Sun Sets Sights on IBM's AIX Customers

By Thor Olavsrud (Send Email)
Posted Jun 18, 2003


Moving to profit from SCO Group's revocation of IBM's Unix license (which IBM denies SCO has the right to do), Sun Microsystems charged in to play the role of White Knight for Big Blue's AIX customers. UPDATE: Sun Microsystems moves in to capture IBM's AIX customers by capitalizing on SCO Group's revocation of IBM's Unix license.

With an advertising campaign launched Wednesday, Sun declared, "Attention AIX Users: Sun is here to help."

The campaign comes after SCO , current owner of the Unix operating system source code, followed through on its challenge to IBM Monday and terminated the company's right to use or distribute any product based on Unix System V source code, due to an alleged contract violation. That includes IBM's own AIX operating system.

SCO has since amended its $1 billion lawsuit against Big Blue to request a permanent injunction to that effect, and also to add additional damages to the suit in the form of a share of the revenue IBM earns from AIX from June 16th until the matter is settled.

Amy D. Wohl, president of technology consulting firm Wohl Associates, said SCO's legal strategy also hinges on how long the case could wend its way through the court system, now that it appears headed for litigation.

"SCO claimed that IBM would now owe it a percentage of the revenue IBM earned from AIX (hardware, software, and services), from June 16th until the matter was settled, implying that the longer it took to take this through the courts, the better, since the sum would only be larger," she said.

She also noted that SCO applied for a permanent injunction rather than a temporary injunction. "This is very interesting since it would be more common to file for a temporary injunction which could, if granted, provide immediate relief," she wrote in a a research note.

"Permanent injunctions aren't generally granted until the case has moved through the courts and is found in the plaintiff's favor -- which, in this case, could take years. But to get a temporary injunction requires several conditions SCO was probably unable to meet (we've consulted several lawyer friends in an attempt to sort this out). SCO would have to prove that it was going to suffer immediate and irreparable harm if the injunction was not granted.

"SCO would have to offer solid proof that IBM was the cause of this harm. The court would require SCO to post a bond equivalent to the value of the loss to IBM. IBM does more than $3 billion a year of AIX business plus its Linux business so we're talking more money than SCO could possibly have access to."

IBM maintains SCO does not have the right to revoke its license. "SCO continues to make claims, and as we have said all along, our license is irrevocable, perpetual and cannot be terminated," IBM spokeswoman Trink Guarino said of SCO's action. Noting that its license is fully paid up, IBM also declared that it will not alter its use of AIX.

"IBM will continue to ship, support and develop AIX, which represents years of IBM innovation, hundreds of millions of dollars of investment and many patents. As always, IBM will stand behind our products and our customers," the company said in a statement Monday.

Guarino added, "IBM will stand by its customers. We are fully committed to AIX. We continue to invest and ship AIX. It is not a trivial exercise to port a Unix operating system from one proprietary version to another. And our customers know that."

Noting that the next step is for IBM and SCO to go to court and schedule a date for discovery, Wohl said the market will continue to function in the meantime.

"It is likely to continue to largely ignore this law suit," she said. "We've interviewed IBM, IBM customers, two Linux distributions and some Linux customers about customer reaction. All agreed that customers expect IBM to sort this out and they were unconcerned (although, in some cases, annoyed)."

Meanwhile, Sun hopes to capitalize on its strong contract relationship with SCO for the Solaris operating system to cherry pick IBM AIX customers worried by the revocation.

"You chose Unix as your network computing platform because you knew you were in it for the long haul," Sun said in an ad that appeared in the Wall Street Journal Wednesday. "You'd expect your IT partner to show the same kind of commitment.

"Unfortunately, our friends in Blue have a problem with licensing contracts that could make things very expensive for anyone running AIX. Fortunately, Sun is ready to help. The Solaris OS combines security, low cost of ownership and product stability on both x86 and Sparc systems.

"So, for all of you stranded AIX users, Sun is offering a solution. For qualifying customers, we'll conduct a two-day Migration Consultation, gratis, to assess and analyze your migration feasibility to the Solaris OS. We're even willing to take a trade-in on whatever Blue boxes you're running now."

Sun said its migration consultants can assess and analyze all aspects of a migration project: the architecture, implementation and the management.

"The game, of course, goes on," Wohl said. "One unattractive thing that is about to occur is that some of IBM's competitors see this as a marketing opportunity, rather than a disruption to the system as a whole. So Sun has decided, apparently, to tell customers that it's not safe to buy Unix products from IBM but that it will be glad to take that business, since its Unix license from SCO is 'safe.' Sun needs to go take a course in systems analysis, as taught by that master thinker Russel Ackoff (Professor Emeritus at the University of Pennsylvania and a founder of Operations Research), and learn the importance at looking at the WHOLE system before you try to identify and solve the problem."

She added, "First, it's not at all clear why SCO picked IBM to go after (other than its size). So far, we haven't seen any proof of who put the 'copied code' (if there is some) into Linux. We suspect that means all the Unix players, including Sun, are at some risk. (In fact, there are hints that SCO is about to go after another systems vendor; we suppose Sun thinks that isn't them.)

