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Linux's New Best Friend 2

Linux's momentum will be helped by the Novell's purchase of SuSE Linux.

For Novell, the acquisition should solve two problems. It lets the vendor sell a more integrated software stack, while reducing the company's heavy dependence on NetWare, which accounted for about 30% of Novell's $1.1 billion in sales last year. "The operating system was the missing piece," Stone said.

The challenge for Novell is execution, and its track record with acquisitions isn't great. In 1993, it bought the rights to Unix System V source code from AT&T in order to move its file, print, and other network services to Unix. That didn't produce the expected benefits, and in 1995 Novell sold the UnixWare operating system it created to Santa Cruz Operations, now known as SCO Group.

Novell needs to do a better job with SuSE and with Ximian Inc., a company it bought in August that makes Linux desktop software that supports Windows file formats, networks, and standards. SuSE offers a Linux desktop operating system that works with Ximian's software, letting companies run a combination of Linux and Windows applications in the same environment.

The open-source community seems to be rooting for Novell to succeed. "The acquisition helps with the acceleration of Linux," says Stuart Cohen, CEO of Open Source Development Lab, a consortium of technology companies dedicated to advancing Linux. The group has been talking to Novell about becoming a member.

SuSE competitor Red Hat says Novell can help push Linux as an alternative to Windows in business-IT environments because it has applications that Red Hat doesn't offer, such as a directory server. "But I'm not sure how they plan to manage the dynamics of being both a distributor of an open-source platform and a vendor of proprietary software," says John Young, Red Hat's VP of marketing. Novell says it will offer SuSE as its preferred operating system but will continue to support Red Hat.

Novell expects SuSE to bring 399 employees to its payroll and as much as $40 million in revenue in 2004. And Boscov's Poole thinks Novell will get it right this time. "Novell has always been a smart company," he says. "They might have lost their way from time to time, but they seem to be finding it again."

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Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
Pam Baker, Contributing Writer
James M. Connolly, Contributing Editor and Writer
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
Greg Douglass, Global Lead for Technology Strategy & Advisory, Accenture
Carrie Pallardy, Contributing Reporter