[Linux-aus] ZDNet: Is Novell-SuSE deal a brilliant Big Blue power play?

[Arjen Lentz]

http://techupdate.zdnet.com/techupdate/stories/main/novell_suse.html

Is Novell-SuSE deal a brilliant Big Blue power play?
By David Berlind
November 4, 2003 

As Novell CTO Alan Nugent told me yesterday, notwithstanding a $50 million
injection from IBM, his company's decision to acquire Linux distributor SuSE
was backed by a significant amount of market and technical rationale. But
legally speaking -- an area where Nugent offered me only a peek -- the move
may go down in history as pure chess brilliance on behalf of IBM and Novell
in one of this industry's most notorious power struggles.

Although no official from Novell or IBM would come out and say it, a reading
between the various official lines reveals how IBM may have cleverly dodged
the Linux indemnification issue while ripping the legal rug right out from
under SCO.

The first clue appeared in a prepared statement from IBM spokesperson
Michael Darcy: "IBM's investment in Novell is consistent with the company's
history related to Linux. We've invested in a number of Linux distributors,
including Red Hat, SuSE, and TurboLinux in the past as a way to insure
customer choice in the market. Today's investment also helps assure IBM's
customers that there will be strong, continued support for SuSE Linux across
our family of eServers and suite of middleware offerings."

"Helps assure?" Customers usually start needing assurance when someone
notices that confidence may be lacking. Until SCO started rattling its
intellectual property saber, few were questioning the viability of SuSE or
any other distribution provider. In my discussions with various IBM
officials about Linux on its mainframe and midrange systems, SuSE was
invariably mentioned as the distribution provider around which the Linux-big
iron strategies were designed. We may never know whether or not some of
IBM's prospective big iron Linux customers were getting cold feet over the
SCO lawsuit. But my hunch is that some of IBM's customers were demanding the
assurances of which Darcy spoke.

Then, in my interview yesterday with the Nugent, the Novell CTO made some
interesting statements, one of which had to do with his role in overseeing
Novell's mergers and acquisitions strategy. "Part of my job is to make sure
that our strategic investment goes into areas that are not commodities,"
Nugent told me. "The base operating system is an example of such a
commodity." Considering that Novell had just announced the acquisition of
something (an operating system) that by his definition is a commodity, I was
confounded by his statement.

"Yes, the operating system itself is a commodity, Nugent added, "But the
distribution is not." But if that didn't make it clear, this next statement
did: "By doing this, we can make sure there are no problems with
dependencies [in Novell's application stack] or intellectual property." We
were getting warmer.

In talking to customers, Nugent went onto explain, Novell was told over and
over again that there needed to be at least two enterprise Linux offerings
(Red Hat being the other) with the backing of a large global company. I
wondered if that was the message that IBM was getting too. Generally
speaking, "backing of a large global company" equals assurance.

So, let's add this up, against the backdrop of indemnification. We've got
two companies --- IBM and Novell --- both of which have made heavy
technology and marketing investments in Linux and open source (including
Novell's recent acquisition of Ximian). One of the companies (IBM) is the
subject of a giant lawsuit from the company that claims to own the
intellectual property rights to the technology in Linux. The other is a
company that, dating back to its UnixWare days, is rumored to still have
just enough Unix intellectual property rights to be immune to the wrath of
SCO. The customers of these two companies want some assurances, and the CTO
of Novell wants to provide them in the way of solid stack interoperation and
issue-free intellectual property rights. Are we getting warm yet?

So, if Novell is immune (which Novell officials wouldn't comment on
yesterday), and SuSE belongs to Novell, then it follows that SuSE's
distribution of Linux could be untouchable. IBM's Linux strategy --- of
which SuSE's Linux distribution is a centerpiece --- is preserved. Novell's
cross-platform services strategy (which I'll get to in a minute) --- at
least a third of which (or more) depends on the long-term viability of Linux
--- remains intact. Customers seeking indemnification end up with something
better--a free and clear license.

I asked Nugent what he thought of my theory. While he didn't give me much,
he gave me this: "Your intuition is good. Stay tuned."

