Someone needs to let the folks in Raleigh know we're in a down economy still. While much of the tech market lingers in the doldrums, Red Hat announced another strong earnings report for its fiscal third quarter 2010.
Here are some of the headline numbers:
- Revenue of $194 million, an 18 percent increase year-over-year.
- Subscription revenue topped $164 million, up 21 percent year-over-year (and 85 percent of the company's revenue).
- Deferred revenue climbed 23 percent year-over-year to hit $619 million.
- All 25 accounts up for renewal in the quarter renewed, and at 120 percent of value.
Small wonder, then, that the company elected to repurchase 1.9 million shares of common stock for $52.3 million.
While Red Hat's revenue growth rate has been sliding for some time, as The 451 Group has detailed, Red Hat's prospects remain bright. Piper Jaffray, for example, recently highlighted a range of factors contributing to its "Overweight" rating on Red Hat's stock:
Recent conversations with 40 Red Hat industry contacts point to an improved operating environment, an ongoing acceleration in the pace of Unix-to-Linux migrations, and Q3 results essentially inline with plan. We continue to see longer term catalysts for outperformance based upon the recently introduced virtualization products (RHEV), upsell to the premium priced Advanced Platform, adoption of cloud computing, and broadening awareness of open source offerings
In my own conversations with Red Hat executives, it's clear that the company has plenty of headroom in both its JBoss business (8 of the top 25 deals in the quarter included a JBoss component, and Red Hat CFO Charlie Peters said that it continues to grow faster than Red Hat's core RHEL business), but particularly in its virtualization strategy. Virtualization is effectively a way for Red Hat to sell much more deeply into existing accounts. Much deeper.
But Red Hat is also seeing traction in its nascent cloud-computing initiative. In the third quarter, Red Hat saw a major movie studio building a private cloud with its technology in addition to NTT choosing Red Hat for its cloud infrastructure, plus the signing of a six-figure Red Hat Enterprise Linux-based cloud deal.
Clearly, there is gold in the Linux hills for Red Hat, gold that doesn't seem to be running out, especially as Red Hat improves its ability to get free-riders (CentOS and unpaid RHEL users) to pay, as it did this quarter with two sizable "free-to-paid" deals. The only negative in Red Hat's quarter seems to be a back-loading of revenue, meaning that more deals closed at the end of the quarter than normal.
But Peters said that cash flow for the year would come in at the high end of his former guidance, so things remain on track.
In light of Red Hat's strong performance in its core Linux business, it's somewhat strange to see Novell reorganizing to emphasize its proprietary products instead of hitting hard on its still-solid Linux business.
But perhaps there's only room for one Linux vendor in the data center. Based on the last several years of Red Hat performance, that vendor appears to be Red Hat.
The next time you feel tempted to laud the power of the open-source business model, take a look at Novell.
Novell has been struggling for over 10 years, yet it still manages to crank out nearly $1 billion in sales each year, most of which derives from the licensing of proprietary software.
Novell reported its fourth-quarter earnings on Thursday, along with results from its full fiscal year. They're not pretty, but they do suggest a path forward for the erstwhile software leader.
Novell saw its sales slump over 12 percent from its year-ago quarter to $216 million. For the full fiscal year, Novell stumbled to a $257 million net loss, versus a $5 million profit in 2008, on net revenue of $862 million and a net loss from operations of $206 million.
Perhaps not for long.
Much of that annual deficit came in the fourth quarter, which included a $279 million noncash impairment charge that sent Novell's quarter into the red by $259 million.
Not pretty.
Unless you look at Novell's Linux numbers. Linux remains Novell's most appealing business and was up 21 percent year over year to $149 million--and up 14 percent at $39 in in its fourth quarter over the year-ago period. While a far cry from Red Hat's booming Linux business, Novell's results suggest that there's life in its Linux business yet.
Life that Microsoft continues to seem content to grant.
