Novell Set to Acquire SuSE --- What Does this mean to the Linux Community?

By Bill Claybrook
http://aberdeen.com/ab_company/bios/claybrook.htm

November 4, 2003

Novell announced today that it has entered into an agreement to acquire SuSE, one of the two leading worldwide Linux distributors.

There was a time a couple of years ago that most folks thought that this type of acquisition would not happen, and we thought that it would not be a good thing. Most people thought that keeping the Linux distributors separated from the hardware vendors and ISVs and other software companies was a good thing for Linux. My feeling is that this is a good acquisition for Novell and maybe it will turn out to be a good one for SuSE as well.

There are a number of questions to ponder about this acquisition:

1. SuSE has been very aggressive in forming partnerships with hardware and software vendors, some of which can be considered competition for Novell. Novell will honor those contractual agreements for the duration, but what will they do when the contracts expire? Will Novell treat SuSE Linux as its own operating system just for its products, or will it continue to promote and sell SuSE Linux to all interested parties?
2. IBM has a lot at stake because SuSE Linux is supported on all of its eServer platforms and SuSE has worked more closely with IBM than any of the other Linux distributors. IBM intends to make a $50 million investment in Novell stock and is negotiating extensions to the current agreements between IBM and SuSE Linux.
3. Is this good or bad for Red Hat? I believe that this is good for Red Hat. Not only are they the largest Linux distributor in the world, but they are the only major independent Linux distributor left. Red Hat has to be able to take advantage of the acquisition in its marketing and strategy messaging. Can they do it?
4. With SuSE Linux being acquired by Novell, we now have to ask what will Novell do with SuSE Linux in the long term? They did not do much with Unix. Will it be allowed to continue to host products that could compete with Novell's desktop and server side offerings? You do not have to ask that question about Red Hat since they are independent.
5. Will the acquisition of SuSE, make Novell's product offerings more acceptable in the marketplace? Will it enhance Novell's position in the open source community? This acquisition along with the Ximian acquisition makes Novell a big player in the Linux community. The real question is how much the two acquisitions will help Novell's bottom line. They could have worked with Ximian and SuSE without acquiring them, but Novell needed to be seen as a serious Linux player, hoping that that will make their products more acceptable in the enterprise. Perhaps they will become more acceptable, but I am leery.

12:35 ET

Follow-up to Novell Acquisition of SuSE

By Bill Claybrook
http://aberdeen.com/ab_company/bios/claybrook.htm

November 10, 2003

Last Wednesday there was a second teleconference per the acquisition of SuSE by Novell involving the management of the Linux business at Novell. Novell said the following things:

• Novell will change nothing that SuSE is doing, except they will rethink distributing their products on Red Hat after some time period.
• Novell will not have a Novell Linux product; they will keep the SuSE brand.
• Novell will be a "regular" Linux distributor.
• Novell believes that Red Hat is difficult to bargain with.
• Novell has several hundred tech support staff trained on Linux (some have been through LPI training).
• Novell will not try to turn every Linux licensee into a SuSE licensee (Novell products run on other Linux platforms).
• Novell believes that Red Hat has made a mistake by dropping point releases and by not having a free distribution (Red Hat does have the Fedora project which is free Linux and Red Hat will have other free Linux-based software available to open source users).
• Novell misinterpreted some of Red Hat's strategy involving moving customers to Red Hat Enterprise Linux.

• I think that Red Hat is in an excellent position to gain market share from SuSE if they get the correct messaging out as soon as possible. Red Hat is an independent Linux distributor/product company not tied to a supplier like Novell.
• Enterprises should be aware that Novell might not do some of the things it says it will do or will not do.
• I do not believe that moving NetWare products to Linux will make them immediately popular and revenue generating; one reason that users like Linux is because there is a lot of open source software available that is low cost or free. Ximian is a nice company but has not been generating much revenue and SuSE is a $35M to $40M company. Novell will have to figure out how to generate revenue from its acquisitions. The worldwide Novell service and support organization should help.
• I think that Red Hat is doing the correct thing by focusing on the enterprise server market. Providing software releases on a 12 or 18 month schedule is much more useful to users and ISVs than releases every four or six months. The past three years have shown that trying to use open source as a business model is a road leading to nowhere.
• If Novell sticks by its word, then the acquisition should be good for both Novell and SuSE.

3:14 ET

Copyright 2003