Independence, OpenStack renewing SUSE's growth in Linux, exec says

Despite Novell's seeming inability to grow SUSE substantially, the Linux distributor, now an independent unit of Attachmate and a big backer of OpenStack, has grown its revenues to $225 million and is strengthening it No. 2 position in the Linux market, its president says
Written by Paula Rooney, Contributor

As the No. 1 dog in the Linux market, Red Hat gets most of the attention when it makes  big moves, such as its fairly recent decision to back OpenStack and reaching the $1 billion milestone.

But the longtime No.2 player in the market, Germany-based SUSE, which is also celebrating its 20th birthday, got little attention when it was the first to announce OpenStack support last October and when it was the first to ship an OpenStack distribution last month. 

In the aftermath of a tricky transition following its acquisition last fall, execs are trying to elevate SUSE's profile. Having hit the $225 million in Linux revenues recently, and earning a major appointment to the OpenStack Foundation board, the Linux distributor, now operating as an independent business unit and a platinum sponsor of OpenStack, is beginning to make noise again.  

It's been almost one year since Novell announced it was selling the Linux distribution and assets to Attachmate for $2.2 billion. Since then, the enterprise business and its allied open source project has been making necessary adjustments, most of which appear to be positive to outside observers.

Nils Brauckmann, President and General Manager of SUSE, now an independent business unit owned by Attachmate, said the Linux business is seeing "nice progress" with a growth rate of 18 percent in the last year and the addition of 2800 new customers to the business in the last 18 months.     


Novell purchased SUSE Linux in 2004 for $210 million and grew Linux modestly. At the end of the 2009 fiscal year, the first five-year-period, for instance, sales of SUSE Linux subscriptons piked at $149 million.  Since Novell divested itself of its Linux assets for more than $2 billion to Attachmate in the first quarter of 2012, Linux sales have already blossomed to $226 million, up from about $180 million at the time of the transaction was announced.

Sources say Novell's longtime ownership of the open source Linux distribution clearly solidified its No. 2 place in the enterprise market, but its efforts to push its other product business lines such as ZenWorks and GroupWise along with it created a drag on the OS's adoption.

Additionally, Novell's tight partnership with Microsoft ensured customers about interoperability but also caused quite a strain for open source backers. [Later, when the SUSE deal was announced with Attachmate, Novell compounded the anger by selling 882 patents to CPTN Holding, a consortium of companies organized around Microsoft, though the US Justice Department is claimed to have insisted upon licensing restrictions to protect Linux. ]

Brauckmann said all the OS needed to regain momentum was to stand on its own.

"The fact that we go to market as a focus dedicated to enterprise Linux under the SUSE corporate brand contributed big time beause there's more support and deeper relationships with our alliance partners," Brauckmann said of the new focus. "They like to go to market green and under the SUSE brand and customers saw the messaging we had focused on SUSE Linux Enterprise and the cloud as much more focused and it made more sense."

[Operating as a ] independent business also "allowed us to build a sales team focused on serving SUSE customers with SUSE technology and services. It's made a big difference," Brauckmann said in a recent telephone  interview during SuseCon 2012. "The quality was always there as was enterprise service and support. It was about sharpening our profile in the marketplace."

Roughly half of the company's 780 employees are engineers, he said. SUSE, which heralds itelf as the Switzerland of platforms, continues to support both Xen and KVM hypervisors and the GNOME and KDE desktops, and maintains interoperability pacts with proprietary giants Microsoft and VMware.

SUSE garnered some unexpected attention last month when it announed availability of SUSE Cloud, the first OpenStack-based Linux cloud platform in the marketplace.

Most recently, SUSE earned a coveted position in the OpenStack Foundation. Alan Clark, Director of Industry Initiatives, Emerging Standards and Open Source at SUSE, was elected Chairman of the Board. 

George Weiss, a vice president at Gartner Group who has followed the Linux market since its inception, said there was a lot of market confusion and concerns after Attachmate's purchase but noted that execs have made progress dispelling some of those worries.

"When they were with Novell it was in a downward spiral and people were losing confidence [in SUSE]. Since them, Nils and others in the executive ranks have done a good of instilling confidence in the installed base and growing some of their revenues," Weiss said.

"They hit bottom [but] they're on their way up. There's a positive trending upward," Weiss said. "Revenues are okay but not amazing and they're well behind the market leader. A lot of [Gartner]clients are still in a little but of a phase of not being quite sure about the company."

But with all of the distractions behind it, SUSE will be a stronger No. 2 choice in the enterprise marketplace, Brauckmann claimed.

"Red Hat is the market leader and we are a very strong No. 2. I want to educate the  audience that there's a No 2 in the market that is relevant, and has the size and capabilities to execute. [Having] $226 million in revenues and service sales related to Linux, it shows something."




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