Make no mistake, without Microsoft, Novell's Linux business would struggle, at least in the short term. Microsoft, after all, has been funding Novell's Linux business since 2006, when the two companies entered into an interoperability and Suse Linux subsidy pact.
And without its Linux business, all of the rest of Novell's business would be in jeopardy, as Suse Linux makes Novell's other products a palatable choice. Even so Novell's Identity and Security Management, Systems and Resource Management, and Workgroup businesses all dropped significantly (down 10 percent, 6 percent, and 13 percent, respectively).
Novell's needs
Clearly, Novell needs Linux. Equally clearly, it needs Microsoft to grow that Linux business. Microsoft has already plowed $247.5 million into Suse Linux Enterprise Server (SLES) subscription coupons, and Novell CEO Ron Hovsepian has indicated he's now dipping into the additional $100 million in coupons the companies negotiated.
But how can Novell accelerate its Linux business at a pace that will be comfortable for Microsoft, which has made no secret of its animus to Linux and desire to quash it? Microsoft partners with Novell to show a good interoperability face to its customers who use Linux and to prop up the No. 2 vendor against Red Hat, the dominant Linux vendor.
The day that Novell's Suse Linux business threatens Microsoft, and not merely undermines Red Hat, is the day Microsoft will pull its extensive financial support from Novell's Linux business. That same day Novell's Linux business will crumble, perhaps irreparably.
Unless.
Unless Novell can deliver a coherent strategy centered on Linux rather than merely friendly to Linux. For years Novell has packaged and repackaged a set of mostly stale offerings (e.g., Workgroup), pretending that they were part of a coherent strategy.
They weren't. The company was simply milking maintenance revenues as it sought to find a way forward. (I was in those meetings back in 2002 when the company discussed how to stanch the bleeding from maintenance declines. Those same conversations continue today, I'm sure.)
Then, as now, Novell's various product lines, and particularly Workgroup, offered little synergy, either in sales or engineering (i.e., the buyer of GroupWise is not the same as the buyer of Suse is generally not the same as the buyer of Identity Management).
Ongoing makeover
Novell is now entering a new phase of its repackaging makeover, but this one actually makes some sense. The company is calling it Intelligent Workload Management, arguing that a "new market [exists] for solutions that address the risks and challenges for computing securely across multiple environments."
Not surprisingly, Hovsepian argues that such an Intelligent Workload Management market "plays to the strengths of Novell--identity and security, systems and resource management, and our new Suse Appliance program."
Surprisingly, he may be right.
First of all, its wonderful to see Workgroup dropped from the discussion. Yes, it's Novell's biggest product by revenue, but no, it has almost no relevance for the rest of its business. Sell it off. Move on. The company has already offloaded much of its Workgroup development to India, anyway.
Second, Novell really does have a great deal of expertise in this area, with some assets that could go a long way toward helping it compete with the vendors that compete aggressively in the market: VMware, Microsoft, and increasingly Red Hat.
The key will be for Novell to really put Linux at the heart of its story, rather than simply using it as a conversation starter and loss-leader.
And yet, more is needed. Novell has the burden of a stale brand that it must shed. A few select acquisitions could help it to establish technology and brand leadership in the market. Companies like Reductive Labs (Puppet project for data center infrastructure management), VMOps or Eucalyptus (for building and managing private clouds), and/or Cloudera (for designing and analyzing large-scale data assets) could put Novell in the driver's seat on this market.
For the first time in years, the market seems to have moved in a direction that corresponds with Novell's rich technology assets. If Novell can make Linux the centerpiece of this campaign, bolstered by relevant, innovative technology, it will finally get its Linux business out of Microsoft's shadow and its overall business back on track.
The technology pieces are in place. It's now a question of brand and execution.
Linux jobs in the United States are booming, up 6 percent since January, according to data from Dice.com. This will come as small consolation to Novell employees, however, which weathered another round of layoffs at the Waltham, Mass.-based company.
