The GNU General Public License (GPL) is an unforgiving beast; if you
distribute something derived from GPL-licensed code, the whole derived
product must be distributable under the GPL's terms. This provision
effectively prevents the use of GPL-licensed in proprietary, closed-source
products. That is an inconvenience for proprietary software vendors, but
is clearly what the authors of the GPL intended.
In fact, the terms of the GPL work very well for some software vendors as
well. Consider this
press release from MySQL AB, Sleepycat Software, and Trolltech AS.
These companies claim that their 2003 software licensing revenues were up
65% over the previous year. Not bad for companies which make their
software available for free.
Each of these companies is a provider of "library" code - tools which can
built into an application to give it new capabilities. MySQL and Trolltech
make their offerings available under the GPL; Sleepycat has its own license
which requires source availability (though in a weaker form than the GPL).
In each case, however, there is a twist: for a fee, the company will make
the same software available under a license which allows closed-source
When this model works, it works well. The free software community gets
access to high-quality software, and the company gets the benefits of the
free development process. At the same time, the company is able to extract
money from others who are making money with the code. This model will only
work in some situations; the software in question must be attractive as a
component of a larger application, and external contributors must be
willing to transfer copyrights or otherwise allow their work to be
distributed in closed-source form. But, when those conditions apply, the
dual-licensing model appears to work well.
There is one interesting problem which occasionally comes up, however;
licensing this sort of library code under the GPL can block its use with
other software which is available under a free, but GPL-incompatible
license. This conflict has been highlighted by the fact that the
GPL-incompatible PHP license means that PHP and
MySQL 4 cannot be used together (or, more correctly, an application
combining the two cannot be redistributed). Since MySQL and PHP are a
popular combination, this restriction hurts a lot of people; it also led to
a number of distributors sticking with the older MySQL 3 release,
which did not have this problem. The
GPL-incompatibility of the new XFree86 license is another high-profile
example; in that case, the license conflict may be the final straw that
signals the end of XFree86 as a viable project.
MySQL AB has now acted to mitigate the problem of free but GPL-incompatible
licenses; the company has extended the MySQL client library license with
the "MySQL FOSS
License Exception." This exception provides a series of licenses which
can be applied to parts of derived works involving the MySQL client
libraries; it includes the PHP license and several others. With this
extension, the PHP license conflict is no more.
The stated intent of the GPL is to ensure that all derived products remain
free software. This extension of the license is clearly compatible with
that goal; it still does not allow the covered code to be distributed in a
non-free manner. If this sort of exception is adopted more widely, it may
point toward a need for a new form of the GPL. If the end result is more
free software, that would be a good thing.
Comments (16 posted)
, we looked at SCO's stock price as
a sort of public referendum on the company's prospects. Shortly
thereafter, the SCO Group made it clear that company management, too, is
watching the stock price closely, and is not pleased with what it is
seeing. Thus, SCO has announced
stock buyback program in the hopes of raising the price somewhat - or, at
least, halting its decline.
What the company has announced is that the board of directors has given its
OK for management, "at its discretion," to buy up to 1.5 million
shares of SCO stock over the next two years. Board chairman Ralph Yarro is
quoted as saying:
At current prices, we believe our stock represents an attractive
investment opportunity and that this action reflects our ongoing
commitment to improving long term stockholder value. We believe we
will have sufficient capital resources to undertake this buyback
program and continue to pursue our strategic initiatives.
The interesting thing, of course, is that capital resources is one thing
the SCO group lacks. From the
latest quarterly report filed with the SEC, we read that "Our cash and
equivalents balance decreased from $64,428,000 as of October 31, 2003 to
$57,945,000 as of January 31, 2004." $58 million is not a
small cash pile, but one should bear in mind that this pile has to sustain
the company in litigation for over a year until the IBM case comes to
trial. Delays in that trial seem likely; if SCO should somehow win some
sort of judgment, an appeal also seems likely. SCO's ability to stay
afloat long enough to see its various lawsuits through is doubtful as it
is, without spending millions of dollars on stock buybacks.
Company management understands this; that is why the same quarterly report
includes this text:
If we repurchase a substantial number of shares during this
24-month period, and we do not generate off-setting revenue form
our UNIX and SCOsource businesses, our cash position could decrease
significantly and our ability to fund future operations could be
Spending SCO's scarce cash on SCO stock would thus seem an absurd thing to
do. So one might well wonder what is really going on. If one were given
to wild speculation, one might come up with either of the following
- The press release states that the shares will be repurchased "on
the open market, in block trades and in privately negotiated
transactions, depending on market conditions and other
factors." It is not that hard to imagine "privately negotiated
transactions" being used to funnel money out of the company and into
the pockets of selected shareholders (at "privately negotiated"
prices) before the whole thing falls apart.
- The company has no actual intention of buying back shares; it simply
issued a PR in the hopes of convincing investors that the price will
be going back up soon.
