After the sell-off, what?

Every year, in the salubrious Santa Cruz campus of the University of

California, amidst fog-covered pine trees, Unix veterans and users used to

gather at what used to be called the SCO forum. This year also they gathered as

usual. Only, the event was no longer the SCO Forum. It had become a plain and

simple Forum. Why? SCO–Santa Cruz Operation–had just sold off its operating

systems and professional services division to Caldera.

For those who came in late, SCO is a twenty-year-old software company that

specialized in Unix for Intel based servers. It had two products in this space–Unixware

at the higher end and OpenServer at the entry level. A couple of years back, SCO

ventured into Web-based application server software with a product called

Tarantella. Briefly with Tarantella you could make non-Web enabled applications

available over the Internet, on a Web browser. SCO has a professional services

division, which along with IBM and Intel had taken up an ambitious project, code

named Monterey that was supposed to provide a common direction to the various

Unixes.

In an exclusive interview to Dataquest, SCO CEO Doug Michels talks about the

future of SCO as well as the logic behind the sale of its operating systems

division.

Why did you choose to sell off SCO’s operating systems division?



We saw that the industry was about to start in another major direction with open
Source and Linux forces coming to bear on it. We saw a big opportunity for

operating systems. But in order to exploit that opportunity, we needed to create

a company that was positioned properly, that had the capitalization necessary

and that had a differentiation from the other competitors.

SCO could have been that company. But it had some weaknesses. It didn’t

have enough capital, was perceived as an old company and not a new one, and wasn’t

yet credible in the Linux and Open Source space.

On the other hand, SCO had some incredible key assets–it had technology,

employees, worldwide infrastructure, a top notch customer base, open systems,

credibility and experience.

It had almost all the ingredients, but not quite. We looked at what we could

do to create something that really has a chance to be number one. Or be number

one against Microsoft. And we looked around and we felt that we could combine

with one of the Linux companies that was well funded, had a new image and had

credibility in the Open Source Linux space. Combine that with all the assets in

our hands, and we will probably end up with something bigger and better than

either company was before. We always have to look for a combined company where

one plus one is more than two. We found in Caldera the exact complement to the

SCO pieces.

Continued...

Now that the operating systems are with another company, what new options

open up for Tarantella? Specifically, would there be a Win2K version soon?



There would be a Windows 2000 version of Tarantella. It was going to be there
anyway.

It would be easier for example to have a good relationship with Microsoft as

Tarantella than it would be as SCO. It would be easier to have a relationship

with Sun.

Having Tarantella as a separate company allows different alliances. It may be

easier to raise the initial capital we need, because people will be investing in

Tarantella and not in both Tarantella and servers. I see a lot of new

opportunities for Tarantella.

Would the new company remain a one-product company, or would you have more

products?



Tarantella is not a one-product company now. Under the Tarantella brand we have
three different products. We have Tarantella Express, Tarantella Enterprise II

and Tarantella ASP, which are all aimed at different market segments and have

different features and price points. The company also has the Vision 2000

products.

What is the differentiator between Citrix and Tarantella?



The universe of Citrix and that of Tarantella overlap, but they are not the
same. Citrix is positioned really to be multi-user NT. Tarantella can be used to

Web-enable any app. We specialize in heterogeneous environments. They specialize

in homogeneous NT environments. We do have a product that is better, and is

priced more aggressively.

Before this transaction happened, there was talk about SCO’s own version

of Linux. What happened to that?



If you had looked at the plan we never announced (laughs), you would have seen a
pretty detailed plan on how we would add value to Linux to make it very

attractive to the markets we service. Technologies we would add, features we

would add.... Most of the elements of that strategy will be done to Caldera Open

Source Linux.

In the last two years, if you had a chance to do things differently, was

there anything you would have done differently?



Anyone can be perfect in hindsight. But, I don’t think we understood last
year, how much effect Y2K would have and how much effect it would have on this

year. If we had known that we would have spent less and saved more money than

last year. Another thing, we would have taken a more aggressive posture on Open

Source.

This article was first featured in the September 30, 2000, issue of Dataquest

.