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Red Hat's (and Sun's) missed SUSE opportunity (Updated)

Red Hat and Sun both actively considered acquiring SUSE back in 2002 and 2003. Novell ended up with the prize. How would our industry be different today if Sun had succeeded?

I posted a (substantiated) rumor last week about Red Hat getting first dibs on buying SUSE and ultimately passing on it. As it turns out, all sorts of people have come out of the woodwork to give me more information on Red Hat's near-miss on acquiring SUSE.

Here are a few gems, including a cameo role from Sun:

  • Red Hat actually looked at buying SUSE twice. The first time was two years before Novell ultimately acquired SUSE, when SUSE was teetering on bankruptcy, and the second was during the negotiations with Novell.
  • The first time, at least one senior SUSE executive took an urgent flight to the US to try to sell the company to Red Hat, but the efforts were shelved when additional venture and industry funding was found in time to prevent a bankruptcy;
  • As for the bankruptcy, it appears that the quasi-bankruptcy was probably technically an actual bankruptcy under German law...;
  • The times being what they were, the quasi/actual bankruptcy was preceded by a period of madness when SUSE was on a torrid hiring binge;
  • While Red Hat took a good, long look at SUSE just before Novell's acquisition of SUSE, Sun was also taking a look at acquiring SUSE, and according to insiders was much closer to acquiring SUSE than Red Hat was.

Chew on that last one for a bit. Way back in 2002/2003, Sun might have been in the Linux business, while Novell might have kept fiddling with NetWare (but more likely would have gone actively into the open-source applications realm, following on its acquisition of Ximian). We would have been living in a very different open-source industry if things had gone Sun's way back then.

Better? Worse? I don't know. But different.

UPDATE: Just heard this from a former SUSE person: Apparently, Matthew Szulik (then Red Hat's CEO) actually promised to move all OS engineering to Germany if they bought SUSE. It's unlikely this would have happened, but that was part of the verbal enticement.

Also, Novell had been expecting to get SUSE for less than $200 million, but Sun's entry into the field raised the price considerably. (Arma Partners, which was managing the deal for SUSE, played that one very well, it seems.) IBM had to kick in $50 million to make the price tag palatable to Novell, and the deal went through.

Why was Sun interested? Keep in mind that Sun was paying SUSE at that point to build the Java Desktop System, which was basically SUSE plus some Sun bits, including a newer GNOME. Ximian and Wipro were contracted to build the GNOME bits.

Back to Red Hat. It's very likely that the SUSE and Red Hat engineering cultures wouldn't have meshed well. After all, they had been duking it out between KDE and GNOME for a long time. (As part of Novell's Linux Business Office at the time, I remember many conversations about trying to resolve the GNOME (Led by Novell's Ximian team) and KDE divide post-acquisition. It was a bit of a mess.) So perhaps Red Hat passed on the "opportunity" to save itself an internecine (but civil) war.

Ultimately, perhaps Novell missed out the most, as one commentator wrote to me. Novell investigated building a Debian-based distribution instead of buying SUSE. This was some months before Ubuntu was announced.

If Novell had spent that SUSE money improving Debian, and focused on usability (following its Ximian team's lead) and Novell's sense of "enterprise" instead of the German definition of "enterprise," so the argument goes, it might be in an even stronger position right now. Basically, they could be Ubuntu with enterprise credibility, which is what Ubuntu is trying to achieve (and getting closer every day).