The first scenario looks like a "go directly to jail, do not pass 'Go'"
card for the people involved. One never knows, but looting the company in
that way looks extreme even for SCO. The second option (issue a PR, do
nothing), on the other hand, is something we've seen from this company
before. We will find out for sure in future SEC filings, but the odds are
that SCO will not be buying back those 1.5 million shares.
Meanwhile, the public confirmation from BayStar that Microsoft did, indeed,
direct them toward investing in SCO has had its own effect on how the whole
SCO case is seen by the wider public. SCO has, at this point, definitively
lost the public relations battle.
Finally, a related development is the announcement
of the launch of Open Source Risk Management and its "open source risk
protection services." OSRM will sell you an indemnification policy for
free software, and will even allow customers to modify that software. The
company's offering is based on "sophisticated code-scanning technology and a
set of best practice protocols," along with the results of Groklaw's
efforts to track down the origins of the code in the Linux kernel. We can
only welcome a company which is trying to make free software users sleep
better at night, but it should be noted that this sort of insurance policy
needs a risk to insure against. As SCO goes down in flames, potential
customers might well wonder if they really need this sort of protection.
Let's hope that some other hungry, litigious corporation does not answer
that question for them.
Comments (10 posted)
When MandrakeSoft filed for the "declaration de cessation des paiements"
(similar to Chapter 11 bankruptcy in the U.S.) on
, there was some
concern about the future of MandrakeSoft and the Mandrake Linux
distribution. A little more than a year later, the company and the
distribution seem to be doing well.
MandrakeSoft recently filed its "redressement judiciaire" plan to emerge
from bankruptcy with the French courts, and its stock has already resumed
trading on the Marché Libre. This seemed like a good time to ask
Gaël Duval for an update on the company's health and its plans for the
The bankruptcy exit plan has not yet been approved, but Duval said that
the company expects the plan will be approved before the end of March. The
plan calls for MandrakeSoft to repay €4.1 million over 9 years from
revenues, rather than borrowing the money to repay the debt. If the plan is
approved before April 15, MandrakeSoft also stands to sell an additional
358,000 shares at €2.10 apiece, according to their shareholder
What led up to the bankruptcy? Duval said that the main problem was that
the company's expenses were too high, as opposed to unsuccessful
products. He did single out MandrakeSoft's e-learning venture as an
"unprofitable venture." What has the company done to improve its financial
Since 2002 we worked hard to reduce expenses. This included closing some
offices, be more careful about where money goes to, and unfortunately,
reduce the number of employees...We had to re-center Mandrakesoft's
strategy in line with its initial philosophy, which is building easy-to-use
and friendly Linux products and making a business from these products.
After the layoffs, MandrakeSoft is now down to about 60 employees. There
are still quite a few people backing the Mandrake Linux distribution,
however. Duval noted that there are about 800 registered contributors for
the Mandrake Linux Cooker, about 600 for the Cooker-i18n, and approximately
150 for Cooker-AMD64.
Duval said that the company has focused on products with better revenue
potential, with an increased focus on sales directly through MandrakeSoft's
online store rather than sales through distributors that take a larger cut
of the profits. The company has also looked to the MandrakeClub, which now
has nearly 20,000 subscribers. Duval also noted that MandrakeSoft, like
other Linux distributors, saw a marked decline in sales of boxed product as
high-speed Internet connections became more common.
MandrakeSoft has also been working on "OEM activities," with companies like
HP. HP has been offering Mandrake Linux on PCs for some time, and the
company recently rolled
out new PC models with Mandrake Linux. Duval didn't provide specifics
on the deal with HP, but said that it provides a "good income" for the
For the first time since its 1998/1999 fiscal year, the company can claim a
"good income." MandrakeSoft's revenues have
increased by 8.4 percent since the first quarter of the last fiscal
year. The total revenues for the first quarter total €1,421,000 , with
a net profit of €271,000. MandrakeSoft's results might have looked
even better if the dollar had held its value against the
Euro. MandrakeSoft reports its financial results in Euros, but most of its
income is in dollars. Currently, the dollar is worth about €0.82.
As the company heads toward its exit from bankruptcy, Duval says it they
"reinforce" its business offerings. Duval said that the company's
Multi-Network Firewall and Corporate Server products are doing well, and
that MandrakeSoft is planning to launch a new version of the Corporate
Server product soon. The company is also planning to introduce a Corporate
Desktop product in the near future.
There may be some growth in the near future as well. Duval noted that
MandrakeSoft is planning "a few mergers, small ones to begin."
Specific merger targets were not mentioned.
Though there is no shortage of Linux distributions on the market, it's good
to see MandrakeSoft making a healthy recovery. The company's return to
profitability, without abandoning its commitment to free software,
demonstrates that there is indeed money in free software for those who find
the right formula.
Comments (none posted)
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