Will Channel Make Or Break UnitedLinux--and Red Hat?

Channel increasingly viewed as important to Linux deals

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Channel partners claim the debut of UnitedLinux and the first Linux distributions from SuSE and The SCO Group at Comdex represent far more than a competitive jab at Red Hat.

However, it is unclear whether the UnitedLinux will translate into real money-making market opportunities for channel.

At the Las Vegas show on Tuesday, the UnitedLinux organization will unveil the completion of its first enterprise-class uniform Linux distribution. The SCO Group, formerly Caldera Systems, will launch SCO Linux Server 4.0, while German Linux giant SuSE will launch SuSE Linux Enterprise 8 Server. The UnitedLinux launch is being sponsored by Hewlett-Packard and IBM.

Both companies are targeting their United Linux distributions to compete more effectively against leading Linux software vendor Red Hat, but they also are focusing on different customer segments: The SCO Group is aiming at the SMB market, while SuSE is targeting enterprise customers and resellers.

Last May, SCO and SuSe joined with other Linux underdogs TurboLinux and Conectiva to create a new Linux organization called UnitedLinux, whose mission was to create a uniform Linux distribution that would enable them to compete as one against leader Red Hat and get more ISV support.

IBM, for example, plans to support UnitedLinux across its entire software portfolio for Linux with more than 65 products, including WebSphere, DB2, Lotus and Tivoli offerings.

Taking a page from Red Hat's playbook, UnitedLinux will give business customers a commercial-grade OS, a broader portfolio of applications, stronger branding and better support. The alliance also hopes to tap into a resource Red Hat lacks: a strong channel base.

Red Hat, whose business model has historically been viewed as channel unfriendly, only recently signed its first reselling deal, with IBM Global Services. In contrast, UnitedLinux vendors have thousands of partners worldwide.

Some view the UnitedLinux alliance as a desperate attempt to prevent the same kind of fragmentation that splintered the Unix world and block Red Hat--already the market leader with more than 50 percent share of the server market--from becoming the Microsoft of the Linux world.

But UnitedLinux has an advantage today: It debuts at a time when the channel is increasingly viewed as a more viable model for driving Linux business. In recent months, for example, traditional services-oriented Red Hat has reversed course and sculpted a new business model based on driving the "majority" of its services business through the channel, while reaping revenue from its server software, Red Hat CEO Matt Szulik told CRN recently.

Whether or not UnitedLinux will get better traction because of its stronger channel base is unclear, but some observers say it has an advantage, given Red Hat's poor channel relations to date.

Mark Hatch, COO of Integrated Computer Solutions (ICS), Cambridge, Mass., a Unix ISV and consulting firm that lists Disney, Lockheed, Citibank and Southwest Airlines as clients, said, "By creating a single, compatible distribution that combines the customer bases of SuSE, TurboLinux and SCO, ICS can serve more customers with a single product distribution.

"Prior to UnitedLinux, it was uneconomical for ICS to support [SCO OpenLinux and many of the other smaller Linux distributions because subtle incompatibilities required separate products with their own release engineering," said Hatch. "I think the combination of the market share of SuSE and Turbo, with the traditional distribution strengths of SCO, will make this a two-horse race. SCO understands the value of partners of all sizes, something that Red Hat has yet to learn."

SCO executives expect its UnitedLinux distribution also will be more appealing to channel partners and customers because of the wider breadth globally and the availability of business applications. UnitedLinux partner TurboLinux has a wide reach in Japan and the Pacific Rim, SuSE rules in Europe and Conectiva has a stronghold in South America.

SCO Linux Server 4.0, unveiled on Tuesday in four editions, is a significant change from the company's existing OpenLinux server and offers enterprise-class features, including eight-node clustering and large memory support (4 Gbytes). SCO has a base of 16,000 resellers--mostly Unix focused--and will market a low-end edition for resellers priced at $599, as well as classic, business and enterprise editions to scale up for different customer needs.

"Version 4.0 is an entirely new animal," said Chris Sontag, senior vice president of The SCO Group's operating systems division, noting the company will offer migration tools to enable partners to upgrade customers from the company's previous OpenLinux platform to SCO Linux Server. "It's a best-of-class enterprise server product, but we're focused on small to medium-size businesses and will focus our solutions to their requirements."

