The Weaker Linux Players Wont Consolidate. Instead, Theyll Die

Last Aug. 14, I predicted in our cover story “Linux Slugfest” that Caldera and Red Hat would be the only major Linux distributors left standing. Anyone still want a piece of that bet? I didnt think so.

Since then, SuSE has nearly abandoned the North American business market. There will still be an English language version, but with its U.S. cutbacks, you can forget about getting the support you need to place SuSE Linux in businesses.

Also, second-tier Linux firms appear to be in a heap of trouble. Stormix Technologies, for example, has both a firewall Linux distribution and another thats been customized for ISPs and ASPs. The Vancouver, British Columbia, company made the right moves in deals with resellers and integrators like ION Computer Systems and NetStation. Nevertheless, Stormix ran out of cash and has filed for bankruptcy. Corel is trying to get out of the Linux distribution business, period.

Meanwhile, TurboLinux has finally agreed to buy Linuxcare. I like this deal. TurboLinuxs clustering technology is great, and I tip my hat to Linuxcares Arthur Tyde and David Sifry for pulling their company back from the grave after both a CEO and a CIO turned sour on them in Linuxcares early days. I think the combination of TurboLinuxs distribution and Linuxcares support expertise could make a great company.

I am concerned, however, that TurboLinux cut employees in advance of the deal. It sounds like TurboLinux needs this deal to stay afloat. Most of us who keep a scorecard on Linux companies expected the deal to be done on Feb. 13, but it didnt close until the 21st.

But I think the TurboLinux/Linuxcare deal will prove to be the exception, not the rule. Im now expecting Linux companies, as the economy gets tighter, to start failing and for no one to save them by buying them up. Its not a good sign that a Linux hardware vendor success story cut 25% of its staff on Feb. 20th

Why? Think about it. What do you get when you buy a Linux company? Theres little intellectual property; with the exception of Red Hat, theres no company brand, and there sure isnt anything material to sell off. The one thing that Linux companies have is bright, hardworking people.

Now, you can either buy the company—and hope the best and the brightest stay—or simply hire them. I believe Caldera made the right decision last November when it hired John Terpstra, a former TurboLinux executive, both in hiring him and in its approach to Linux market “consolidation.”

This column isnt just a Linux lesson, though. Maybe its time to forget about buying out your competitors and partners and focus on getting the best people for the job. Even with the noncompete-agreement headaches, hiring instead of buying is penny-wise, not dollar foolish.