Linux Containers Authors: Pat Romanski, Liz McMillan, Yeshim Deniz, Zakia Bouachraoui, Elizabeth White

Related Topics: Open Source Cloud, Linux Containers

Open Source Cloud: Article

Umm, About That $100m Microsoft Funneled to SCO

Umm, About That $100m Microsoft Funneled to SCO

A piece of juicy compromising e-mail written by a SCO consultant to SCOsource VP Chris Sontag and SCO CFO Bob Bench last October suggesting that Microsoft had quietly funneled $86 million to SCO and that it was good for at least $106 million before tapping all possibilities happened to turn up on open source philosopher Eric Raymond's web site Thursday.

Eric made it part of his Microsoft-embarrassing internal documents collection and dubbed it Halloween X. (See www.opensource.org.)

He says he got it from an "anonymous whistleblower inside SCO," which is odd because, given the timing and other little niceties, one would be tempted to think that it was a bit of SCO discovery that somehow got loose from IBM. Oh, yeah, Eric is a sometime consultant for IBM and his anti-SCO credentials are impeccable.

Right at the top of the kinda disjointed e-mail the consultant, one Mike Anderer from the M&A side of an outfit called S2 Strategic Consulting, clearly refers to Baystar Capital, the VC that was part of a $50 million investment in SCO last year, as a "Microsoft referral."

SCO admits the e-mail is genuine but claims it was misguided. SCO spokesman Blake Stowell read a statement that said, "We believe the e-mail was simply a misunderstanding of the facts by an outside consultant who was working on a specific, unrelated project to the Baystar transaction and he was told at the time of his misunderstanding. Contrary to the speculation of Eric Raymond, Microsoft did not orchestrate or participate in the Baystar investment."

Evidently Microsoft did introduce SCO and Baystar, but the millions Baystar, an obscure house, put in was Baystar's, not Microsoft's. Of course, Microsoft was doubtless grateful, and gratitude can sometimes be profitable.

IBM has already subpoenaed Baystar, along with a couple of other SCO investors, so it should be interesting to see what its fishing expedition turns up.

The other investor in the $50 million round was the Royal Bank of Canada. Microsoft is supposed to have paid SCO $10 or $11 million for some Unix IP.

The rest of Anderer's e-mail says:

"I realize the last negotiations are not as much fun, but Microsoft will have brough [sic] in $86 million for us including Baystar. The next deal we should be able to get from $16-20, but it will be brutial [sic] as it is for go to makerket [sic] work and some licences [sic]. I know we can do this, if everyone stays on board and still wants to do a deal. I just want to get this deal and move away from corp dev and out into the marketing and field dollars.

"...In this market we can get $3-5 million in incremental deals and not have to go through the gauntlet which will get tougher next week with the SR VPs.

"...Microsoft also indicated there was a lot more money out there and they would clearly rather use Baystar 'like' entities to help us get signifigantly [sic] more money if we want to grow further or do acquisitions.

"This Microsoft deal is the Ante to the poker game...We should get this done and go after several $2-3 Million deals from the expense side of their company. So their revenue plan for the future is to hit Microsoft up for money, then hit them up for more money. The [sic] will help us a lot and if we execute we could exit and Unix componients [sic] we have build [sic] potentially back to Microsoft or MCS.

"I think they are on track and may not be able to push much more this round, but there are other ways to get money from them, their partners, investment bank referrals, etc.

"Do kepp [sic] in mind that they have brough [sic] us between $82 million and $86 million if this deal is between $4million per quarter where Rich [Eric think he means Rich Emerson, Microsoft's senior VP of corporate development and strategy] is at, or it turns into %5 [sic] million wjich [sic] is the lowest number Chris had interest in.

"There will be more, lo[a]ns, partnerships, etc. but we need to just get this one done. It is too high profile, it is also critical, but they are not the people to pitch.  We should get what we can from them ad [sic] then work the other and larger areas of the company and groups where they have real budget and need for our help."

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (19) View Comments

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.

