| What's up with Novell's new licensing? |
Jan. 24, 2006
You might have missed it, since it's really a reseller/channel partner story, but Novell Inc. has changed the rules on how its partners will be selling Linux.
In our sister publication, Channel Insider, my colleague, John Hazard reported that Novell "will no longer force users into CLAs (contract license agreements), which attached service and maintenance agreements to the software deal."
That, in turn, means if you want to buy products from Novell's serious SUSE Linux line -- SUSE Linux Enterprise Server (SLES), Novell Linux Small Business Suite 9, and Open Enterprise Server -- you'll be paying less after March 1st.
Of course, if you want patches, support, and all that other good stuff, that will be another matter. Still, given how many people can now pass Linux server administration 101, I'm sure a lot of people will buy the basic versions.
I presume Novell is counting on this to help boost its overall numbers vs. Red Hat Inc.'s RHEL (Red Hat Enterprise Linux).
Now, that's not what they're saying. They're saying that it's because customers want it that way, and they want to give customers what they want.
Well, yes, I'm sure that plays a role too, but still I wonder if part of what's going on here is that Novell keeps looking at the shipping rates of SUSE servers vs. RHEL.
In Novell's last quarter, which ended Oct. 31, 2005, the Linux distributor sold 65,000 subscriptions, not counting subscriptions sold under enterprise-wide licensing deals. That's great. That's up 137 percent sequentially and 216 percent on a year-over-year basis.
But, Red Hat, in its last quarter, did even better. While the company didn't reveal the total number of subscriptions sold, a little math with its subscription revenues showed that the company continued to do a good-deal better than Novell at selling Linux.
What I suspect is happening here is that Novell has decided to give the tried and true loss-leader strategy a try. Novell may not make money quickly from untying its services and support from its Linux sales, but eventually, I think, the company hopes it will gain enough new customers to really challenge Red Hat in the Linux server market.
--Steven J. Vaughan-Nichols
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