TurboLinux chief predicts death without mergers

(SCMP.com) - Paul Thomas, chief executive and president of TurboLinux, said the hype that drove up Linux valuations last year had caused a backlash this year, with many enterprises nervous about the future of Linux distributors.

"We have to be customer centric, we have to move into the enterprise, and the only way the enterprise will accept this is if we stop the fragmentation. The world doesn't need 150 Linux distributions," said Thomas.

"If it's going to be adopted by enterprise, if it's going to be successful, we've got to get to a more standardised distribution. If we don't, I think it'll be a tough run for all of us."

The leading Linux distributors - RedHat, SuSe and Caldera - were all in agreement over the need for consolidation, said Thomas.

Besides the inevitable collapse of some smaller developers, he said he believed the most likely scenarios would be an agreement between the big four to work together on a single distribution, or for companies to move toward the same end individually.

"We've got to get off having 150 different distributions. And even if it's just 50 or whatever it is, there has to be one standard that everybody agrees to, and then it has to be available," he said.

He said the profit in basic development and distribution was too small to keep a large company profitable, and that the community as a whole was agreed that profitability lay in applications development, services and support.

The high valuations of last year, which saw Red Hat reach its current billion dollar market cap, despite the fact that its stock price had fallen from US$151 to US$6, would not be repeated, he said.

In October, Turbolinux filed for an initial public offering on the Nasdaq stock market.

"The hype got in before the companies did, so you have companies that are waving the Linux flag, who really aren't operating the way they should be," said Thomas.

"I think what you'll see this year and going into next year is that all these companies are now getting their acts together ... I would argue that there was a tremendous amount of hype built into this. None of these companies should have been worth what they were worth. None of the stock prices should have been as high as they were."