Can Linux cross the channel?

Linux is gaining in popularity while the Linux industry is shrinking.While major players in the open source world lay offpeople, or merge, or watch their share prices hemorrhage, researchmaintains that Linux growth isn't slowing.

This paradox confounds competitors, who still must cope with the rise ofLinux use without having a clear target vendor to aim for. But even more soit confounds Linux fans, who want their industry to exhibit the necessarystability to take on proprietary software vendors. So we're back to thebasic question of how one can make a buck from free software.

We can see that the market forLinux-related services is growing -- what's at issue is who stands toreap these rewards. One of the greatest income opportunities for Linuxlies in "the channel". Comprised of middle-tier companies that existbetween vendors and end users, these value added resellers (VARs) stand tomake even more money than the major distributors.

So much in the Linux vendor world today hinges on the business model ofgiving away the software, and then selling the consulting, customization,and training. A highly centralized version of this approach--as currentlypromoted by every distribution vendor, as well Linuxcare, VA Linux, IBMand others--is only effective when targeting the largest of potentialend-user customers, since it relies on the clients having in-house ITstaff that can lean on the direct services of the distant supportorganizations.

But while most of the major vendors are chasing the big customers, they'reignoring other opportunities to make money. Who's looking after the needsof small to medium-sized businesses? Folks seem to forget that this is howUnix got its foothold in the days when VAX/VMS was king, maturing withinthe small and mid-sized business market while preparing to take on theenterprise. And so it shall be, I believe, with Linux.

The Linux world has not come to grips with the task of assembling amarket-savvy and aggressive field of Linux-friendly VARs and systemintegrators. Speaking as someone who's been involved with Unix and LinuxVARs for more than a decade, I believe that there are plenty ofopportunities for VARs and major service vendors to fill this gap.

VARs take many forms. Some are tiny operations that outsource computersmarts for the very smallest of end users. Some specialize in a specificvertical market, bringing together hardware, systems software,industry-specific applications, and support into a tidy little package.Others offer a variety of management and service offerings.

These companies could benefit greatly from Linux: open source softwarecould reduce their costs and decrease their reliability headaches. Sincethe systems software and core applications are only one part of theirbusiness, these VARs could reduce costs while maintaining revenues fromservice and support.

Of course, VARs need some Linux smarts in order to realize these results.They need access to higher level support when they come across issuesbeyond their knowledge and experience. But the current offerings of mostLinux-based support vendors go horribly wrong in that they target the enduser, directly competing with the VARs who are more in tune with those endusers.

Caldera has made the beststab at a good VAR channel, with nominal fees and services. It standsto gain from the acquisition of SCO, which has good experience at keepingVARs happy and loyal. But Caldera's program of information and productdiscounts isn't enough of what VARs need.

Red Hat has two programs--one looks like a way topeddle its certification program, and the other costs$25,000 per year in return for 20 hours of support. Offerings from othervendors aren't any better, if they exist at all.

There's a great opportunity here for the Linux company that comes up witha superior way to support VARs. The channel needs high-quality techsupport specifically tuned to VAR requirements. VARs also need--andwould be willing to pay for--marketing support with teeth, such as co-opadvertising and genuine bi-directional communications with high-levelmanagement. Done right, such a VAR subscription service could be moreprofitable to a major vendor than a retail channel or fighting with everyother Linux company for the Fortune 500. The company that does well in theVAR circle stands to be in the best position as the enterprise warms toopen source.

What will it take to get VARs to embrace Linux? Tell Evan in the TalkBackbelow or in the ZDNetLinux Forum. Or write to Evan directly at evan@starnix.com.Linux is gaining in popularity while the Linux industry is shrinking.While major players in the open source world lay offpeople, or merge, or watch their share prices hemorrhage, researchmaintains that Linux growth isn't slowing.

This paradox confounds competitors, who still must cope with the rise ofLinux use without having a clear target vendor to aim for. But even more soit confounds Linux fans, who want their industry to exhibit the necessarystability to take on proprietary software vendors. So we're back to thebasic question of how one can make a buck from free software.

We can see that the market forLinux-related services is growing -- what's at issue is who stands toreap these rewards. One of the greatest income opportunities for Linuxlies in "the channel". Comprised of middle-tier companies that existbetween vendors and end users, these value added resellers (VARs) stand tomake even more money than the major distributors.

So much in the Linux vendor world today hinges on the business model ofgiving away the software, and then selling the consulting, customization,and training. A highly centralized version of this approach -- as currentlypromoted by every distribution vendor, as well Linuxcare, VA Linux, IBMand others -- is only effective when targeting the largest of potentialend-user customers since it relies on the clients having in-house ITstaff that can lean on the direct services of the distant supportorganizations.

But while most of the major vendors are chasing the big customers, they'reignoring other opportunities to make money. Who's looking after the needsof small to medium-sized businesses? Folks seem to forget that this is howUnix got its foothold in the days when VAX/VMS was king, maturing withinthe small and mid-sized business market while preparing to take on theenterprise. And so it shall be, I believe, with Linux.

The Linux world has not come to grips with the task of assembling amarket-savvy and aggressive field of Linux-friendly VARs and systemintegrators. Speaking as someone who's been involved with Unix and LinuxVARs for more than a decade, I believe that there are plenty ofopportunities for VARs and major service vendors to fill this gap.

VARs take many forms. Some are tiny operations that outsource computersmarts for the very smallest of end users. Some specialize in a specificvertical market, bringing together hardware, systems software,industry-specific applications, and support into a tidy little package.Others offer a variety of management and service offerings.

These companies could benefit greatly from Linux: open source softwarecould reduce their costs and decrease their reliability headaches. Sincethe systems software and core applications are only one part of theirbusiness, these VARs could reduce costs while maintaining revenues fromservice and support.

Of course, VARs need some Linux smarts in order to realize these results.They need access to higher level support when they come across issuesbeyond their knowledge and experience. But the current offerings of mostLinux-based support vendors go horribly wrong in that they target the enduser, directly competing with the VARs who are more in tune with those endusers.

Caldera has made the beststab at a good VAR channel, with nominal fees and services. It standsto gain from the acquisition of SCO, which has good experience at keepingVARs happy and loyal. But Caldera's program of information and productdiscounts isn't enough of what VARs need.

Red Hat has two programs -- one looks like a way topeddle its certification program, and the other costs$25,000 per year in return for 20 hours of support. Offerings from othervendors aren't any better, if they exist at all.

There's a great opportunity here for the Linux company that comes up witha superior way to support VARs. The channel needs high-quality techsupport specifically tuned to VAR requirements. VARs also need -- andwould be willing to pay for -- marketing support with teeth, such as co-opadvertising and genuine bi-directional communications with high-levelmanagement. Done right, such a VAR subscription service could be moreprofitable to a major vendor than a retail channel or fighting with everyother Linux company for the Fortune 500. The company that does well in theVAR circle stands to be in the best position as the enterprise warms toopen source.

What will it take to get VARs to embrace Linux? Tell Evan in the TalkBackbelow or in the ZDNetLinux Forum. Or write to Evan directly at evan@starnix.com.