Most Recent Comments
gbob 03/08/04 06:41:19 PM EST

In response to Huh?

Do you have any specifics on "vaguely uncomplemtary" ? I've been following this a while and what is happening is a bit beyond "vaguely uncomplementary" it is more of a full frontal assault by SCO, funded by MS..

Huh? 03/08/04 06:29:40 PM EST

Seems like Microsoft and SCO aren't the only organizations adept at spreading FUD. If someone mutters something vaguely uncomplementary about Linux, the zealots scream FUD, but give ESR a leaked memo from an outside contractor, and speculation and accusations pour from the mouths of the same people.

The hypocrisy is incredible.

rich gilbertson 03/06/04 04:43:38 PM EST

First off, Gates did not buy MS-DOS, he bought Down and Dirty DOS (a rip off of CPM). And if the creator of CPM had not have died he would be in Gates shoes.

Second off, Cross Compilers were the thing back then, THAT is why all the code looks the same.

Third off, check out why there are not anymore Cross Compilers today. If we had them most of our problems would be much smaller.

Rich Gilbertson

IT Tech

P.S. I started with computers on a K43 Teletype terminal in 1976.

Dave Lozier 03/06/04 03:07:34 PM EST

It's all speculation but nothing between SCO and Microsoft would surprise me. Only time will tell. The only annoyance with waiting is having to put up with the FUD noise out of SCO.

daljon 03/06/04 02:34:03 PM EST

MS also put money in Apple.

John Harrison 03/06/04 12:49:40 PM EST

SCO "sells" Linux licenses as part of a lawsuit settlement and includes an NDA so that the "customer" can't publicly admit that they are (or are not) a customer.

It smells pretty desperate when you won't let your "best" customers comment on what they've bought from you.

Jeff 03/06/04 12:01:32 PM EST

Hmmm...and while reading all the diatribe and being a microsquishy basher myself - what to my wondering eyes should appear?? A microsoft add on LinuxWorld (offering unix services on MS for the "datacenter".... oh yeah, that should just about make Linus's day - who's to say SCO isn't the only one with their hands in Redmond's pockets

wtrmute 03/06/04 10:48:49 AM EST

The really unfortunate part is that in the old days, Caldera used to be one of the better Linux distros out there. They had a good system installer, lisa, for example. Shame, really, what Mr. McBride's done with the company.

ces 03/06/04 10:45:41 AM EST

Remember Microsoft is already under court supervision for the anti-trust case they lost (even if the punishment was weak).

The judge can take things like Microsoft funding SCO's crusade against Linux as evidence that Microsoft isn't complying with the remedies ordered.

Also if there is enough of a smoking gun with the memo IBM, RedHat, and Novell could potentially drag Microsoft into their lawsuits with SCO. As well as turn up enough evidence for later lawsuits against Microsoft including private anti-trust suits.

gbob 03/06/04 10:06:02 AM EST

Assuming this is true (and if you look at MS past behavior patterns, this is not a big leap), then what you have in essence right now is Microsoft (through SCO) bringing law suits against AutoZone and maybe Daimler Chrysler for using products not sold by Microsoft.

El 03/06/04 10:02:07 AM EST

What would you do if you had $500 million? Never work again? Why would you care whether or not you were committing "career suicide" if somebody gave you enough money that never finding another job wouldn't be a problem? Let's see now, I can continue working another 25 years, and earn maybe a total of $1 million over that time, and pay half that in taxes... or I can take $10 million right now and retire... which would you do?

johnvu 03/06/04 09:53:19 AM EST

Let's assume that this is truly the case - that SCO is just a pawn in Microsoft's chess game. If so, why would the likes of Darl McBride and his cronies commit career-suicide? Come on, let's be honest, once Darl loses, what company would even want to touch him with a ten-foot pole? He'll always be referred to as "that guy" who started a ridiculous claim that never came to fruition.

