December 27, 2001

New CEO, new SuSE: Company aims for profitability, number one server OS

Author: JT Smith

- By Steven J. Vaughan-Nichols -

Having welcomed new CEO Gerhard Burtscher in November, SuSE
is aggressively pursuing its plans to be a major server player.

This comes after a period of disorganization at SuSE. Former CFO
Johannes Nussbickel is returning to his CFO post after being a
caretaker CEO since June. In addition, former CEO Roland Dyroff has
been placed in charge of North American marketing.

Burtscher, a long-time computer industry executive, says his short-term goal is "to reach the planned turnover (total sales) for 2001, which is EUT 40
million. We will just about reach this goal, despite the current
economic situation worldwide. Thus, our turnover growth of 50 percent
is far above the sector growth in the whole IT industry."

As a private company, SuSE doesn't have to report its numbers, but
Stacey Quandt, Open Source analyst for Giga, says that these
numbers sound reasonable. She adds that there's a clear trend in
Europe toward server consolidation and a move away from Netware
and toward Linux. With its strong European position, Quandt notes, "SuSE is ideally positioned to take advantage of these trends."

Specifically, Burtscher proposes to make SuSE profitable in 2002 by
"the extension of our business product line for medium-sized
enterprises," and also by "providing Linux solutions and services to
large enterprises with complex IT-requirements. Moreover, the public
sector will get more attention."

In practice, this means that while SuSE will continue to ship its popular
everything-and-the-kitchen-sink Linux distribution, it will be
spending much more of its energy on its business versions of Linux
for the complete IBM server line, and it has released SuSE 7.3 for
SPARC, working with SAP R/3 migration customers and other mid-
sized and up companies.

In particular, SuSE's partnership with IBM is continuing to expand.
Working on the success of its port of SuSE Linux for IBM mainframes,
SuSE recently released its SuSE Linux Enterprise Server 7 for S/390.

SuSE is working on more than just IBM mainframes. SuSE's, along
with rival Turbolinux, Linux for the IBM iSeries, formerly known as
the AS/400 line, is now available in a Test Drive version. Red Hat, the last of the trio of Linux distributors working with IBM, will
have its iSeries Linux available for test-driving in January.

It doesn't surprise Quandt that SuSE's technical working relationship
with IBM has worked out so well. She observes that "SuSE has a very
strong engineering team."

SuSE's product line is also branching out from Linux porting. The
company recently released SuSE eMail Server III. This Linux based e-
mail package is based on the Cyrus IMAP server, the IMP webmail
client, and the ever-popular Postfix Mail Transfer Agent.

This is no mere by-product of SuSE's Open Source work, Burtscher
explains. "The SuSE Linux distribution will continue to be the main
product for technical-oriented private users. In addition, we will
increasingly penetrate the market with products tuned to business
users in the enterprise. During the past months, we have already
released a number of products targeting enterprise business users,
and we will continue to intensify the significance of this business."

To make this happen, SuSE will be moving into customized
programming, as has Linuxcare. SuSE will be doing this, says
Burtscher, though newly created SuSE Business Units moving "closer
to the customers to determine what is needed. Therefore, we expect
to generate more specific solutions tailored to the individual needs of
our customers. We want to understand the respective requirements in
a more distinguished manner and translate them to the ideal

"SuSE," Burtscher says, "is not here for the overnight success or great
headlines. We are here to stay the course in bringing an alternative to
what many see as total domination of the operating system
environment. SuSE will continue to concentrate on its core markets in
Europe and in the United States. Earlier this year, we successfully restructured our U.S. operations, and we continued to grow SuSE's market share after this realignment."

Despite its U.S. employee cutbacks in February, Roland Dyroff, SuSE
co-founder and former CEO, and currently head of SuSE's North
American efforts, reports that SuSE's U.S. 2001 revenue in the first
three quarters was 80 percent higher than over the same period in
2000. In addition, with Dyroff doing some wheeling and dealing, in
November SuSE became a value-added distributor for IBM's Linux
products -- such as DB2, Domino, and WebSphere -- in Europe, the
Middle East and Africa.

What does it all mean? For one, that SuSE is heading as fast as
possible to the business market with its close IBM ties.

From Burtscher's perspective, SuSE's competition is not the other
Linux companies, because "SuSE Linux is superior to the competitors'
products in terms of comfort, stability and security." Instead, he says,
"we view Microsoft and Sun as our core competitors."

SuSE won't be competing hard with Microsoft on the desktop,
though. Burtscher explains: "Apart from a few large projects like the SmartClient infrastructure we implemented at Debeka Insurance group, Linux on the desktop is used mainly by private users." In business, though, Linux on the desktop is a much more difficult sale because businesses "fear the expenses and workload incurred by
staff training. A Linux migration of the server infrastructure does not
pose this problem. The clients can remain Windows, while the servers
migrating to Linux gain in availability, performance, and scalability. We
have a clear advantage in this respect."

And the long-term goal for SuSE? "In the past, nobody believed that
mission-critical applications ran on Linux. However, opinions have
changed drastically. Yet, there is still a lot to do. In the past, the
general notion was that you would always be on the safe side using a
Unix system. Today, many people think the same about Microsoft. IT
managers interested in Linux have a lot of pressure because they fear
that they may be under the heat if something goes wrong.
Linux is on its way to standardizing the enterprise computing. It's our
goal to make it the global standard."


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