According to several sources within the company, and confirmed by Novell's public-relations director, Ian Bruce, Novell last week laid off 100 to 130 people of its roughly 3,900 global employees.
While my sources indicated that the Workgroup division was particularly hard-hit, Bruce told me that the cuts came "across the company, both geographically and productwise."
Novell appears to be doing its best in caring for these employees, offering several months of severance pay, apparently based on the number of years with the company, among other factors.
For those remaining employed there, Novell announced this week that it would be suspending 401(k) matching contributions, which followed on the heels of its formal filing on Monday, to that effect, with the U.S. Securities and Exchange Commission.
Novell has spent the past few years attempting to reinvent itself as a Linux company, and it has managed to string together several quarters with strong earnings in its Linux business on the back of its controversial partnership with Microsoft. The company has struggled to compete effectively with Linux-leader Red Hat.
On November 2, a Novell PR representative contacted me to arrange a conversation with CEO Ron Hovsepian about Novell's "new focus in its strategic direction."
Whether this means more or less open source is not yet clear. It is clear, however, that Novell needs to focus more on top-line revenue growth, and not merely ways to cut costs. Until Novell learns to grow business, and not simply reduce expenses, its employees are going to remain all-too-familiar with layoffs.
Technology companies are generally quick to publicly announce and highlight their customer wins. But in what strikes me as a first, Novell has publicized a customer loss, announcing to the world that the City of Los Angeles dropped it for Google Apps, including Gmail, Google Calendar, and Google Docs.
Google recently announced the City of Los Angeles as its latest high-profile customer win for Google Apps, one that reflects growing momentum for the cloud-computing giant's enterprise business. Until Novell's announcement, I had no idea that Los Angeles had dumped Novell GroupWise in favor of Google Apps, and suspect few others did, either.
Novell, however, attacks Los Angeles' decision, arguing "The City of Los Angeles should have opted for this proven product [GroupWise] to ensure the security of its data and to save taxpayer money. They have taken a risk with no reward."
Translation? "We think Los Angeles is run by a bunch of fools who aren't smart enough to know what's good for them."
This is no way to treat customers.
It's not made any better with this throwaway line: "However, as a valued customer, Novell will continue to offer our world-class support to the City of Los Angeles during the transition."
Well, that's comforting, but given that it comes at the tail end of Novell publicly excoriating its "valued customer," it's doubtful that LA will linger long with such a "valued vendor."
This isn't the Novell that I know. I used to work for Novell, and have never seen the company publicly criticize a customer, not even for defection, of which Novell has seen plenty over the last decade.
It's unclear who Novell is hoping to persuade with the announcement, or what benefit it hopes to derive from it. Is it trying to stem a tide of customers dropping GroupWise for Google Mail? If so, why has it not done the same for all the companies (and there have been plenty) leaving GroupWise for Microsoft Exchange or IBM Notes/Domino?
In fact, the only companies that benefit from this kind of customer abuse are IBM and Microsoft, because Novell slams Google Mail's alleged security and cost deficiencies, without them having to sully their hands with the negative marketing. It certainly won't endear Novell to the City of Los Angeles or to its other customers.
It takes time, leadership, and a fair amount of luck to successfully build an open-source community. It also takes money. Lots of it, if IBM's $1 billion commitment to Linux is any indication.
Unfortunately, the return on such open-source community investments may be permanently scuppered by the European Commission's misguided defense of MySQL from Oracle's intended acquisition. If the EC is going to punish successful open-source endeavors like MySQL, will investors still clamor to finance the rise of open source?
In many ways, MySQL is the quintessential commercial open-source success story. On the financial side, MySQL managed to build a vibrant business, doing north of $90 million at the time of its acquisition by Sun Microsystems in February 2008.
Equally compelling, however, is the exceptional user and developer community that formed around the open-source database project, registering tens of millions of downloads and a massive developer community.
