Caldera International, Inc., earlier Caldera Systems, was an American software company that existed from 1998 to 2002 and developed and sold Linux- and Unix-based operating system products.
Caldera Systems was created in August 1998 as a spinoff of Caldera, Inc., with Ransom Love as its CEO. It focused on selling Caldera OpenLinux, a high-end Linux distribution aimed at business customers that included features it developed, such as an easy-to-use, graphical installer and graphical and web-based system administration tools, as well as features from bundled proprietary software. Caldera Systems was also active in the Java language and software platform on Linux community.
In March 2000, Caldera Systems staged a successful IPO of its stock, although the stock price did not reach the stratospheric heights of its chief competitor Red Hat and some other companies during the "Linux mania" of 1999.
In August 2000, Caldera Systems announced the purchase of Unix technology and services from the Santa Cruz Operation (SCO). The much larger, merged company changed its name to Caldera International when the deal closed in May 2001.
In the end none of these efforts succeeded in the marketplace, and Caldera Systems/International lost large amounts of money in all four years of its existence. Under severe financial pressure, in June 2002 Love was replaced as CEO by Darl McBride, who soon adopted the corporate name The SCO Group and took that entity in a completely different business direction.
Caldera Systems Background and formation
Caldera, Inc., based in Utah, was founded in 1994 by Bryan Wayne Sparks and Ransom H. Love, receiving start-up funding from Ray Noorda's Canopy Group. Its main product was Caldera Network Desktop (CND), a Linux distribution mainly targeted at business customers and containing some proprietary additions. Caldera, Inc. later purchased the German LST Software GmbH and its LST Power Linux distribution, which was made the basis of their following product Caldera OpenLinux (COL).
Caldera, Inc. inherited a lawsuit against Microsoft when it purchased DR-DOS from Novell in 1996. This Caldera v. Microsoft action related to Caldera's claims of monopolization, illegal tying, exclusive dealing, and tortious interference by Microsoft.
On September 2, 1998, Caldera, Inc. announced the creation of two Utah-based wholly owned subsidiaries, Caldera Systems, Inc. and Caldera Thin Clients, Inc., in order to split up tasks and directions. Caldera Systems, whose actual incorporation date had been August 21, 1998, took over the Linux business, including development, training, services, and support, while Caldera Thin Clients (which changed its name to Lineo the following year) took over the DOS and embedded business. The shell company Caldera, Inc., remained responsible for the lawsuit only.
"Linux for Business" Caldera Systems was headquartered in Orem, Utah, and was headed by co-founder Ransom Love as President and CEO. Caldera Deutschland GmbH, based in Erlangen, Germany, served as their Linux development center. Drew Spencer joined in 1999 and became the company's Chief Technology Officer.
The company targeted the Linux-based software business with its Linux distribution named Caldera OpenLinux, and the Caldera Systems business plan stressed the importance of corporate training, support, and services. Towards this end they created a professional certification program for Linux as well as for the KDE desktop that the Caldera Systems distribution used. In doing so they worked with the Linux Professional Institute in developing class materials and created a series of Authorized Linux Education Centers around the globe that would train successful students towards doing well in Linux Professional Institute Certification Programs. Beginning courses trained on several difficult Linux distributions as well as Caldera OpenLinux, while more advanced courses focused on OpenLinux only (the name OpenLinux tended to annoy other Linux distributions, suggesting as it did that the others were not open).
The early leader in the Linux as a business race was Red Hat Software, which attracted equity investments from several major technology companies in early 1999. Red Hat also tended to get the most media attention. Besides Red Hat and Caldera, other well-known companies selling Linux distributions included SuSE, Turbolinux, and Mandrake Soft. But no company at the time had been successful in building a profitable business around open source software.
Caldera Systems focused on a high-end Linux product and its Linux distribution became rich with features with bundled proprietary software. For instance, the company offered NetWare for Linux, which included a full-blown NetWare implementation from Novell. They licensed Sun Microsystems's Wabi to allow people to run Windows applications under Linux. Additionally, they shipped with Linux versions of WordPerfect from Corel as well as productivity applications from Applixware. Since many of their customers used a dual boot setup, Caldera shipped with PowerQuest's PartitionMagic to allow their customers to non-destructively repartition their hard disks.
This approach led to a debate about the purity of Linux-based products. Red Hat CEO Bob Young said in 1999, "One where you might see a problem is Caldera, because they see part of their value added in proprietary tools they have licensed from third parties." In response, a Caldera Systems executive expressed the company's philosophy: "We have produced a product that combines the best of open-source and commercial packages; we are doing Linux for business. We do add to it commercial packages that allow business users to easily integrate it."
Caldera OpenLinux was also available on a retail basis, in the form of a CD-ROM for installing Linux on an IBM PC compatible machine that sold for .