So, now that I've covered what I believe is the biggest reason behind this
deal, let's explore some of Novell's other reasons for acquiring SuSE.

Hoping to prove that there is indeed life after NetWare, Novell's goal,
according to Nugent, is to provide the best-of-breed offerings in the areas
of directory services, identity management, resource management, system
provisioning, and Web application development, and to do so in a way that
provides customers with a great deal of flexibility. "We've been talking
over the past few months about our standards-based approach and commitment
to open source and our desire to offer customers choice," said Nugent. "To
do that, we're offering a set of services that behave consistently across
Windows, Linux and NetWare. We want to be the leading provider of
cross-platform services. With SuSE and its orientation towards the
enterprise, we saw a lot of synergies across the board. It was the right
company to go after."

I reminded Nugent of another time Novell had made a similar promise. Novell
had promised that most if not all of NetWare's functionality --- especially
NetWare Directory Services --- would be available on UnixWare. I asked him
why Novell felt that it was able to make good on its promise this time.

Nugent tactfully avoided bashing his ancestry at Novell: "That was a
different company. There was nothing wrong with the company eight or nine
years ago. It's just that the Novell of that generation had a different
leadership and a different focus and it may have lacked a clear
representation of a go to market strategy. In the last 18 to 24 months,
we've sharpened our approach to the market by using a single code base to
offer everything across all platforms."

Nugent went on to explain that the single code base issue is a critical
efficiency for any company to succeed with the cross platform message.
"Until you do this, you can't begin to say to the market that you're a cross
platform vendor," said Nugent. "We took the code that was tied closely to
the operating system, we put it into common code base, and made it
compilable for other operating systems. Prior management teams wanted to go
the cross platform course from multiple code bases. It's tough enough to
maintain one code base for one operating system. But to maintain three for
three or six for six? Now that we're on a single code base, we're in a much
better position to deliver on the cross platform promise."

Another reason the Novell executive team likes SuSE, Nugent continued, is
because of SuSE's people. The SuSE team understands the same customer set
that Novell targets: the enterprise. "They understand enterprises much
better than Red Hat does, " Nugent said. "As an example, SuSE wisely delayed
the release of the next version of its enterprise class Linux until version
2.6 of the Linux kernel comes out. So, the next release of SuSE's Enterprise
Server will be version 9 which will come out in the spring or summer of next
year. Meanwhile, Red Hat just announced its newest enterprise version of
Linux --- Red Hat Enterprise Linux 3.0 --- and it will be based on version
2.4 of the kernel. They'll have to rev it again when version 2.6 of the
kernel comes out and the last thing enterprises want is that kind of
change."

I asked Nugent why, even if the distribution is not a commodity, it makes
sense for Novell to own a distribution when, as part of its commitment to
choice, it promises to support other distributions as well. Said Nugent,
"That is true. We are committed to supporting any enterprise distribution of
Linux. In addition to SuSE, our stuff runs on Red Hat. The Turbo guys have
announced they'll be coming out with an enterprise Linux and when it's out,
we'll support that. If tomorrow, the folks at Debian said they're coming out
with an enterprise Linux, we'd support that too. So, in light of that,
internally at Novell, we debated this ad nauseum and we still decided that
we needed a distribution to be successful. We thought about coming out with
a third enterprise distribution of our own (in addition to SuSE's and Red
Hat's). But in addition to SuSE's enterprise mindset, we saw a company that
was successful in Europe and that had great relationships in Latin America,
South American and Asia."

Nugent made it clear that the SuSE deal shouldn't be recognized as a Linux
play, or even an open source play. "The decision was based on the fact that
they understand the market," said Nugent. "Not the Linux market or the open
source market. The enterprise market."

Fair enough. SuSE may indeed be an excellent fit for this new generation of
Novell. But with $50 million of IBM's money in the mix, the real rationale
is hard to deny.


-- 
Arjen Lentz, Technical Writer, Trainer
Brisbane, QLD Australia
MySQL AB, www.mysql.com

Brisbane 2 Feb 2004 (5 days): Using & Managing MySQL Training
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