This community augmented MySQL's financial fortunes, of course, but it also protected MySQL database users from the whims of the company, as former MySQL CEO Marten Mickos wrote to European Competition Commissioner Neelie Kroes:
Even if Oracle for whatever reason would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity - not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.
Unfortunately, the EC seems intent on punishing MySQL--both community and company--for its success. Already the MySQL database project has started to fracture into competing forks, while business rivals like EnterpriseDB and IBM collect confused customers.
More worryingly, the EC's actions may end up diminishing potential returns to investors in other open-source projects, particularly those that take the added time and cost to build global communities.
Technology mergers and acquisitions activity is at a 20-month high. Open-source companies, however, may miss out on this resurgence, particularly those, like Acquia and EnterpriseDB, that build on successful open-source communities (Drupal and Postgres, respectively).
Indeed, based on the EC's actions, perhaps the worst thing these companies could do is foster successful open-source communities. Maybe they should just take the cash and run?
Consider: the EC didn't challenge Yahoo's acquisition of Zimbra, VMware's acquisition of SpringSource, Citrix's acquisition of XenSource, etc. What do they have in common? Rising revenue but, except in the case of SpringSource, much more limited communities than MySQL. (Even the Spring community pales in comparison to MySQL, impressive though it is.)
Granted, the major difference with Oracle/MySQL is that the two are ostensibly competitors, as CNET points out. In the letter referenced above, however, Mickos dismisses such competition. The reality is that MySQL and Oracle compete in two different database markets.
Regardless, as well as MySQL was doing, $90-plus million is spare change in the global database market. The EC, in other words, isn't trying to protect MySQL's business. It's trying to protect MySQL's community.
Such mollycoddling of an open-source community is destructive to all future investments in similar endeavors. Why should commercial entities bother fostering community--the very community that makes them less susceptible to hostile takeover and anticompetitive forces--if doing so simply ends up ruining financial returns?
The EC means well, but it is not doing the right thing for MySQL, its community, or other open-source commercial efforts. Quite the opposite. Just as the commercial open-source community has been pondering a move back to community-controlled open source, the EC threatens to hobble the shift.
The EC may well end up with less competition, not more, by blocking Oracle's proposed acquisition of Sun and its crown jewel, MySQL.
Novell has been positioning itself as the Avis of Linux, a distant but gaining Red Hat competitor that "tries harder." Like Oracle, Novell argues that it can give customers Red Hat value at a lower price.
What, me worry?
It's true that adoption of unpaid Linux like CentOS is booming, and that this no-cost alternative to more expensive solutions like Red Hat is a real threat to Red Hat. This is no doubt why Red Hat has made "free-to-paid" a core element of its ongoing strategy, as related in its recent earnings call.
But it's a much bigger threat to Novell and Oracle, both of whom are trying to position themselves as cheaper alternatives to Red Hat Enterprise Linux.
If a customer really wants Red Hat at a lower price, they're not going to move to an incompatible distribution that may or may not run their applications properly. They're going to jump to CentOS, which is basically a carbon copy of RHEL, minus the trademarks (and price tag).
Oracle, for its part, is clearly not in the Linux market. It's in the market to eradicate Red Hat, so as to claim top-to-bottom control of its software stack. But even as Oracle tries to squeeze Red Hat into oblivion, CentOS provides an excellent hedge against commercial competition from Oracle (and Novell), making its pitch ring hollow.
CentOS: Red Hat's biggest annoyance and greatest friend?
It's not dissimilar to the role that piracy plays for protecting Microsoft's Windows dominance against Linux, especially in emerging markets. Quite possibly the worst thing that Microsoft could do, as IDC has also suggested, is to succeed in its anti-piracy efforts.
Were Microsoft to raise its pricing above $0.00 in such markets, suddenly Linux would look like a much better alternative.
Back to Novell and Oracle. It's not enough to try harder. Red Hat has created a dominant global brand that CIOs trust. It's not worth a few dollars here and there to disrupt that to shift to SUSE or Oracle Enterprise Linux.
