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Microsoft And SCO Group: What's So Secret?

Some people suspect Microsoft is conspiring with SCO Group, the litigious, self-appointed flag bearer of intellectual-property rights for the commercial software industry, by covertly sending other companies SCO's way to sign license agreements worth tens of millions of dollars. The money brought in through this covert arrangement, the thinking goes, is keeping SCO afloat long enough to continue its legal campaign on a widening front that now includes lawsuits against IBM, Novell, AutoZone, and DaimlerChrysler.

The conspiracy theory gained what seemed like a shred of evidence when Eric Raymond, the outspoken open-source advocate who sometimes uses satire to make his points, got his hands on a leaked E-mail message that, interpreted a certain way, implicates Microsoft in a money-making scheme for SCO. It seems to imply--and I say "seems" because the E-mail message in question is anything but clear and comprehensive--that Microsoft had a role last October in engineering a $50 million investment in SCO that was led by BayStar Capital. SCO, in fact, acknowledged the authenticity of the message, but it described the contents as "a misunderstanding" by its author, an outside consultant. Microsoft, meanwhile, put out a statement describing Raymond's analysis as "inaccurate" and denying any ties to BayStar.

But Microsoft is attempting to put out this fire--or mostly smoke so far--with a squirt gun. What's really needed is a clear, unequivocal explanation of the nature of the company's relationship with SCO. As you may recall, SCO revealed last May that Microsoft had signed a contract to license some of its Unix code for an undisclosed amount. A few months later, Microsoft signed an extension to that original agreement that included additional technology and usage rights. The second deal was not disclosed by either company. Together, the deals were worth about $16.6 million, a significant 21% of SCO's total revenue in fiscal 2003.

The mystery behind Microsoft's arrangement with SCO could be cleared up, and maybe some of the speculation put to rest, if Microsoft would disclose more details about how it plans to use SCO's technology. But it won't. I've asked for that information four times in the past 12 months, but Microsoft will only discuss its plans in the broadest terms, and even then unconvincingly. Microsoft has indicated that it intends to use SCO's Unix code in Microsoft's Services For Unix product, a subsystem of Unix APIs and protocols that helps customers move Unix or Linux applications over to Windows or lets those mixed environments co-exist through interoperable files and directories.

But I was surprised to learn that Services For Unix version 3.5, when it was released in January, didn't include any of the new SCO code available to Microsoft through the licensing agreement. SCO's technology "wasn't a factor in this release," Dennis Oldroyd, a director with Microsoft's Windows server group told me in a January briefing on SFU 3.5. Oldroyd explained that Microsoft was "pretty far in the development cycle" for SFU 3.5 when the SCO license was signed.

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