Linux users to MS: What 'balance sheet liability'?

Microsoft/Novell's patent cooperation agreement unnecessary, say Linux CIOs

While Microsoft may cast the Nov. 2 patent cooperation agreement it pushed on new partner Novell as a way to protect corporate users of the SUSE Linux operating system from potential lawsuits, CIOs Tuesday said they weren't worried in the first place.

"I do not believe that my company has an "undisclosed balance sheet liability," Russ Donnan, CIO at business information provider Kroll Factual Data, said in an e-mail response to questions from Computerworld about the Microsoft deal. Kroll Factual, a Loveland, Colo.-based subsidiary of global services provider Marsh & McLennan Companies, uses Red Hat Linux servers along with Windows servers in its data center.

After keeping mum about Microsoft and Novell's tie-up, Microsoft CEO Steve Ballmer openly declared last week that he believes the Linux source code infringes upon Microsoft's intellectual property (IP). And companies that use Linux, apart from Novell's SUSE distribution, face a latent financial time bomb that he called an "undisclosed balance sheet liability."

Monday, the two companies released separate statements, with Microsoft softening but still standing by Ballmer's comments even as Novell's CEO Ron Hovsepian disavowed them.

Donnan, who described himself as "not a huge fan of software patents," said "the threat of such a 'liability' would not in any way influence" whether Kroll would stick with Red Hat or move to SUSE or even Windows. "Steve Ballmer is posturing for mind share to enterprise executives, knowing it will have little to no impact on IT executives," he said.

Barry Strasnick, CIO of U.S.-based financial services provider CitiStreet, was even more emphatic.

"Like many IT executives, I took great offense to Ballmer's comments," Strasnick wrote in an e-mail. CitiStreet uses Red Hat Linux widely in its data centers. "If Microsoft really thinks there is some code in Linux that violates their patents, they should publish those lines of codes immediately instead of just posturing in the press. [Fear, uncertainty and doubt] may have worked for IBM in the 1970s (some of us are old enough to have been around then), but not today."

When Linux began gaining adoption by dot-coms in the late 1990s, many mainstream CIOs considered it risky in part because of their unfamiliarity with the open-source General Public License (GPL) that governs the operating system's intellectual property, according to Gordon Haff, an analyst with Nashua, N.H.-based Illuminata Inc.

"It wasn't that any circa-1999 CIO had carefully studied the IP issues surrounding Linux, it was that they didn't know much about them and the whole thing sounded kind of fishy to them," he said.

Those risks appeared to become realized in 2003, when The SCO Group, a former Linux distributor-turned licenser, began suing both Linux vendors such as IBM and Red Hat and ex-customers, such as AutoZone and Daimler-Chrysler, for infringing upon its copyrights.

But SCO has made little progress in its lawsuits. Meanwhile, many open-source vendors, including Hewlett-Packard, Red Hat, SUSE and others, quickly responded by offering indemnification against potential lawsuits as part of their standard support packages to customers. Others, such as IBM, have long maintained indemnification was unnecessary.

"We don't offer indemnification because customers rarely, if ever, ask for it," an IBM spokesman said.

Either way, "Linux' success tends to suggest that buyers for the most part don't look on Linux as something risky," Haff said.

And Microsoft's assertions might be even backfire. "There were some applications I had been thinking about moving to a Microsoft platform, but this has now totally alienated me from Microsoft," Strasnick said.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Eric Lai

Show Comments

Cool Tech

Xiro Drone Xplorer V -3 Axis Gimbal & 1080p Full HD 14MP Camera

Learn more >

ASUS ROG Swift PG279Q – Reign beyond virtual world

Learn more >

Crucial® BX200 SATA 2.5” 7mm (with 9.5mm adapter) Internal Solid State Drive

Learn more >

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

D-Link TAIPAN AC3200 Ultra Wi-Fi Modem Router (DSL-4320L)

Learn more >

D-Link PowerLine AV2 2000 Gigabit Network Kit

Learn more >

Gadgets & Things


Learn more >

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Lexar Professional 2000x SDHC™/SDXC™ UHS-II cards

Learn more >

Family Friendly

Lexar Professional 2000x SDHC™/SDXC™ UHS-II cards

Learn more >

ASUS VivoPC VM62 - Incredibly Powerful, Unbelievably Small

Learn more >

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Stocking Stuffer

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Lexar Professional 2000x SDHC™/SDXC™ UHS-II cards

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Best Deals on PC World

Latest News Articles


GGG Evaluation Team

Kathy Cassidy


First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni


For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell


The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi


The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott


My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.


Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?