Dear SCO Partner:

As a SCO Partner, we thank you for your support and continued business. Because you are a valued partner, it is important that we make you aware of important SCO business decisions and announcements as soon as possible. As such, we wanted to make you aware of an important announcement made today.

This communication is about recent efforts SCO has made to license and protect our patents, copyrights and intellectual property pertaining to the UNIX(r) operating system.  As you know, on March 7, 2003 SCO announced that it filed legal action against IBM in the State Court of Utah, for misappropriation of trade secrets, tortuous interference, unfair competition and breach of contract. The complaint alleged that IBM made concentrated efforts to improperly destroy the economic value of UNIX, particularly UNIX on Intel, to benefit IBM's new Linux services business.

As we have progressed in our discovery related to this action, SCO has found compelling evidence that the Linux operating system contains unauthorized SCO UNIX intellectual property (IP).  Due to this discovery, we are taking three immediate courses of action.

1 - The first is to send a letter alerting commercial users to the fact that legal liability for the use of Linux by businesses may extend to end users. Customers should start receiving this letter today. For your information, a copy of this letter may be found at:

2 - The second action we are taking is to suspend all future sales of the Linux operating system from SCO until the attendant risks with Linux are better understood and properly resolved.

3 - Finally, although this action affects future development and sales of SCO's Linux offerings, SCO will continue to support our SCO Linux and OpenLinux customers and partners who have previously implemented those products and we will hold them harmless from any SCO intellectual property issues regarding Linux. SCO will continue to honor all contractual obligations with existing customers including product updates, service, and support.

As many of you are already aware, SCO UNIX systems continue to sell well - including an increase in OpenServer sales over the previous quarter. Our UNIX products continue to support many of the world's largest businesses. In addition, new customer sales indicate that there is still no better option for rock-solid, dependable technology for their core businesses than our SCO UNIX solutions.

We are excited to be building on our SCO UNIX history as we roll out our next generation UNIX operating system and SCOx framework this fall. SCOx will allow small and medium business customers and branch offices to plug their existing applications into a Web services environment. Details of this strategy will be unveiled at SCO Forum in Las Vegas, Nevada, August 17-19. (For more details, see: ).

SCO remains committed to building new business opportunities for our partners such as you. We recognize that you have depended on us to provide reliable, solid technologies for your customers for over twenty years. We look forward to helping you and your customers meet your business needs for the next twenty years.


Darl McBride
President and CEO
The SCO Group