04 01:09:54 PM EST

I still can't see how anyone can go after distros like Red Hat, Mandrake et. al. They are just distributing the code. The code itself is made by tons of different people around the globe; to stop Linux, people would have to sue every contributor to Linux. I don't think that's possible given that many developers aren't even in the United States.

tmacinta 03/13/04 01:07:34 PM EST

It sounds to me like he's talking about the Eolas suit against Microsoft in the first sentence. He leads off talking about how Microsoft has needed to defend its turf because of the nature of the OS business, says that RedHat would be crushed by a judgment of the same kind which Microsoft was handed (the fine was $500M), and then points out that the Eolas suit is not unique and that Microsoft faces suits like that quite frequently.

oryoa 03/13/04 01:06:16 PM EST

Yes, he says that Microsoft have a great many lawsuits queued up AGAINST them. His perspective is evidently that you can only survive in the operating systems market if you can stand up against the sort of litigation that Microsoft has to:

> In a world where there are $500 million dollar patent
> infringement lawsuits imposed on OS companies (although
> this is not completely settled yet), how would somebody
> like Red Hat compete when 6 months ago they only had
> $80-$90 million in cash? At that point they could not
> even afford to settle a fraction of a single judgment
> without devastating their shareholders. I suspect
> Microsoft may have 50 or more of these lawsuits in the
> queue. All of them are not asking for hundreds of
> millions, but most would be large enough to ruin anything
> but the largest companies.

Question 03/13/04 01:03:39 PM EST

Does Anderer mean that Microsoft has a queue of 50 frivoulous lawsuits against itself, or that Redmond is planning 50 lawsuits against other people? I think it's the former, yes?

dukerobillard 03/13/04 01:00:00 PM EST

>The world of software is changing.... It used to be
>you included R&D and patent development costs into your
>license add your costs and a markup and you could make
>a living. We relied on cross-licensing, licensing, and
>innovation, and our ability to prevent other people
>from copying our work without permission. Now things
>are shifting, but I am not certain anybody has completely
>figured out this new model, and if you think it is
>just any one company that is concerned about this, you
>are wrong.

Hmmm...maybe it'll go back to the way it was before people could get rich on software. That's what RMS was originally after, all those years ago

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