The only thing that I can think of, to make it worthwhile for Darl to do such a thing is if Microsoft said to him "don't worry about your career, we'll take care of you" and paid him off big-time. The legalities of this payoff is questionable -- but then again, the legalities of what SCO is currently doing is highly questionable.

k_head 03/06/04 09:52:17 AM EST

So what? It's not like the DOJ would punish them or anything. Legality only matters if the court system is willing to go after you when you break laws. The DOJ has shown no willingness to hold MS accountable.

DougJohnson 03/06/04 09:51:42 AM EST

Microsoft can't buy UNIX as it would be a breach of their anti-trust settlement and an obvious move into a MORE monopolistic position

Suzuki-roshi 03/06/04 09:51:12 AM EST

Speculation where? In your head? MS is not going to push Linux anytime soon. Your statement about Windows and Longhorn sounds a lot like what people said about XP four years ago. Besides, MS couldn't get away with buying out SCO.

In the beginner's mind there are many possibilities. In the expert's mind there are few.

rixstep 03/06/04 09:50:36 AM EST

An interesting postulate. Perhaps that's the carrot MS are dangling before SCO. If SCO can get a sort of 'monopoly' on Unix, MS will buy them and put them all on easy street.

There's been a lot of speculation that MS would go towards their own Linux distro, and that both Windows and Belgian Blue (Longhorn) are dead in the water. To enter a new market, Bill would want a monopoly.

That's a given.

harmless_mammal 03/06/04 09:50:01 AM EST

Doesn't it look like SCO is interested in selling its Unix properties to Microsoft if they're actually successful in solidifying their position?

Sj0 03/06/04 09:49:15 AM EST

Gotta love capitalism. It works as well in theory as communism does in fact. Luckily, it works a lot better in fact that it does in theory, but it can still be awfully silly sometimes. :)

Sj Zero

MooCows 03/06/04 09:48:23 AM EST

As much as I hate to say this, the justice system isn't going to do a thing against MS as long as they don't commit massive frauds or something similiar.

To the government MS is simply a healthy company bringing in a boatload of cash, who cares if they don't play by the rules [of capitalism].

IoT & Smart Cities Stories
A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to great conferences, helping you discover new conferences and increase your return on investment.
Headquartered in Plainsboro, NJ, Synametrics Technologies has provided IT professionals and computer systems developers since 1997. Based on the success of their initial product offerings (WinSQL and DeltaCopy), the company continues to create and hone innovative products that help its customers get more from their computer applications, databases and infrastructure. To date, over one million users around the world have chosen Synametrics solutions to help power their accelerated business or per...
DXWorldEXPO LLC announced today that ICOHOLDER named "Media Sponsor" of Miami Blockchain Event by FinTechEXPO. ICOHOLDER gives detailed information and help the community to invest in the trusty projects. Miami Blockchain Event by FinTechEXPO has opened its Call for Papers. The two-day event will present 20 top Blockchain experts. All speaking inquiries which covers the following information can be submitted by email to [email protected] Miami Blockchain Event by FinTechEXPOalso offers sp...
SYS-CON Events announced today that IoT Global Network has been named “Media Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. The IoT Global Network is a platform where you can connect with industry experts and network across the IoT community to build the successful IoT business of the future.
IoT is rapidly becoming mainstream as more and more investments are made into the platforms and technology. As this movement continues to expand and gain momentum it creates a massive wall of noise that can be difficult to sift through. Unfortunately, this inevitably makes IoT less approachable for people to get started with and can hamper efforts to integrate this key technology into your own portfolio. There are so many connected products already in place today with many hundreds more on the h...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
CloudEXPO New York 2018, colocated with DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
DXWorldEXPO | CloudEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
Disruption, Innovation, Artificial Intelligence and Machine Learning, Leadership and Management hear these words all day every day... lofty goals but how do we make it real? Add to that, that simply put, people don't like change. But what if we could implement and utilize these enterprise tools in a fast and "Non-Disruptive" way, enabling us to glean insights about our business, identify and reduce exposure, risk and liability, and secure business continuity?