When SCO Group (SCOX ) in Lindon, Utah, sued IBM (IBM ) on Mar. 7 for $1 billion, claiming Big Blue unlawfully handed over parts of SCO's Unix software code to Linux developers, techies let out a Bronx cheer. IBM's huge investment in Linux has legitimized it with corporate users. Linux watchers perceived a lawsuit as the last desperate act of a struggling company (see Bw Online, 5/23/03, "Meet Linux's New Public Enemy No. 1"). But on May 19, SCO got a hand from Microsoft (MSFT ), which agreed to license SCO's Unix technology. That sent shudders through the industry: "Microsoft is legitimizing this complaint," says analyst Tony Iams of D.H. Brown Associates, a market researcher in Port Chester, N.Y.

Many Linux fans and industry analysts see an ulterior motive. They don't believe Microsoft has any fear of running afoul of SCO's intellectual-property rights, thus it didn't really need to license Unix from SCO. They see the move as a way to cast doubt on Linux, which poses the greatest threat to Microsoft's hegemony. Linux is now No. 2 in the $50.9 billion market for server computers, with a 13.7% share to Microsoft's 59.9%. "This creates fear, uncertainty, and doubt about Linux licensing," says software analyst Rick G. Sherlund of Goldman, Sachs & Co.