Since its inception as Caldera in 1994, the Lindon, Utah-based company has faced significant marketing challenges against Red Hat. While establishing itself early as a channel-friendly Linux company, Caldera failed to make significant inroads while rival Red Hat took off on Wall Street and in market circles. Caldera made several steps to boost its presence, including changing executive leadership and acquiring the Unix business and substantial channel assets of the former Santa Cruz Organization in 2001. Nevertheless, it continued to face an uphill battle. Last August, the company discarded the legacy Caldera branding and took on the more recognizable SCO branding.

One SCO Group channel partner said he believes the latest UnitedLinux marketing efforts and availability of more business applications for SCO Linux Server 4.0 will finally make SCO's Linux more competitive against Red Hat and others.

"This release offers a convention of players rallying on the same distribution. With the power of these companies, Linux will have a united front and united backing by those that create software to run on it," said Mark Robinson, CFO of Auto Rain Data Systems, a SCO-authorized partner in Spokane, Wash. "More products will be able to be built for this group than was ever possible with split distributions, since the developers can [now test once for distributing to the many."

Another significant UnitedLinux launch at Comdex this week is SuSE's Linux Enterprise 8. The German-based company's first UnitedLinux distribution--which competes with Red Hat Advanced Server--will begin shipping on Nov. 25, said Holger Dyroff, head of U.S. operations for SuSE.

The company, which has a U.S. office in Oakland, Calif., markets the cross-platform benefits and enterprise-class features of its existing Enterprise 7 Server, but will push added platform and UnitedLinux support in Version 8.0. SuSE Enterprise 8 runs on Intel and x86, Itanium and IBM's iSeries, pSeries and zSeries mainframes. SuSE has attempted to attract U.S. partners in the past year and lists IBM Global Services as well as high-end IBM business partners Sirius and Mainline Information Systems among its partners to date.

SuSE has a major alliance with IBM Global Services and will also announce on Wednesday a major distribution agreement with Arrow Electronics, Dyroff told CRN. "We have a distribution agreement with Arrow and will offer two products for the channel, including a package available much cheaper for internal use," said the SuSE executive. The Enterprise 8 Server, for example, will be available for about $150 for internal reseller use and $350 for customer pilots.

SuSE's UnitedLinux distribution will be a good product for channel partners because it has cross-platform support across all Intel and IBM platforms, more ISV interest, enterprise-class features that rival those of Red Hat Advanced Server, international coverage and better options for channel partners, said SuSE partners.

"What we feared is that Linux would go the way of Unix and each vendor would have its own variant and there would be incompatibilities. UnitedLinux addresses that and creates a standard," said Jimmy Lee, director of emerging technologies at Mainline Information Systems. "It'll take a period of time, but it will work."

Lee also maintains that UnitedLinux is destined to get more channel support because Red Hat has not been channel friendly. The reseller unveiled partnerships with TurboLinux and SuSE but was unable to negotiate a reselling deal with Red Hat over the past year.

"I don't believe in arrogance," said Lee, claiming that Red Hat did its deal with IBM Global Services and told his company they'd come calling after they established an SMB channel program. "Red Hat called back two months ago and we said, 'No thank you.' We walked away."

Observers remain unclear about the potential success for UnitedLinux--and Red Hat Linux--in the channel. While Red Hat continues developing a new SMB channel program it intends to launch within the next few months, UnitedLinux members will be able to tap into one another's existing channel assets to land more channel and distribution deals. However, it will continue to face off against Red Hat's strong brand identity as well as Microsoft's commanding lead in the channel for client and server operating systems, observers maintain.

Yet at least one purist in the open-source world claims the business models of Red Hat and UnitedLinux ultimately won't work because they cling to the more traditional, proprietary method of doing business.

"Basically, UnitedLinux is an attempt to share the costs of maintaining a core Linux distribution between different companies. It's an interesting idea, but I don't think its workable as planned because they are not inviting participation of the Linux community or Linux businesses by allowing people and companies to contribute to the core packaging effort," said Anthony Awtrey, vice president-director of integration for Linux solution provider Ideal Technology, which favors the Debian Linux distribution.

"UnitedLinux has no plan to engage other companies or development groups without those groups paying to participate," said Awtrey. "Therefore, if Oracle or some small SCO reseller wants their application to be certified for UnitedLinux, they must pay for it. There is no way to create the perceived value of the certification to justify the cost to participants.

"I can't see UnitedLinux ever winning out."

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