Not when those CIOs can shave 100 percent of their RHEL subscription costs by moving to CentOS.
I know some CIOs who have, but they tend to be enterprises with lots of developers that are comfortable supporting themselves. Fortunately for Red Hat, few CIOs care to take that risk. Unfortunately for Novell and Oracle, those who do want to save all of their Linux subscription fees, not just some of them.
Red Hat announced a range of cool new products and technologies last week at Red Hat Summit, but the most potent message emerging from the conference may well have been 'Diplomacy be damned!' Red Hat has generally opted to publicly ignore competitors, but not anymore. The company singled out Microsoft and Oracle, in particular. Is this a new, combative Red Hat?
Red Hat's DeltaCloud was the big technical news, offering a "common API to blend public and private clouds." It also announced a new Catalyst program to corral a partner ecosystem around its infrastructure products.
But for me, it was Red Hat's swipes at its competitors that are possibly more momentous. It's not that Red Hat never criticizes competitors: in 2006, for example, Red Hat declared the imminent death (wrongly, as it turns out) of Novell.
But there's a difference between criticizing pure competitors and those companies, like Oracle, that Red Hat both competes with in some markets and partners in others.
Hence, when Red Hat's executive vice president of products and technologies, Paul Cormier, singled out Microsoft Azure for its potential to lock in customers, this was an easy jab at a company that drives no Red Hat revenue.
Red Hat CEO Jim Whitehurst's scorn for Oracle's technology strategy, however, has the potential to damage the companies' partnership:
Do you want to buy into Larry Ellison's vision of what your IT infrastructure should be and what functionality you should provide to your customers, or should you listen to your customers and be flexible?
This second critique has more sting because Red Hat and Oracle partner as much as they compete. Oracle first caused waves in the partnership by cloning Red Hat Enterprise Linux and undercutting Red Hat's pricing, but Red Hat's response ("It's a fork and not a particularly good one") was relatively muted. It had to be: Oracle's database certification for RHEL has long been a driver of RHEL sales.
Is this a sign of a new Red Hat, one that will not only talk down competitors but also be willing to take them down by entering competitor-partners' product markets?
I hope so. There's no way for Red Hat to grow without stepping on partners' toes. I'm not suggesting Red Hat should declare war on its partners, but it certainly needs to be willing to make partners uncomfortable, as it did by acquiring JBoss. It's a sign of a more competitive Red Hat.
Follow me on Twitter @mjasay.
Novell reported on Thursday a 22 percent year-over-year increase in its Linux revenue, topping $40 million. That's the good news. The bad news is that overall, net revenue slumped to $216 million from $245 million for the third fiscal quarter of 2008, with every product besides Linux dropping considerably. From identity and security management (down 16 percent) to systems and resource management (down 15 percent) to workgroup (down 12 percent), Novell is in serious trouble, with at least two potential options:
Turn to the open-source community or Microsoft to fix its failing businesses.
Novell's Open Platform business, of which Linux comprises the majority of revenue, has consistently soared for several straight quarters. Though it has had hiccups, Linux has been a factor in Novell's resilience through the downturn. This is either a factor of Novell's commitment to open source or its partnership with Microsoft, or both.
Whichever it is, Novell needs more of it. Now.
Novell's Workgroup business has been underperforming for years now as the company tries to Band-Aid the declining relevance of its once-leading solutions, like GroupWise. It's time to either amputate (sell off assets) or graft new products onto the product line. Companies like Jive, MindTouch (Disclosure: I am an adviser to MindTouch), Open-Xchange, and others could fill out Novell's Workgroup product offering.
Ever the savvy operator, Novell CEO Ron Hovsepian was able to steer the company to positive growth in operating margin, but now he needs to turn around the company's revenue story. His contention that Novell's "revenue performance was similar to many companies in the software industry" is certainly not true of Novell's chief Linux competitor, Red Hat, which has thrived through the recession, even despite plummeting semiconductor sales, signaling lower overall demand for the servers and personal computers that fuel Novell's business.
