By buying SuSE Linux AG for $210 million, Novell Inc. has broadened its Linux horizons. In a phone interview from SuSEs global headquarters in Nuremberg, Germany, Novell CEO Jack Messman and SuSE Linux CEO Richard Seibt discussed with eWEEK Senior Editor Peter Galli the effects of the deal for both companies, the open-source community and customers.
Red Hat Inc. is focusing all its attention on the enterprise and the annual subscription fee that goes with that software. Does this provide an opportunity for Novell and SuSE in the SMB [small and midsize business] space and on the desktop front?
Messman: Yes. Novell has been at the enterprise level for a long time, and sitting on our NetWare kernel are a lot of enterprise NetWare services like file and print, collaboration, messaging, and the directory. These are all features that Red Hat says it will add to its product going forward. We have been selling them for 20 years. Now were going to put them on SuSE Linux, which gives us a significant leg up on anyone in the marketplace. The SuSE desktop product being sold in Europe through the retail channel is also a perfect product for the U.S. market, and Red Hat is pulling out of that market. What a wonderful opportunity for us.
Seibt: If you look at the people buying 4.5GB boxes, those technical users start off using the desktop product and then move to the enterprise server and then buy the applications that run on top of the operating system. It is very important for us to be in that market. If we are successful in the enterprise, then they will use the desktop both at work and at home.
On the enterprise side, both SuSE and Red Hat have opted for a subscription model. Do you intend to still offer prepackaged products through the retail channel going forward?
Messman: The model has to be a subscription model in the enterprise space, as the one thing that bothers CIOs is the rate of change in Linux. The updates being made by the open-source community and the new kernel releases all have to be managed. So a subscription-based model works best. While the product is basically available for free, what were really selling is the maintenance of the technology, making it current, and giving customers upgrade protection when the next version comes out.
Seibt: Our enterprise subscription model has grown by 180 percent per year on average over the last four years, and that growth continues.
Given how vocal Microsoft Corp. executives have been about the threat Linux poses to their business, given the combined resources you now have, this should pose an even greater threat to them. Are you aggressively going to target Microsoft customers with your NetWare/Linux offerings?
Messman: I think it would be wrong for us to paint Microsoft as the enemy as opposed to say we have an opportunity here called Linux that we want to take advantage of. Our customers are going to decide where the battle is and where the opportunity is.
How are you going to position your traditional NetWare offerings and services versus your Linux ones?
Messman: We have customers who have had NetWare for years and are very pleased with it. They do not have to worry about scalability and reliability and all the bugs that Microsoft has. But they were worried about the migration path and the future. We were aware of that and so this April we announced that the network services in NetWare 7, the next version of that product, will work on both the Linux and NetWare kernels, so our customers do not have to leave Novell to migrate to Linux if that is what they want to do. We also announced this year that we would offer the Novell Network services, Nterprise, only on Linux.
Do you ultimately intend to phase out NetWare as an operating system?
Messman: No. We are adding Linux, we are not dropping NetWare.
How big a contributor do you see Linux being to Novells bottom line?
Messman: We dont do forecasts, but we expect SuSE to do $35 million to $40 million in revenues this year, and we expect that it will not be dilutive for us next year and that there will be growth after that.
What are your plans with regard to supporting the Red Hat Linux distribution?
Messman: Today we support SuSE and have been trying to support Red Hat, who were not being cooperative. We are committed to doing what our customers want, and if thats to work with Red Hat, then well consider that.
Seibt: I think it is very important that we talk to Red Hat because at the end of the day we both fight for the Linux market together. At the same time we both have to commit to the LSB [Linux Standard Base] standard. That is sometimes pretty hard to discuss with Red Hat. SuSE is fully committed to the LSB standard to let customers easily migrate applications from one distribution to another. So there is a need to talk to one another.
What is your response to The SCO Groups lawsuit around Linux and Unix, and how much attention are you paying to the ongoing litigation issues?
Messman: Were not paying much attention to the litigation. For us its business as usual with that as a small side issue.