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Novell, SCO: When FUD Comes Calling

By Paul Rubens (Send Email)
Posted Sep 1, 2009


Companies with inferior products are often tempted to create Fear, Uncertainty and Doubt. A bit of FUD is an effective leveler, allowing these companies to compete on more equal terms with the competition. FUD is A Bad Thing because it distorts the market so that buyers don't always buy the optimum solution, and sellers make sales their products don't warrant.

OS Roundup: FUD isn't something to cheer about. But for those companies that lag behind, it can bring them closer to the head of the pack. Is revenue growth in Novell's Linux products attributable to FUD? What about SCO's latest courtroom antics?

Last week, Novell announced its third-quarter results, revealing a decline in net revenue from $245 million in Q3 last year to $216 million in the same period this year. But within that, revenue from Linux Platform Products was up 22 percent to $38 million.

But beware. FUD is in operation here. Back in November 2006 Microsoft and Novell entered an agreement under the terms of which Microsoft provided a covenant to Novell's Linux customers that it would not sue them if it turned out that Linux infringed certain unspecified Microsoft patents, as the Redmond company had suddenly started claiming in 2004. Novell also agreed to provide a similar covenant to Microsoft customers.

As Novell puts it, "By securing a commitment from Microsoft to support the use of Linux and open source software, we have allayed any potential concerns for our customers and removed a barrier to enterprisewide Linux adoption." The fact that Novell stated at the time "there was no threatened litigation" from Microsoft leads one to the conclusion that this was all FUD-making.

It's a bit like a food company saying "our products contain no rat poison," thus implying that competitors products might.

The Novell-Microsoft agreement has been used as a selling point for Novell's SUSE Linux, and if it has resulted in sales that would have otherwise gone to another OS maker, then the FUD has done its job. Novell's Linux results may be encouraging, but net of FUD they are not nearly as encouraging as they first appear.

SCO, another source of long-term FUD, was also in the news again last week. You'll no doubt remember the long-running saga involving legal battles between the widely despised SCO and IBM, and between the widely despised SCO and Novell, about the ownership of UNIX copyrights and whether Linux infringes those copyrights. A few years back, it was feared that this SCO-generated FUD would harm sales of Linux, until a District Court judge seemingly put a stop to the nonsense in November 2008. He ruled at the time that Novell, not SCO, owned the copyrights to UNIX, and told SCO to pay Novell the $2.5 million it had received in royalties from Sun.

Now it seems a U.S. Court of Appeals for the Tenth Circuit has ruled that the ownership of Unix copyrights should actually be decided by a trial by jury. If that takes place and if — and it's a big if — SCO wins, then that could in theory pave the way to new legal battles between SCO and heaven knows who.

In case the whole sorry affair isn't complicated enough, SCO has filed for Chapter 11 bankruptcy relief, and last week the bankruptcy court appointed a Chapter 11 trustee who now has authority over SCO's assets and affairs as well as the future course of SCO's litigation against Novell, IBM and anyone else. SCO president Darl McBride may have been litigious, but what the company does ain't up to him any more.

SCO's future course of action will be decided by one Edward Cahn, Esquire, the company's Chapter 11 trustee. What he will choose to do is anyone's guess, which means more uncertainty and doubt, and possibly even a little fear.

Not only is FUD annoying, but is has a nasty habit of coming back just when you finally thought that it had gone away. Much like SCO, really.

Paul Rubens is a journalist based in Marlow on Thames, England. He has been programming, tinkering and generally sitting in front of computer screens since his first encounter with a DEC PDP-11 in 1979.

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