That's not to suggest that everything is rosy at Red Hat. As The 451 Group reports, Red Hat's rate of revenue growth has steadily declined over the past few quarters, requiring it to take some action to kickstart growth.
Fortunately for Red Hat, the market has clearly signaled that it welcomes acquisitions, as its highest valuation in the past five years came on the heels of its JBoss acquisition. Apparently, investors would like to see Red Hat grow beyond its core Linux business.
Back to Novell. The company needs a growth strategy, and it has only found two ways to grow over the past few years: open source and Microsoft. One or the other will do. Novell's current strategy of using Linux as a loss-leader of sorts to promote its separate, proprietary products is not working.
Follow me on Twitter @mjasay.
Even as the recession continues to cool CIO appetites for software purchases, Linux is bucking the trend, according to a new IDC report.
IDC is projecting Linux revenue to expand at a compound annual growth rate of 16.9 percent from 2008 to 2013, topping $1.2 billion in 2013.
As IDC notes, this growth will comprise just 4 percent of total software market revenue by 2013, up from 2.2 percent in 2008. However, for the second time, IDC has also examined nonpaid deployments of Linux, revealing some troubling data.
I've always assumed Red Hat's primary Linux competitor is Novell. And based on IDC's numbers, it does appear that Novell is increasingly a real threat to Red Hat.
But it is the nonpaid usage of Red Hat's software that may well pose a bigger risk.
Novell has 27.9 percent market share of paid deployments and 20.1 percent of the total paid and nonpaid market. This doesn't look so great at first glance; after all, more people use Red Hat (including Fedora) for free than pay for Suse Linux Enterprise Server.
However, in growth, Suse stands out. On paid shipments, Red Hat's 2007 to 2008 growth was 1.9 percent, while Novell's Suse was nearly double that at 3.5 percent.
On revenue, Novell comes in at 29.8 percent market share. That represents 50.3 percent growth in market share, versus Red Hat's 14.8 percent growth. Granted, Red Hat has a much larger base of revenue from which it's growing ($319.5 million compared with Novell's $112.6 million in 2007), but Novell's Linux revenue growth has outpaced Red Hat's since 2007.
I don't particularly like Novell's partnership with Microsoft to promote Linux, but it does appear to be paying off for Novell.
If Red Hat could elect to eliminate one competitor tomorrow, though, I'm wiling to bet that it would not choose Novell's Suse. It would choose unpaid Red Hat Enterprise Linux (RHEL), which accounts for a big chunk of the overall Linux market.
This may seem trivial, given that Red Hat earned a 62.2 percent share in the overall market for new license paid shipments/subscriptions, measured by deployments, or 64.7 percent, measured by revenue.
Sounds great, right?
Maybe. Intriguingly, Red Hat also claims 28.6 percent of the nonpaid market...for RHEL, its Linux distribution that should only be available to paid subscribers, but which many companies dishonestly use without paying (e.g., they may violate their contract by running more RHEL servers than they actually pay for).
Add Red Hat's paid and nonpaid deployments together, and Red Hat accounts for 47.6 percent of the global Linux market, whether users are legitimate customers or pirates.
It gets better (or worse, depending on your view). If one adds in the RHEL clone CentOS and Red Hat's own community distribution Fedora Core, Red Hat and its offspring dominate the global Linux deployments market with 57.1 percent market share.
This might not be so bad, if the trend were toward more paid Linux adoption, but it's not. While paid Linux server deployments will grow at an impressive rate, nonpaid deployments will grow even faster, nearly reaching parity with paid deployments in 2013.
Why this growth in nonpaid Linux?
Undoubtedly some of it stems from enterprises wanting to get something for nothing. Rather than pay for value, they attempt to cheat the system, leaving less money to help develop Linux.
