Novell's Linux Coup
SUSE, which will contribute $35 million to $40 million to revenue from Novell's fiscal year 2004 ending in October, is the No. 2 player in the Linux software market. With the buy, Novell will have a Linux server OS to go along with its Ximian Linux desktop and set of Linux file, print, messaging and directory networking services, due by the end of the year.
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'It's clear that a lot of the big players want to have at least two major Linux distributors to balance things out, which is probably why you'll find IBM supporting the deal.' ,Linus Torvalds, Linux kernel developer
Novell's global channel, sales and technical-support organization are key advantages that could help the new Linux powerhouse unseat Red Hat as the No. 1 Linux vendor and make Novell a more suitable place for Unix and Windows defectors to seek refuge, analysts say.
"It's a compelling combination," said Novell CEO Jack Messman after the deal was announced early last week. "Novell [will be] the only $1 billion company with a full Linux stack from desktop to server, and we have the worldwide ecosystem to support it. We can become the No. 1 Linux company together."
IBM anointed the merger with a $50 million investment in the 20-year-old, Provo, Utah-based company. Sun Microsystems and Hewlett-Packard also blessed the marriage.
Neither Red Hat nor Microsoft would comment.
Linux kernel developer and founder Linus Torvalds said Novell's buyout of SUSE will likely prevent one company from monopolizing the rapidly consolidating Linux OS space. "It's clear that a lot of the big players really want to have at least two major Linux distributors to balance things out and keep everybody honest and on their toes, which is probably why you'll find IBM supporting the deal," Torvalds told CRN.
Red Hat and SUSE have signed enterprise account pacts with IBM Global Services and HP. Red Hat lacks a formal channel program in the SMB space, however, and SUSE's eight-month-old global channel initiative has been slow to take off in the United States.
Novell's channel is a critical advantage that will help build a Linux channel, analysts and solution providers say . "Novell needs opportunities to grow, and Linux is a pure market to play in," said John Enck, vice president at research firm Gartner Group.
One Novell solution provider that has dabbled with both Linux distributions said the deal tips the hat in favor of SUSE. "We've generally been happy with the general Red Hat [distribution], but if we are going to continue putting Novell services on Linux, we'll definitely move toward SUSE," said Scott Urbatsch, security specialist and engineer at Polar Systems, a solution provider in Portland, Ore.
Initial reaction from the open-source community was positive, but concerns remain regarding Novell's proprietary past.
Chris Maresca, president of Olliance Group, an open-source consulting firm in Palo Alto, Calif., said, "It's a great fit, although I would be a little concerned if SUSE Linux becomes NetWare Lite rather than remaining a full-fledged Linux [distribution]."
One Microsoft Certified Partner, who requested anonymity, said he was stunned by the news. "The fact that you can now connect Linux and Windows environments without the CAL [client access license] should be frightening to Redmond," he said. "This is Microsoft's worst nightmare: a dedicated competitor that hates their guts and has the resources to fight."