Joining the Party

Caldera's acquisition of a Unix services business underscores the gap between Linux and mainstream adoption

Caldera Systems Inc. rocked the Linux/Unix world recently by announcing its intent to acquire service and sales businesses from veteran Unix vendor The Santa Cruz Operation Inc. (SCO, www.sco.com). Ransom Love, CEO and president of Caldera, depicted the acquisition as ushering in a new era in combining Linux and Unix server solutions and services on a global scale and touted a new technology initiative -- the Open Internet Platform (OIP). According to Love, the OIP will be a unified "develop on/deploy on" platform that provides scalability and clustering capabilities for high-end commercial needs, but will also be suitable for thin-client and wireless computing and Internet applications.

Love also introduced a new "Open Access Model" licensing structure in lieu of the freewheeling open source code manifesto championed by Linux developers. Love asserted that the global enterprises to which Caldera will be marketing OIP solutions are not interested in owning source code.

In his August 16 keynote address at LinuxWorld in San Jose, Calif., Love identified a number of barriers Linux must leap on the path to universal adoption and how the SCO acquisition could overcome such obstacles. Chief among the Linux problems are a lack of qualified support professionals, which can be alleviated by Caldera's new SCO Professional Services division, according to Love. Love also said that Linux cannot scale to high-end data center needs, but his company's plans to integrate multiple OS kernels with Linux will provide such scalability.

The terms of the purchase, expected to close in October, transfer the SCO Server Software and Professional Services divisions to Caldera, which will give SCO 17.54 million shares of Caldera stock (worth about $125 million), $7 million in cash, and a 28 percent stake in the Caldera Inc. holding company formed to accept the assets from SCO. Caldera also gains access to SCO's sales channels and 15,000 global partners.

SCO retains its Tarantella Web-enabling software division and about 55 percent of the revenue stream and intellectual property associated with SCO OpenServer, which amounted to about $11 million in Q3 2000. About 20 percent of SCO's 1,100 employees will remain with SCO, while the rest will move to Caldera.

The transaction comes at a time of growing industry recognition of Linux as a vital factor in enterprise computing. A recent study of the server operating environment market by International Data Corp. (IDC) revealed that Linux has overtaken Novell NetWare in this sector and is now second only to Windows 2000/NT, and that Linux shipments will exceed all other server operating systems through 2004.

Major vendors Compaq, Dell, and HP recently announced plans to make Linux a strategic OS for their product lines, with Compaq extending that support to its servers, workstations, handheld, desktop, and notebook PCs, according to a recent TechWeb News article on CMPnet.com Oracle has also introduced the "first enterprise-level application server for Linux," Oracle Internet Application Server 8i (iAS) and Oracle iAS Wireless Edition.

Analysts at Zona Research viewed the acquisition as a promising development for Caldera and a lifesaver for SCO, which had taken revenue hits in the period preceding the deal, but expressed concern that the new open access model licensing arrangements could be "the beginning of a serious split in the Linux community."

-- Claudia Willen
 

 

Continued in News and Analysis Part II >>>