Analysis: Unix integrators are the deal's real hidden gems.
Execs at Caldera Systems have been rolling out the red carpet to SCO integrators with mixed success for more than two years. But now, after buying a big chunk of the beleaguered Unix vendor, Caldera may have a pitch they can't refuse.
With the UnixWare product from SCO at the high end, and Caldera's Linux products geared toward small to midsize businesses, Caldera believes it has a foothold in the entire software market.
"What Linux needs more than anything is a global infrastructure ... [This deal] gives us support, marketing [and] partners in every major market," crows Caldera Systems CEO Ransom Love.
As first reported by Sm@rt Partner, the US$120 million stock and cash deal sends the SCO server and professional-services divisions to Caldera. The acquisition, announced earlier this month, is expected to close later this year.
Still, there's no guarantee that SCO's integrators will jump into bed with Caldera. After all, many SCO integrators have been working for years with multiple Linux partners--including Red Hat and SuSE.
Some SCO partners are willing to give Caldera a look. "This merger will give Caldera more credibility than Red Hat or Suse," says Glenn Jacobson, CEO of Unique Systems, a Unix and Linux integrator that works with SCO, Caldera, Red Hat and SuSE.
Bob Darling, president of integrator Isis, concurs. "All signs from Caldera so far have been positive," says Darling, who was one of many SCO integrators to meet at length with Caldera execs, including Love, at last week's SCO Forum. "We want to pick one [Linux] horse and ride it. ... There's no sense in messing around."
But Caldera faces other hurdles. For starters, Caldera has to prove that it stands on firm financial ground. SCO's business has been drying up in recent quarters, and some critics consider UnixWare a hot potato of sorts that has burned all of its owners. The product originally was designed by Novell and AT&T under the Univel banner. Novell ultimately took ownership of UnixWare before handing it off to SCO for pennies on the dollar.
Now, Caldera will drive UnixWare's future, but the company is tiny compared with most of its operating-system rivals. Caldera has never been profitable and isn't growing as quickly as Red Hat. During its most recent fiscal financial year, Red Hat's revenue topped US$42 million, compared with US$3 million for Caldera.
Caldera has wealthy financial backers like former Novell CEO Ray Noorda, but some potential partners aren't sure how they can make a buck on Caldera's products. "I agree with Ransom's vision that product drives services ... and UnixWare will be the carrot," says Darling. "But it's a concern. When you sell a product for this little, how does this benefit us?"
Caldera also must navigate the tricky terrain between its newly acquired proprietary UnixWare software and its open-source Linux offerings. While it won't immediately uncork the UnixWare recipe to developers, Caldera must quickly move the product in that direction to keep from alienating the open-source faithful.
"It's going to be a tough path to navigate [between open-source and proprietary software]. I think [Love] is well aware of the challenges he's facing," says Larry Smith, partner with Electronic Communications Systems, an integrator with experience in both SCO and Caldera.
Still, Caldera has a firm track record as a partner-friendly outfit in the Linux arena--building solid relationships with integrators and resellers.
"Caldera is a great group to work with," says Ron Herman, CEO of Blue Chip Computer Systems, which has worked with SCO, Caldera and Red Hat. "More than SCO, they know what a channel is worth."
Whether that ends up being US$120 million depends on how many SCO integrators Caldera can recruit.
Will they fall for Love?
