SUSEcon2012 — SUSE’s Coming Out Party

Every culture has its coming of age rituals — Confirmation, Bar Mitzvah, being hunted by tribal elders, surviving in the wilderness, driving at high speed while texting — all of which mark the progress from childhood to adulthood. In the high-tech world, one of the rituals marking the maturation of a company is the user group. When a company has a strategy it wants to communicate, a critical mass of customers, and prospects bright enough that it wants to highlight them rather than obscure them, it is time for a user group meeting.

This year, having passed a year since the acquisition of Novell by AttachMate and its subsequent instantiation as a standalone division, as well as being its 20^th anniversary, SUSE had its first user group meeting. All in all, the portents were good, and SUSE got its core messages across to an audience of about 500 of its users as well as a cadre of the more sophisticated (IMHO) industry analysts.

Among My Key Takeaways:

• SUSE is a stable company with rational management — With profitable revenues of over $200M and a publicly stated plan to hit $234 for the next fiscal year, SUSE is a reasonably sized company (technically a division of $1.3B Attachmate, but it looks and acts like an independent company), with growth rates that look to be a couple of points higher than its segment.
• SUSE’s management has done an excellent job of focusing the company — SUSE, acknowledging its size disadvantage over competitor Red Hat, has chosen to focus heavily on enterprise Linux, publicly disavowing desktop and mobile device directions. SUSE’s claim is that their market share in the core enterprise segment is larger than their overall market share compared to Red Hat. This is a hard number to even begin to tweeze out, but it feels like a reasonable claim.
• SUSE has done an excellent job of projecting an image of high quality — SUSE’s focus and aggressive migration to the Linux 3.0 kernel (along with competitor Oracle) positions them as technically aggressive and forward looking. Red Hat’s current position favoring back porting selected 3.0 enhancements rather than moving to the 3.0 kernel is probably an artifact of product development schedules and possibly the inherent conservatism that sometimes creeps into the DNA of a dominant market leader. In the end, Red Hat’s Linux remains eminently suitable for enterprise use, and they will eventually move to the 3.0 kernel, but this is a business where image matters, and both SUSE and Oracle have given the appearance of technical aggressiveness exceeding that of Red Hat.
• The acquisition and transition issues are behind it — Over the past year I had a number of discussions with North American clients about the future of SUSE, its viability, and the risks of continuing to invest in it. I think the time for these questions is past. SUSE is a profitable, growing division of a $1B-plus company, and all the omens point to its health and continued success.

Lizard Or Hat? Who Wins?

Putting aside the convictions of those who, like Conrad Lorentz’s ducks, have imprinted on either the rakish red hat or the enigmatic grinning green lizard, SUSE is not going to suddenly dominate the market and crush the hat; despite the transient advantage SUSE may have with the 3.0 kernel, there is no technical reason to consider replacing current Red Hat installs with SUSE. But the existence of at least two qualified and closely competing players has always been beneficial to any market in multiple ways: increased commercial competition, more customer choice, and more rapid technical evolution. There are now no considerations of corporate viability or stability to make current SUSE users reconsider their choice, and Red Hat can no longer rely on SUSE self-destructing or fading into the sunset, so potential new Linux users now have an attractive Avis to Red Hat’s Hertz.

And both SUSE and Red Hat need to get their game face on to deal with Oracle and its Linux thrust, which seems to have also gathered steam in the last year.