August 13, 1999 6:00 PM PDT
SCO to boost revenue by offering Linux services
SCO will announce Monday that it will help companies set up Linux computer systems, competing with IBM and a several other companies. It's an important--if not necessary--move for the long-time Unix purveyor, whose revenues are threatened by the spread of Linux.
Professional services--essentially high-priced hand-holding for customers who need someone experienced to set up or run complex computer systems--are a growing business for computer companies. Although Linux can be obtained for free, Linux companies are hoping to make money by selling services. SCO is a new arrival in this area, though, because it sells Unix but not its offspring, Linux.
SCO will help customers decide whether Linux is appropriate and which version is best for their circumstances, said David Taylor, vice president of SCO's 40-person professional services group. It's the first time SCO has offered such a service for an operating system other than its own versions of Unix.
SCO sees Linux as an inevitable feature in the business computing landscape and believes its Unix expertise will give it an edge over other consultants, Taylor said.
SCO's Unix products are similar to Linux in that they run on Intel-based systems, the same hardware where Linux is most popular. SCO, IBM, and Sequent are merging their Unix versions in a project called Monterey-64 that will be released with Intel's 64-bit chip, Merced.
But SCO hasn't benefited from the Linux buzz. This week, the dominant Linux seller, Red Hat, began selling shares publicly. Red Hat's current market capitalization of $5.7 billion is roughly 20 times that of SCO's $270 million, even though SCO has far greater revenues.
SCO will be able to maintain its advantage as the seller of Unix for higher-end systems, Taylor said.
"We see Linux being used extensively in the desktop environment and more limited-function servers," Taylor said. When a server has very strict requirements for reliability and power, "there still seems to be a strong attachment to a commercial product."
SCO will support the four major for-profit Linux distributions: Red Hat, TurboLinux, SuSE, and Caldera Systems. The company will provide round-the-clock support, customization for a specific network environment, and other offerings designed for corporate customers, Taylor said. SCO will charge $12,000 to $15,000 to evaluate a company's needs, he said.
The services will first be offered in North America, Taylor said, with Europe to be added in the next couple months.
About half the company's 40 consultants have Linux skills that can be marketed today, he said. Services currently accounts for about 5 percent of SCO's revenues.