November 19, 2002 5:14 PM PST

SuSE deal to expand U.S. sales effort

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LAS VEGAS--German Linux seller SuSE will announce a partnership with technology distributor Arrow Electronics on Wednesday, an effort SuSE will use to extend its reach in the United States and exert more pressure on market leader Red Hat.

The deal will help SuSE fill a gap in its U.S. sales strategy, Holger Dyroff, general manager of SuSE-Americas, said in an interview at the Comdex Fall 2002 trade show. SuSE currently has retail outlets to reach individuals and partnerships with IBM Global Services to reach large corporations, but its sales channel is weaker when it comes to selling to small and medium-sized companies, he said.

Arrow will help connect SuSE to larger computer resellers, companies with their own expertise in installing and supporting computer technology. That expertise is crucial to helping companies install products such as SuSE's Linux-based Open Exchange Server, which duplicates the function of Microsoft Exchange.

"For Open Exchange Server, the channel is necessary," for example, in helping to migrate e-mail servers from Microsoft technology to SuSE, Dyroff said.

The Arrow plan is part of SuSE's larger attempt to expand sales in the United States. In 2001, the company drastically curtailed its U.S. operations, laying off many of its employees.

The cuts trimmed the operations down to about 15 employees, but the U.S. division is now profitable and has begun hiring again, Dyroff said. "We are earning money in the United States," Dyroff said, adding that revenue from the United States is growing more quickly than from any other region.

SuSE is the second-ranked seller of the Linux operating system--a clone of Unix--trailing Red Hat, which analyst firm IDC said garnered nearly three-quarters of Linux revenue in 2001. SuSE has pooled its interests with three other Linux sellers in a group called UnitedLinux, which uses SuSE's software as a foundation.

The Arrow partnership will include a lower-priced version of SuSE Linux Enterprise Server 8 geared for corporate test projects. It costs $350 and includes just three months of support, Dyroff said.

The regular price of SuSE Linux Enterprise Server is $749, including a full year of support, with support costing $649 per year after that.

SuSE had revenue of $35 million in 2001 and has a goal of $45 million to $46 million for 2002. Dyroff declined to say whether the privately owned company expected to be profitable.


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