New Survey Finds No Linux ‘Chill’ From SCO Suit

By Michael Floyd

The SCO Group’s lawsuit against IBM and new warnings of legal action by SCO against other companies over its claim that copyrighted code slipped into select versions of the Linux kernel are not slowing deployments of the open source operating system, an upcoming study has found.

Evan Bauer, a principal research fellow with Robert Frances Group (, said a just-completed survey the IT consulting firm conducted with 15 companies about Linux deployments suggests that cost-savings and the General Public License, or GPL , are trumping any concerns about SCO Group’s claim of copyright infringement within parts of Linux.

“None [of the companies surveyed] have concluded they’re liable in any way,” he said. The survey asked companies whether the SCO lawsuit was impacting their deployment plans.

In addition to SCO Group’s action against IBM , which accuses Big Blue of contributing copyrighted code from its version of UNIX into the open source operating system, IBM has counter sued SCO Group in response to the $3 billion claim. Red Hat , the number one distributor of versions of Linux, filed a formal complaint last August against SCO Group in a bid to show that it did not infringe any intellectual property of SCO.

About half of the companies in the survey, which is expected to be released in January, checked with their legal departments about any potential exposure to the issue. For example, if a court ruled in favor of SCO in finding that some parts of the Linux kernel were copyrighted, would companies running Linux have to pay SCO license fees?

“Many feel they are absolutely protected by the GPL [General Public License],” Bauer said, referring to the open source software license (also called GNU GPL) that details how the open source operating system software and its source code can be freely copied, distributed and modified.

The companies in the survey represented a cross-section of sectors such as manufacturing, retail, financial services, and universities.

Bauer, a former chief technology officer with CSFB who is active in securities industry technology working groups, said the companies were queried about their return on investment regarding Linux, and whether they felt legal issues might slow their deployment of Linux in their IT environments.

The early results of the survey provide something of a counterpoint to some tech analysts’ warnings that IBM’s decision not to provide indemnification to customers before the SCO/IBM dispute goes to trial could hamstring Linux deployments with enterprise customers.

Laura DiDio, senior analyst for The Yankee Group, has called IBM’s stance on the issue a “disservice” to the Linux and open source community. “For Linux to take its place alongside UNIX, Windows, and NetWare in the enterprise, it must be worthy in both a business and technological sense. That means strong indemnification,” DiDio wrote in a research note about the issue.

Gartner’s George Weiss has also counseled caution to both sides as a result of the litigation. In a November note, he recommended that enterprise customers keep a low profile and not divulge details on Linux deployments. He also counseled clients not to pay SCO any license fees until the allegations are settled.

“Fence off the innocuous Linux deployments (such as network-edge solutions) from the performance-intensive ones. Where feasible, delay deployment of high-performance systems until the end of first quarter of 2004 to see what SCO will do,” Weiss wrote.

But the results by the Robert Frances Group’s survey so far suggest the “big chill” that the SCO/IBM dispute was expected to set off has been anything but.

Christopher Dudley, an operating vice president for Federated Department Stores (which was not a part of the survey), echoed the sentiment, but also clarified the role that Linux is playing in the retail company’s networks.

“Despite the SCO/IBM legal issues we are continuing to look into further deployments of Linux into some of our core business areas including and,” he said, referring to Web sites of the respective department stores that Federated also owns.

With annual sales of more than $15.4 billion, Federated currently operates more than 450 stores in 34 states, Guam and Puerto Rico. Within that structure Federated currently runs a small
number of Linux-based servers. And Dudley also pointed out that the company also runs a large number of proprietary, Unix-based servers from Sun, HP, and IBM.

“The dispute hasn’t really yet become a factor in our Linux deployment strategy. As with most companies today, we continue to aggressively pursue cost-saving areas. Linux fits in this space. That, coupled with our direction to make the lower-level operating system components of the infrastructure a commodity currently makes Linux a powerful tool in support of our business,” he said.

At least five other companies that contacted declined to comment on whether they were or are considering Linux deployments, and if so, if the SCO/IBM copyright dispute has slowed their plans.

In Bauer’s survey for Robert Frances Group, the companies concluded they would not be liable if they deploy Linux, preferring instead to view the SCO/IBM dispute as an issue between vendors. “And if there are any remedies related to a settlement they would be non-financial,” Bauer added. Moreover, he said the sentiment among the companies was that the existing lawsuit against IBM would be difficult to extend to them because they had no “intent to damage SCO.”

As to whether Linux is supplanting mission-critical operating systems, the survey results are unclear so far. But the early results dovetail with other trends that suggest 2004 could be an even bigger year for Linux gains in the enterprise.

Merrill Lynch, whose technology group recently began
coverage of Red Hat, noted in a research note last week that “open source and Linux adoption is still in infancy in the enterprise market.” However, “we should see explosive growth in the years to come as corporations look to achieve cost savings within their IT departments.”

Using IDC’s own estimate for Linux server shipments through 2007, as well as its internal data on Linux operating system attach rates and server pricing, Merrill reckons that the enterprise Linux market could be worth $529 million by 2007. “This represents a [compound annual growth rate] of 61 percent over the 5-year period from 2002-2007,” the note said.

In related developments, Novell , which is purchasing Linux distributor SUSE Linux, said this week that it continues to assert ownership of UNIX copyrights and “has applied for and received copyright registrations pertaining to UNIX consistent with that position.” Linus Torvalds, who created Linux, has weighed in on the latest SCO maneuvers with a response on Groklaw in which he says he personally checked the history of some of the disputed code, and “can definitely say that those files are trivially written by me personally, with no copying from any UNIX code _ever_.”

With additional reporting by Erin Joyce