But it may also be that the longer the world uses Linux, the less it feels the need to pay for it. Noted technology CTO Jon Williams once posed a dilemma to me at the Open Source Business Conference. He indicated that the longer his team works with an open-source project, the less need it has for support and maintenance from a vendor.
In other words, the minute the customer becomes profitable to the vendor is the same minute the customer no longer needs that vendor.
We could be seeing this in Linux. Still, the fact that they seem to be stealing RHEL rather than adopting Ubuntu or another "community-led" Linux distribution suggests that we're seeing enterprise IT attempt to cheat vendors rather than do without them.
All of which may mean that the world increasingly recognizes that Linux is a superior server operating system...and doesn't want to pay for it.
How comforting...and alarming. It's not as if Linux development costs nothing. Red Hat pays over $100 million each year to develop Linux, and it's not the only company making such hefty investments.
UPDATE @ 11:03 PT: For the reading-impaired: When I talk about "stealing RHEL" I'm in no way referring to CentOS or Fedora, as my post clearly states. I'm talking about using RHEL without paying for it. Not CentOS. Not Fedora. RHEL. Red Hat has a fair number of companies that actively underpay on RHEL: that is, companies use more RHEL than they are legally allowed to use as per their contract with Red Hat.
So, please read the post, and don't get worked up by the word "steal" and "CentOS" in the same post. I'm not referring to CentOS or other legitimate uses of Linux. I'm talking about theft of RHEL (which is what IDC is talking about, too. Maybe you should buy the report and read it before commenting so that we can have an informed discussion.
Follow me on Twitter @mjasay.
Microsoft, for all its faults, has significantly lowered the bar to IT development, offering tools like Visual Studio that help make average developers more productive. Linux, on the contrary, has been supercharged with powerful capabilities, but has often required significant experience to harness that power.
In other words, Novell, like Microsoft before it, wants to make technology easy.
Novell isn't alone in this aim, of course. Canonical has made great strides in making the Linux "desktop" intuitive and easy, while Red Hat has been working hard to facilitate Linux-based virtualization and cloud computing.
But Novell's SUSE Appliance Program arguably tackles one of the hardest problems in Linux, and delivers a truly easy experience. I asked Matt Richards, Novell's senior program manager for SUSE Appliance Program, to identify how Novell's strategy differs not only from the other Linux vendors, but also from Microsoft.
His answer is instructive:
We are the only operating system vendor that is focused on making it easy for ISVs (Independent Software Vendors) to make money from software appliances. The SUSE Appliance Program is designed specifically for ISVs, providing the technical, sales, and marketing capabilities that ISVs need to build appliances, get appliances into the market, and expand their application footprint.
Only Novell allows ISVs to customize a mission-critical operating system--and get full support for that customized OS.
Proprietary operating systems lack the modularity that Linux offers, and other Linux vendors don't have the SUSE Studio Online tool, which enables ISVs to customize their operating system in a matter of minutes. When you add the technology to our distribution partners like TechData, we offer a unique value proposition that helps ISVs expand their market opportunity.
It's hard to overstate the importance of Richards' comment about "full support," as I've noted before. It's hard enough to enable customization if you're a vendor, but then to support those customizations? Brutally difficult.
And yet that is what Novell is doing, with a host of ISVs already signed up in support.
Novell has demonstrated that it can cut prices, as it has with IBM on mainframes. That's great for enterprises, but the big cost for ISVs is development, which Novell's SUSE Appliance Program should go a long way toward reducing.
This is a bold move by Novell, and great for the industry. Novell's SUSE Studio Online sends a shot over the bow of proprietary software tools, pushing the envelope on innovation. Try finding something as good as SUSE Studio Online for Windows, Unix, etc. (Spoiler: you won't.)
Novell SUSE Studio Online - screenshot
(Credit: Novell)Follow me on Twitter @mjasay.