"Also, Sun is not just a Unix player. They are also a Linux player and there is a danger that Sun will be viewed as a proxy for SCO. We suspect that Linux will be increasingly important to Sun over time. If that is the case, the problem to be addressed isn't how to take short-term competitive advantage in the Unix market, but rather how to resolve whatever is at the root of SCO's unhappiness, so the markets can proceed. That would be a system solution."

While SCO has terminated IBM's license, SCO said AIX customers are safe for the moment.

"While revoking of that license would make [IBM's] customers' licenses obsolete, at this point in time we've elected not to take that approach with customers," Stowell said. "That's not to say we won't at some point. But we see the customer as an innocent bystander right now."

He added, "What we would encourage AIX customers to do right now is make IBM assure them that they'll do everything they can to try and bring this to full resolution. I think that IBM needs to indemnify their customers and right now I don't see how they can do that."

However, Wohl said SCO has hinted otherwise. "SCO has hinted that it might try to audit IBM's customers to see how much AIX they have and are using," she said. "If that occurs, we suspect that IBM might encourage some of those customers to sue SCO. Of course, so far, SCO has claimed that its disagreement is with IBM and not with users, but then why has it sent a threatening letter to Linux users, suggesting they seek legal advice about their use of Linux (which occasioned the German government to seek and receive a court order against it), and hint at AIX audits?"

SCO is suing IBM for misappropriation of trade secrets, tortious interference, unfair competition and breach of contract.

In its court filing, SCO noted, "However, as IBM executives know, a significant flaw of Linux is the inability and/or unwillingness of the Linux process manager, Linus Torvalds, to identify the intellectual property origins of contributed source code that comes in from those many different software developers. If source code is code copied from protected UNIX code, there is no way for Linus Torvalds to identify that fact."

The firm alleged that a "very significant amount" of Unix protected code is in Linux releases based on the 2.4.x and 2.5.x Linux kernels "in violation of SCO's contractual rights and copyrights."

Further, SCO said IBM breached its obligation of confidentiality by contributing portions of the Unix System V source code, derivative works and methods to the open source development of Linux, and also by using Unix development methods to make modifications of the 2.4.x and 2.5.x kernels "which are in material part, unauthorized derivative works of the Software Product."

SCO said this includes scalability improvements, performance measurement and improvements, serviceability and error logging improvements, NUMA scheduler and other scheduler improvements, Linux PPC 32- and 64-bit support, AIX Journaling File System, enterprise volume management system to other Linux components, clusters and cluster installation, including distributed lock manager and other lock management technologies, threading, general systems management functions and others.

The firm sent a letter to IBM Chairman and CEO Sam Palmisano on March 6, warning him that IBM had allegedly breached its contract with SCO by contributing portions of its Unix-based AIX code to the open source movement, and by introducing concepts from Project Monterey, a joint effort by SCO and IBM to develop a 64-bit Unix-based operating system for Intel-based processing platforms, into Linux. IBM scrapped Project Monterey in May 2001.

With the letter sent, SCO initiated a 100-day clock, after which it said it has the right to revoke IBM's Unix license, which IBM entered into with then Unix source code owner AT&T in February 1985. That clock ran out Friday.

Related to the suit, SCO has stirred up a hornet's nest in the open source Linux community with claims that "Linux is an unauthorized derivative of Unix and that legal liability for the use of Linux may extend to commercial users."

It sent a letter to that effect to some 1,350 that use Linux, warning them, "similar to analogous efforts underway in the music industry, we are prepared to take all actions necessary to stop the ongoing violation of our intellectual property or other rights."

Legal and open source experts have suggested that SCO may have some trouble pressing its claims on that front, especially in light of its own sales of Linux. The company also faced a challenge from Novell , which acquired Unix from AT&T in 1993 and later sold it to SCO in 1995. Novell claimed it had retained the Unix copyrights and patents when it sold Unix to SCO. That made SCO's ability to press claims about copyright infringement questionable.

However, Novell later backed away from that stance after SCO uncovered an amendment to the 1995 SCO-Novell Asset Purchase Agreement.

"To Novell's knowledge, this amendment is not present in Novell's files," Novell said in a statement. "The amendment appears to support SCO's claim that ownership of certain copyrights for Unix did transfer to SCO in 1996. The amendment does not address ownership of patents, however, which clearly remain with Novell."

Still, Novell reiterated its request that SCO either prove its allegations that Linux improperly includes Unix code, or retract the statement.

"Absent such action, it will be apparent to all that SCO's true intent is to sow fear, uncertainty, and doubt about Linux in order to extort payments from Linux distributors and users," Jack L. Messman, chairman, president and CEO of Novell, wrote to SCO President and CEO Darl McBride in an open letter on May 28.

SCO has begun showing code to certain select experts and analysts under non-disclosure agreements. Stowell said it is showing different instances to everyone, and at least one instance has been 80 lines of code.

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