Stone, vice chairman for the office of the CEO at Novell, opened the Open Source Business Conference 2004 criticizing SCO CEO Darl McBride for diverting the industry’s attention onto licensing, when people should be thinking about monetizing Linux and open source.

We are so wrapped-up in the low-level nonsense, we forget about the business model, Stone said.

Open source has been evolving… problem is we are still focused on this crap. We are still wrapped up and focused on licensing issues, Darl. The issue is how do you make money?

Novell is itself locked in legal action with SCO, involving claims and counter claims over who owns Unix and wording of Novell’s 1995 sale of its Unix to SCO. SCO lodged a slander action against Novell in January, claiming Novell is harming SCO’s Unix intellectual property (IP) action.

Al Gore didn’t invent the internet and we didn’t invent Linux. We invented Unix and Unix is not in Linux. Linux is a free and open distribution, and should be and will continue to be, Stone said to applause from OSBC delegates in San Francisco, California.

Stone also turned his attention to OSBC co-sponsor Microsoft during the process of debunking some of the myths he claimed surrounded open source software development.

These myths include claims open source will destroy the software industry and that open source is a haven for hackers. He said Novell’s $250m acquisitions proved Novell doesn’t believe open source will destroy the software industry, while open source is a movement dominated by professional developers already working in the IT industry.

Sixty percent of the people in the development community working for you also work in open source. They work for you! Linux, Apache and PHP are exceptional software, Stone said.

The arguments that open source would destroy the software industry has been made by, among others, Microsoft. In recent years, Microsoft has modified such attacks, and instead adopted a tactic of sponsored white papers and advertising to convince companies Windows provides a lower total cost of ownership (TCO) than Linux.

He singled out for attack a recent Microsoft advertisement and statistics Microsoft had used: It’s better to say this F18 [fighter] costs more than this scooter. It’s amazing how we warp the truth in this business.

Stone said open source had scared incumbent software vendors like Microsoft, because it changes the way customers purchase products. In an open source world, users can swap out one supplier for another, forcing ISVs to compete on customer services.

Linux is a substitute for Windows… that’s why Microsoft is providing to much FUD [Fear Uncertainty and Doubt] in this, Stone said.

Stone told open source ISVs to compete on customer service and applications not infrastructure like operating systems, which are becoming increasingly commoditized.

We have got to recognize where the value lines are… we spent money building the infrastructure but the value is in the services – identity, security and office. That’s where the money is. Not underneath. Until you realize that you won’t make money.

Stone also noted that it was important for Novell to offer a mix of open and closed source applications and services and not shift from being the NetWare company to becoming the Linux company.

The worst thing is for Novel to become the Linux company. That’s substituting one operating system [NetWare] for another – that’s a bad strategy. The right strategy is up the stack.

This article is based on material originally published by ComputerWire