November 15, 2003 9:40 AM PST

Linux leaders offer education discounts

Red Hat and SuSE Linux, the top two sellers of the open-source operating system, are launching new discounts to attract students and educational institutions, a strategically important customer set for technology companies.

Raleigh, N.C.-based Red Hat, the top seller of the open-source operating system, will sell students its Red Hat Academic Desktop product for $25 and sell schools its Red Hat Academic Server product for $50, including online software updates but no telephone support. The products will be offered first in the United States, but will be available internationally by the end of the year, said John Young, vice president of marketing.


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No. 2 SuSE on Wednesday began offering schools, students, universities and nonprofit customers a discount of more than 40 percent through two sales partners, CCV Software and Ricis.

An irony in discount plans is that analysts ascribe much of Linux's popularity in the education market to the fact that it can be obtained for free. The products from Red Hat and SuSE have been getting more expensive as the companies try to catch up with the support and quality control of the commercial software realm to attract more customers.

Technology companies covet the education market because today's students are tomorrow's employees, executives, purchasing agents, computer scientists and technicians. Linux has made inroads in the market in part because its open-source nature makes it a popular tool for research, experiments and tinkering, and in part because it's available for free for those who are willing to provide their own technical support.

Educational institutions are crucial in developing and testing open-source software, "and we want to keep a tight linkage with that," Young said. "Open source is very fertile for education and training and research projects. There's nothing hidden about it, so building better mousetraps isn't a matter of finding out what's in the black box."


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Strategic considerations aside, schools also are a sizable market, with computer spending of $9.5 billion expected in 2006.

Apple Computer has long been disproportionately powerful in education compared with its overall market presence, but Microsoft and its allies such as Dell and Hewlett-Packard have been making inroads.

Red Hat's trouble in the education market began when it split its Red Hat Linux product, which was intended for corporate use but could be downloaded for free, into two lines: Fedora Core, a free and fast-moving system for enthusiasts designed to mature raw technology as fast as possible, and Red Hat Enterprise Linux, a slow-changing product for commercial users who want a stable product and years of support.

"Red Hat Linux doesn't meet the needs of everybody, and it is compromised by trying to meet the needs of everybody," Young said. Red Hat's aggressive RHEL push has pushed the company into profitability.

But some in the education market have balked at the choice of inadequate support with Fedora versus the high price of RHEL, which can't be obtained for free or installed on multiple computers once purchased. It costs $2,499 per year for a server with four Intel Xeon processors with round-the-clock technical support; a dual-processor server with more limited phone support costs $799 per year.

Red Hat's new education products, which are based on the RHEL line, provide a middle ground for customers in academia. "Their budgets are small and their needs for support are different from any of our other customers," Young said.

Red Hat Chief Executive Matthew Szulik has made impassioned exhortations to look at the educational environment not as market opportunity to be exploited but as a place where corporate investments will produce future technology and economic growth.

Red Hat Academic Desktop will be based on the RHEL WS product, while Red Hat Academic Server will be based on RHEL ES, he said. Unlike ES, the academic server product will work on systems with as many as eight processors and will be available for use on servers based on Intel's Itanium and Advanced Micro Devices' Opteron.

Schools buying in bulk will get additional discounts through a site license approach. For $2,500, a school can let as many students as they want use the desktop software, and the school itself can set up a satellite branch of the Red Hat Network to supply its students with software updates, Young said.

Red Hat also will offer a site license for administrative use of the desktop software and for servers, but the company hasn't yet settled prices for those options, Young said. And Red Hat will offer more expensive but still discounted options for schools that want Red Hat technical support.

Novell, a server software seller whose star faded after losing the market to Microsoft, announced a plan earlier this month to acquire SuSE for $210 million by January.

 

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