Mar 5, 2004 : The webhost industry: week review

📅 March 5, 2004 - While the purpose of the week in review is ordinarily to take in and examine a range of issues, it would seem almost naïve to overlook the impact that the SCO group's latest dealings have had this week in the Web hosting industry. The company's moves, including a licensing agreement with EV1Servers, the launch of two end-user lawsuits and the announcement of several other agreements have captured the attention of the hosting community as effectively as any story in recent memory, all in the space of a few days.
On Monday, The SCO Group announced that it had signed an intellectual property licensing agreement with Web hosting provider EV1Servers, providing the company with a site license that would allow the use of SCO IP in binary form on all Linux servers located in EV1's hosting facilities. Robert Marsh, CEO of Everyones Internet said the agreement was intended to eliminate uncertainty from the operations of EV1's clients. SCO representatives said the agreement was worth seven figures to the company.
The deal caused a considerable controversy for EV1, with many customers voicing their displeasure at the company's apparent support of SCO's claims, and its effectively contributing money to the SCO legal campaign.
On Tuesday, in a posting to EV1's online forum, Marsh defended the deal, stressing that protecting customers from potentially expensive legal action was a key factor in the decision. EV1Servers, he said, continued to fully support the open source movement.
Also on Tuesday, SCO said it had launched its first lawsuit against a Linux user for allegedly violating its intellectual property rights. The user's identity, at first, was not released. The news came after SCO announced in January that it had sent letters to 6,000 UNIX licensees, asking them to certify their compliance with all UNIX source code agreements.
On Wednesday, the company identified the target of the lawsuit as Autozone, a US dealer of car parts, alleging that the company's use of the Linux operating system violates SCO's intellectual property rights. The company also announced that it would file a lawsuit against DaimlerChrysler for alleged violations of its UNIX software agreement with SCO. The company said DaimlerChrysler refused to provide certification proving its compliance with provisions of its UNIX software agreement.
On Thursday, research and analysis firm Netcraft reported that most of Autozone's Web infrastructure was run on Sun Solaris, with just one of its ten visible Web servers running Linux. The Linux server, said Netcraft, appears to be the front end of an intranet connecting its retail stores that includes more than 3,000 Linux machines, according to a 1999 agreement with Red Hat.
For EV1, the controversy came just as the company prepared for the launch of a new data center this week. In her feature on the data center's launch, theWHIR's Karen Snider described Robert Marsh's presentation, in which he reassured customers that the company's decision to pay the licensing fee for Linux servers would not affect their businesses.
On Thursday, in another posting to his company's forum, Marsh disputed claims that the licensing fee exceeded $1 million, referring to earlier reports from several media outlets that SCO's public relations director had said the deal was worth seven figures to the company. With no official announcement, it remained unclear whether the discrepancy was evidence of a serious dispute or a minor semantic disagreement.
While the debate continued among EV1's customers, SCO announced on Thursday that three additional users had purchased intellectual property licenses from the company, naming IT software company Computer Associates, natural gas supplier Questar and manufacturer Leggett and Platt. SCO reportedly said it had signed up between 10 and 50 IP licenses for Linux users.
However, on Friday, it was reported that Computer Associates had denied purchasing SCO's intellectual property license for Linux, contradicting statements made by SCO's chief financial officer Bob Bench. CA senior vice president Sam Greenblatt said the company did not purchase the IP license, but had acquired a large number of licenses for SCO's UnixWare operating system as part of a $40 million breach of contract lawsuit settlement reached in August 2003 with SCO investor The Canopy Group. Greenblatt said the UnixWare licenses indemnified CA against a possible Linux lawsuit from SCO.
Also on Friday, EV1Servers' Marsh told theWHIR that the decision to pay the licensing fee had been misrepresented, and that the company certainly had no intention of harming the open source movement. Marsh called it "a huge disappointment" that EV1 had been accused of being in league with SCO, and reiterated that EV1 had made no admission that SCO's intellectual property was used in Linux. He also criticized SCO for hinting at the financial details of the agreement, saying that reports were exaggerated and that the contract had prohibited either company from revealing financial details.
The news this week, more than just about any other week in recent memory, was thoroughly capitalized by one main issue, as SCO stepped up its push to assert its intellectual property claims. And as much as any other issue in recent memory, this one looks set to carry its momentum forward to next week and well beyond.