OpenLinux 2.2, released in April 1999, was seen as significantly improved from the previous year's 1.3 release, especially in terms of it having a fully graphical and easy-to-use installation feature. (See also: ) Ease of installation was an important criteria in selecting a Linux distribution, and Caldera Deutschland had created this first fully graphical installer for Linux, called Lizard, starting in November 1998. Several years later it was still receiving praise from reviewers. The installer could even be started from a Microsoft Windows partition.
Industry writer Hal Plotkin praised Caldera as a product development company and noted that OpenLinux won several industry awards, including 1999 product of the year from Linux Journal.
Other products and projects In addition to other people's applications, Caldera Systems created many Linux extensions to fill voids where no other commercial company was.
Caldera Systems created a full-featured GUI system administration tool called Caldera Open Administration System (COAS) that was deployed during 1999. The tool was a unified, easy to use administration tool with a modular design and goals of scalability and broad scope applicability, and was expressly designed to be usable on other Linux distributions in addition to Caldera Systems'. Following that, Caldera Systems sponsored the development of browser-based Unix system administration via the webmin project between 1999 and 2001. It became the first Linux distribution to include Webmin as the standard tool for system administration.
Caldera Systems was a leader in the adoption of the Java language and software platform on Linux. The Blackdown Java project, which first produced working Java ports for Linux systems, was featured on Caldera OpenLinux. In 2000, Caldera Systems was one of the companies elected to the inaugural JCP Executive Committee for Java SE/EE, which guided the evolution of Java language and software platform through the Java Community Process. Caldera Systems' role on the Executive Committee included representing the Linux and open source communities.
The company was re-elected to its seat on the Executive Committee after it became Caldera International, and represented Java usage on SCO Unix platforms as well. Work to improve just-in-time compilation under the Sun "Classic JVM" for SCO Unix platforms that begun under SCO was completed with Caldera International. Caldera Systems was also involved in several Java Specification Requests, including being the specification lead for JSR 140, Service Location Protocol API for Java, and participating in the JSR 48 WBEM Services Specification.
Investments and IPO
Caldera Systems had not been profitable; for the company's 1998 fiscal year, ending on October 31, it had a loss of $7.9 million on revenue of $1.05 million, and for its 1999 fiscal year, it had a loss of $9.3 million on revenue of $3.05 million. However, the industry saw promise in Linux as a solution for businesses, and in the latter half of 1999 a "Linux hysteria" had erupted in the stock market, with first Red Hat in August 1999 and then Cobalt Networks and VA Linux in November and December 1999 having experienced huge jumps in value during their first day each of trading.
On January 10, 2000, three things happened, all of which were coincidental. A settlement to the Caldera v. Microsoft suit over DR-DOS was announced, with Microsoft paying former parent company Caldera, Inc. an amount estimated at $275 million (which turned out to be $280 million). Caldera Systems received a $30 million private equity investment from a group of companies that included Sun Microsystems, Novell, Citrix, Santa Cruz Operation, Chicago Venture Partners, and Egan-Managed Capital, with the goal to "fund operations and accelerate the growth and acceptance of Linux." Also, Caldera Systems announced that it would be filing to have an initial public offering. Ransom Love said that the Microsoft settlement would not benefit Caldera Systems other than that Caldera, Inc. would relinquish the name "Caldera", which would address existing industry confusion between the two. Reports at the time also indicated that the settlement would not directly benefit Caldera Systems, but that Caldera Systems could get an intangible benefit from a name association with a company that had bested an industry giant. Love also said that the timing between the funding round, work for which had begun six months earlier, and the IPO announcement was "unfortunate, and completely coincidental".
Caldera Systems reincorporated in Delaware on March 6, 2000. By this point it was well positioned in some respects, such as having a strong relationship with Sun and receiving good product reviews within the industry. But it suffered from a lack of public awareness; as IDC analyst Dan Kusnetzky said, "They have a wonderful demo, and the product looks very good. But if you asked people on the street about Caldera they would probably think you are talking about a volcano in Hawaii."
The company then staged an IPO of its common stock, with the symbol CALD. On the first day of trading, March 21, 2000, Caldera Systems' shares doubled in value, going from an initial price of $14 to close at $29 7/16, with heavy trading been seen and an intra-day high of $33. The IPO raised $70 million for the company and gave it a market capitalization of $1.1 billion.
While the launch was successful on its own terms, analysts saw signs that the Linux mania was finally cooling, abetted by Red Hat and VA Linux having seen their values steadily decrease since their spectacular starts. So, while some observers viewed the IPO as a success, others viewed it as a disappointment. Red Hat continued to dominate in North America, with an over 50 percent share of the Linux market.
Caldera International Acquisition of SCO UNIX