Xenix was developed by Microsoft in the 80s. For a while Microsoft had more UNIX licenses out there than every other VAR/OEM combined! But around '86 BillG decided to focus on OS/2 and hunted around for a buyer. SCO, previously just a device driver shop, wangled a deal in return for Microsoft taking out a 19% stake in the company. What SCO found hard to swallow was that Xenix relied on the Microsoft C compiler, so the development system required them to pay royalties. Xenix also relied on AT&T code, so: royalties. System 7 UNIX hadn't originally come with TCP/IP, so Microsoft licensed an IP stack from another vendor -- more royalties. So basically if SCO wanted to sell a complete system they had to pay out a lot of money each time, hence the lack of a bundled compiler and Xenix coming by default with UUCP rather than TCP/IP, and so on.
In 1988/89 Larry and Doug realized this was no way to run a business, so they paid AT&T for a perpetual license to System V 3.2, which became SCO UNIX. But to maintain binary compatability with Xenix (all the installed base, remember), they needed to keep it running with MS C.
Circa 1993, every copy of Open Desktop that SCO sold -- the all-in, X11 plus Motif plus IXI Desktop on top of SCO UNIX bumper pack -- incurred £500 in royalty payments. So old-SCO had a hard floor beneath which they couldn't sell Open Desktop (or just plain SCO UNIX) profitably, and that floor was already in three digits. Trivial if you were in the minicomputer business, but by then SCO was targeting 486s and the then-new Pentium
From about 1990-1993 SCO joined the ACE Initiative to define a new RISC-based PC architecture -- partners included HP, I think, and it was intended to run the not-yet-there Windows NT as well as Open Desktop as a rival for OS/2, IBM's seemingly invulnerable corporate behemoth. But ballooning development costs broke ACE apart, and SCO bailed (with a 10% downsizing across the global development team).
They also made a bad call in 1992 with the design of Open Server (which shipped late, in 1995). They expected thin clients to prevail once the 1990-92 RAM famine receded, as hard drives of sufficient size to hold a full workstation UNIX were fiendishly expensive back then. So they hit "pause" 8 months into development and re-targeted Open Server as a symlink farm that could be pointed at a local installed filesystem or at a remote file server. But by the time it was ready to ship, PCs were coming with 500Mb drives by default and most folks didn't want to run it as a thin client over 10mbps ethernet. So they kneecapped the design by mistake.
The also had an ageing code base built atop SVR3.2, which nobody wanted: the new hotness was SRV4. But AT&T had wised up and wanted $200M up front for an unlimited license: Sun coughed for it (the result was Solaris) but that was an entire year's revenue for SCO. So SCO engineering in Watford essentually turned their SVR3.2 codebase into a white room clone of SVR4 -- only the AT&T copyrights in the header files remained! -- but couldn't use "SVR4" in marketing, so everyone thought they were increasingly behind the curve. Oops.
In 1994-95 they began negotiating with AT&T for a license to SVR4.2, which they eventually landed (after I left in 95 to join a web startup). But by then it was too late: they'd gone public then promoted an accountant to be CEO, and he … did not make good decisions. Culminating in selling most of the business to Borland, and the trademarks and sublicense agreements to a Linux distributor called Caldera …
And the rest is history.
(Source: first-hand memory, I worked for SCO from 1991-95.)
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timeasmymeasure
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Date: 2025-11-20 02:37 pm (UTC)A footnote:
Xenix was developed by Microsoft in the 80s. For a while Microsoft had more UNIX licenses out there than every other VAR/OEM combined! But around '86 BillG decided to focus on OS/2 and hunted around for a buyer. SCO, previously just a device driver shop, wangled a deal in return for Microsoft taking out a 19% stake in the company. What SCO found hard to swallow was that Xenix relied on the Microsoft C compiler, so the development system required them to pay royalties. Xenix also relied on AT&T code, so: royalties. System 7 UNIX hadn't originally come with TCP/IP, so Microsoft licensed an IP stack from another vendor -- more royalties. So basically if SCO wanted to sell a complete system they had to pay out a lot of money each time, hence the lack of a bundled compiler and Xenix coming by default with UUCP rather than TCP/IP, and so on.
In 1988/89 Larry and Doug realized this was no way to run a business, so they paid AT&T for a perpetual license to System V 3.2, which became SCO UNIX. But to maintain binary compatability with Xenix (all the installed base, remember), they needed to keep it running with MS C.
Circa 1993, every copy of Open Desktop that SCO sold -- the all-in, X11 plus Motif plus IXI Desktop on top of SCO UNIX bumper pack -- incurred £500 in royalty payments. So old-SCO had a hard floor beneath which they couldn't sell Open Desktop (or just plain SCO UNIX) profitably, and that floor was already in three digits. Trivial if you were in the minicomputer business, but by then SCO was targeting 486s and the then-new Pentium
From about 1990-1993 SCO joined the ACE Initiative to define a new RISC-based PC architecture -- partners included HP, I think, and it was intended to run the not-yet-there Windows NT as well as Open Desktop as a rival for OS/2, IBM's seemingly invulnerable corporate behemoth. But ballooning development costs broke ACE apart, and SCO bailed (with a 10% downsizing across the global development team).
They also made a bad call in 1992 with the design of Open Server (which shipped late, in 1995). They expected thin clients to prevail once the 1990-92 RAM famine receded, as hard drives of sufficient size to hold a full workstation UNIX were fiendishly expensive back then. So they hit "pause" 8 months into development and re-targeted Open Server as a symlink farm that could be pointed at a local installed filesystem or at a remote file server. But by the time it was ready to ship, PCs were coming with 500Mb drives by default and most folks didn't want to run it as a thin client over 10mbps ethernet. So they kneecapped the design by mistake.
The also had an ageing code base built atop SVR3.2, which nobody wanted: the new hotness was SRV4. But AT&T had wised up and wanted $200M up front for an unlimited license: Sun coughed for it (the result was Solaris) but that was an entire year's revenue for SCO. So SCO engineering in Watford essentually turned their SVR3.2 codebase into a white room clone of SVR4 -- only the AT&T copyrights in the header files remained! -- but couldn't use "SVR4" in marketing, so everyone thought they were increasingly behind the curve. Oops.
In 1994-95 they began negotiating with AT&T for a license to SVR4.2, which they eventually landed (after I left in 95 to join a web startup). But by then it was too late: they'd gone public then promoted an accountant to be CEO, and he … did not make good decisions. Culminating in selling most of the business to Borland, and the trademarks and sublicense agreements to a Linux distributor called Caldera …
And the rest is history.
(Source: first-hand memory, I worked for SCO from 1991-95.)