April 11, 2002

Reselling Linux: Intel Unix VARs don't see move to Linux

- By Steven J. Vaughan-Nichols -

At the DTR Business Systems annual reseller meeting in Las Vegas last week, everyone knew Intel Unix like the back of his hand, everyone was interested in Linux, but almost no one was making money on Linux.
Linux is making news pushing out Unix in some markets. But, it's RISC Unix, like HP-UX and Solaris, which is feeling the Linux pinch, not Intel-based Unix.

The DTR resellers and network integrators have made their money from Intel-based Unix for years, sometimes decades. These people aren't starry-eyed about Linux in business. Their interest is purely practical: Can it help my users? They sell, service and maintain Unix for small- to medium-sized businesses (SMB) ranging from bookstore chains to oil distributors to sock manufacturers.

No, it's not sexy; these resellers' work victories would never make the cover of Fast Company. On the other hand, while many technology companies have crashed and burned, these guys are still here, still making money. And, for the most part, they're doing it not with Linux, but with OpenServer, a SCO/Caldera Unix that traces its lineage all the way back to the days when Xenix was the PC Unix of choice.

They didn't expect this. While very attached to OpenServer -- stories of it running for years without a single system administrator keystroke are commonplace -- Rene Beltran, vice president of sales for DTR, expected Linux to become a major force in the Intel Unix market space in 2001. It didn't happen. Beltran says, "We thought that between last year and this year, there would be a massive move from Unix to Linux. But, in the vertical space, we just haven't seen it."

Why not? Beltran explains, "It's mainly inertia. Resellers just don't see enough reason to make the move."

Lee Correa, president of Corcom, which supports medical manager
software at 55 sites with OpenServer, agrees. His customers "don't want to get rid of stuff." They're happy with serial connections and dumb terminals so, "they're sticking with what they've got."

"Besides the upfront cost, why should you go to Linux?" is what Morla Toldeo of Trimark Computer Systems wants to know. "In the long term all (Unix) applications are portable" and the operational costs aren't different.

At the same time, Linux has indirectly helped the resellers' Unix business. Dave Walton, president of Information Resource Technology, which makes and services bookstore software, says, "Linux has made Unix sexy again. It's helped the Unix market space."

Still, while the resellers are finding that Linux isn't directly helping their bottom line, it's a different case for developers. Jack McGregor, chief developer for MicroSabio, which sells the portable language platform A-shell, has found the company's Windows resellers and
customers "want to get out of proprietary space into open systems." He's seeing "a tremendous shift to Linux from Windows" and the dealers are having a much easier time selling Linux-based applications.

And what Linux distribution do these resellers choose when they do get a customer to bite at Linux? Despite this group's strong Caldera ties, it's not Caldera OpenLinux. Instead, their customers are asking for Red Hat by name. As one reseller explained, customers know "Windows for operating systems and Red Hat as Linux. Caldera? SCO? They don't know them. Resellers want to standardize, and everyone is going with Red Hat."

Some resellers are not happy with this, though. Walton comments, "We run Red Hat, but we don't sell it." Why not? Because Red Hat is seen as reseller unfriendly.

Beltran explains, "I called Red Hat and I called and I called to just get some simple answers about Red Hat and resellers, and I finally got a guy to call me back. After I explained who we (DTR) are and I just wanted to talk to someone in the reseller channel. His answer: 'There wasn't any.' "

Given that, when it does come to Linux, these resellers would like to sell Caldera's OpenLinux, but they want Caldera to do a much better job of marketing and branding Caldera Linux. It's just that, as one reseller said, "when I walk into an office, it's hard enough to convince them that Windows won't work for them because that's the operating system they all know, but if they've heard of Linux at all, they only know Red Hat. Then, I have to tell them who Caldera is, and that's too much to overcome."

Caldera, aware of this problem, is focusing more of its time and money on its reseller channel. Ransom Love, CEO of Caldera, was the show's keynote speaker and addressed many of the group's concerns. Still, the resellers are taking a wait-and-see approach.

After all, the bottom line for Intel Unix vertical resellers is that it's Unix, and old Unix at that, that's still paying the bills. Linux, despite its popularity as a file/print server in small- to medium-sized offices and as a 'Net server, doesn't seem to be moving in the vertical SMB space.

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