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SCO CEO McBride Speaks Out On Novell, Finances, And Groklaw

Darl McBride says his company has strong products and a growing number of customers, so it will survive regardless of the outcome of legal battles.
InformationWeek: The question of whether Linux infringes on Unix is before an arbitrator in Europe, isn't it?

McBride: What we have to do is go to the arbitrator in December in Switzerland and see how that plays out.

InformationWeek: Even if the noncompete is valid, how is that going to help SCO? There are lots of other Linux distributors out there that can compete against you.

McBride: The issue is whether it's going to hurt Novell. What's their response back to us, in order to get clean on that. They've got to come up to us and make some sort of agreement.

InformationWeek: Judge Dale Kimball in his Aug. 10 ruling said SCO must remit to Novell fees from Unix licenses it sold to Sun and Microsoft. That could be as much as $25 million -- more than SCO's total assets. Is SCO going to be financially viable after this case is through?

McBride: Our argument is that we don't owe them anything. The deals with Sun and Microsoft were about the latest and greatest of UnixWare technology, which is all ours.

InformationWeek: OK, but let's say the judge disagrees and you're faced with a big payout to Novell. What's going to happen?

McBride: There's a couple of nuggets of value we have that are not showing up on a balance sheet or an operating statement right now. One is our OpenServer 6 product. That's been out for a year and a half. The other is our new set of mobility products.

OpenServer 6 is not subject to the legal rulings -- win, lose, or draw. That is the flagship product. We are starting to get some big traction in the [U.S.] and abroad. We have McDonald's, Walgreens, Thomson Financial, CVS. Other big customers also continue to buy. We're regenerating our core business.

The second thing is the mobility products. They are starting to see the light of day and catching some interest with customers and the channel. People are excited about taking the thousands of SCO business applications that have been developed over the years and moving that business logic to a mobile environment. When you go mobile, you go real time. We recently rolled out HipCheck. You can go in and manage your entire IT infrastructure off your phone. You can reset a server from a football game.

We're also getting ready to roll out another set of new products in the fall.

InformationWeek: Yes, but are you going to have enough cash to go forward? To continue to develop and market these products?

McBride: If there was a big judgment we're staring at, we haven't gone out and shopped this mobility play. There are licensing deals, joint venture deals we could do. If we had to collect cash we could even sell off the entire mobility business. But we wouldn't do that unless we had to.

InformationWeek: Is there a possibility that the SCO brand is now tainted because of the lawsuits? That even if you're financially viable, customers aren't going to want to have anything to do with SCO?

McBride: There's clearly an element of that in the industry. But the people who have that view are not our customers. The customers that work with us have a perception of strength and reliability. When we first started our mobility business, it was originally not under the SCO brand for the very reasons you are talking about. But when we went around the world, there was a concern that the products were coming from a startup. So people said, 'Why don't you just say it's SCO?'."

InformationWeek: The Web site Groklaw has given you a pretty rough time over the past few years. What effect has that had on your image?

McBride: I don't think you can discount the impact of Groklaw in trying to create a bad image around us. It's the equivalent of a negative political ad campaign. We used to counter everything Groklaw said. I thought it was my responsibility to SCO stakeholders to have a counter reaction to all these attacks. It turns out that doesn't work well in a courtroom setting. The judges told us that, my attorneys told me that, so I decided to back off.

We just want to have a day in court. Though early on I admit to being more engaged in the battle.

InformationWeek: Ultimately, what you're saying is that you believe that SCO definitely has a future, regardless of how all of the legal wrangling finally plays out?

McBride: If you get knocked down seven times, you get up eight. We took a knock down, but it's not in our DNA to stay down.