February 8, 2001 12:05 PM PST

Linux seller SuSE slashes U.S. staff

SuSE, one of the major sellers of Linux software and services, has laid off 30 of the 45 people in its Oakland, Calif., office and will shift much of the responsibility for North American operations to its headquarters in Germany.

The layoffs, which took place Wednesday, reduced the number of support staff but didn't target programmers, spokeswoman Xenia von Wedel said. "We can be more efficient and reduce costs if we do it from Germany," she said.

Customers seeking technical support will be routed to SuSE employees in Germany, she said. "It doesn't change anything for the U.S. market," von Wedel said. "(SuSE still has) its 24-hour support services and partnerships with Compaq and IBM."

But Giga Information Group analyst Stacey Quandt saw larger implications besides cost-saving measures. She said the move also is an effort by the company's Nuremberg, Germany, headquarters to centralize control. And though SuSE has strong technical expertise and business overall, business partners will weigh the layoffs in their analysis of SuSE's efforts to expand globally, she said.

"The (layoff) may cause some of SuSE's partners to question the viability of SuSE's effort in North America," Quandt said.

SuSE, with about 470 employees now, is one of the four Linux companies to have worldwide Linux support agreements with IBM and other computer sellers. The others are Red Hat, Caldera Systems and Turbolinux, with Paris-based MandrakeSoft trying to make the leap to the level of the other four. SuSE's stronghold is in German-speaking countries, while Red Hat is dominant in the United States.

It's been an CNET's Linux Centerera of belt-tightening as the evaporation of Linux hype forces Linux companies to adopt more down-to-earth plans for capitalizing from the software's popularity. Turbolinux and Linuxcare are considering merging, while Red Hat laid off 20 workers in December as it cut back on plans for its Web site. VA Linux Systems, which sells hardware, has twice warned that revenues were growing more slowly than expected.

SuSE, which has gone through four presidents of North American operations in recent years, seems to suffer from tensions between U.S. operations and German headquarters, Quandt said.

At the LinuxWorld Conference and Expo last week, SuSE announced an expanded partnership with IBM, the largest traditional computing company with a major effort to benefit from Linux. Under the new agreement, IBM's global services division will be able to call upon SuSE expertise to fix problems that require changes to the underlying programming source code of Linux.

 

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