Microsoft Will Make Investment in The Santa Cruz Operation Inc.

By Zee Zaballos, Marty Taucher, Sara Charf and Pam Edstrom
Business Wire

February 15, 1989

Redmond, WA -- Microsoft Corp. and The Santa Cruz Operation Inc. (SCO) further strengthened their successful eight-year business relationship Wednesday by announcing that Microsoft will make a minority investment of less-than-20-percent in SCO, the world's leading developer and publisher of UNIX System software.

Since 1981, SCO and Microsoft have worked together to develop and market XENIX, the first commercial version of the UNIX operating system. As part of the investment agreement, both companies are committing increased resources to joint technology exchange, product development, and marketing efforts.

"Microsoft has enjoyed a very close working relationship with SCO over the past eight years," explained Bill Gates, Microsoft chairman and chief executive officer. "This investment reflects our desire to participate more directly with SCO in the future growth of the UNIX System market."

"The Microsoft investment in SCO is an indication that the UNIX System environment, represented by the SCO XENIX and SCO UNIX System V product line, has achieved a significant and permanent position as a microcomputer software standard," said Larry Michels, SCO chairman. "One of the important advantages of this commitment is that it strengthens the ties between the companies while allowing SCO the autonomy to continue pursuing its separate business interests."

As part of the investment agreement, Microsoft and SCO will expand their ongoing joint activities in building bridges between the MS-DOS, OS/2 and UNIX operating systems. Two near-term results of the increased commitment to combined resources will be:

-- Development and marketing of Presentation Manager/X, a graphics environment for UNIX Systems that will feature the same user interface for SCO XENIX and SCO UNIX System V as exists in Presentation Manager for OS/2.

-- Implementation of LAN Manager/X, a UNIX System version of the Microsoft OS/2 LAN Manager for SCO XENIX and SCO UNIX System V.

"We see distinct roles for OS/2 and the UNIX System," said Gates. "OS/2 has been widely accepted by major software developers as the successor to MS-DOS in the personal computer marketplace. Meanwhile, the UNIX System is becoming more popular for multiuser PCs, high-end workstations, and local area network servers. By working closely with SCO, we can ensure that end users will enjoy commonality of functions, features and user interfaces, no matter which platform they use."

Microsoft and SCO have worked together for nearly a decade to deliver the benefits of the UNIX System to the commercial market. In 1978, Microsoft developed XENIX as an enhanced version of the UNIX operating system, for business applications. In 1981, SCO joined forces with Microsoft to further develop and market XENIX, and delivered the first XENIX Operating System and XENIX-based applications for the Intel 8088 and 8086 PC environments in 1983. In 1985, Microsoft and SCO delivered XENIX System V for the 80286 environment.

In 1987, Microsoft and SCO delivered SCO XENIX System V as the first multiuser operating system for both the new industry-standard 80386-based PC's and the PS/2 series of personal computers from IBM. And in 1988, Microsoft and SCO co-developed "merged UNIX," UNIX System V/386 Release 3.2, which adds XENIX binary compatibility to UNIX System V.

As a result, XENIX has now become the dominant version of the UNIX System in the commercial market, with more than 2500 available applications, an installed base of more than 350,000 licenses, and greater than 100,000 new customers licensed each year.

In their latest joint effort, SCO recently agreed to port Microsoft's programming languages and applications software to the UNIX System environment. SCO will also distribute and provide support for these products.

The Santa Cruz Operation Inc., is a privately held company recognized internationally as the leading developer and supplier of UNIX System software solutions, training, and support services for standard hardware platforms. Founded in 1979, SCO fields a staff of over eight hundred between its Santa Cruz, Calif., Washington D.C., and London offices, including the largest XENIX and UNIX System technical team in the world.

Microsoft Corp. (NASDAQ:MSFT) develops, markets and supports a wide range of software for business and professional use, including operating systems languages, and application programs, as well as books, CD-ROM products and hardware for the microcomputer marketplace.

NOTE:

-- Microsoft, MS and XENIX are registered trademarks of Microsoft Corp.

-- SCO is a trademark of The Santa Cruz Operation Inc.

-- UNIX is a registered trademark of AT&T in the USA and other countries.

-- Intel is a registered trademark of Intel Corp.

-- IBM and PS/2 are registered trademarks of International Business Machines Corp.