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SuSE aims to spur sales through sharing

The German Linux seller gets ready to launch a partnership plan to share revenue with allies who bring in new business, and to release new upgrades.

German Linux seller SuSE is ready to give allies a slice of the revenue pie, under a sales partnership plan to be unveiled next week.

The software company intends to announce the plan, designed to boost sales tied to IBM servers, on Friday at the sprawling CeBit technology trade show in Hannover, Germany. It will also release version 8.2 of its mainstream Linux products at the show.

Under the partnership plan, a global initiative, SuSE will offer training and support services to business partners, such as consultants or server makers that integrate SuSE's products with their own, said Holger Dyroff, general manager of SuSE's American operations.

Essentially, the Linux seller is shifting its sales emphasis toward an indirect model in which business partners take a share of revenue in exchange for bringing SuSE new business. In particular, SuSE will aim to piggyback on partner IBM's support for Linux throughout its entire server line, Dyroff said.

Partnerships are a good approach for emerging companies such as SuSE, said Michael Dortch, an analyst with the Robert Frances Group.

"It seems impossible to succeed in the enterprise marketplace for a software company without the right mix of partners. Resellers, especially where companies like SuSE and Red Hat are concerned, have a lot more credibility with those (customers) than those vendors do," Dortch said.

Linux is an open-source operating system, meaning anyone may see, modify and redistribute the software, a contrast to the proprietary control Microsoft keeps over Windows.

The partnership plan, which comes on the heels of a reinvigorated U.S. sales effort announced last year, is part of SuSE's attempt to win business from leading Linux seller Red Hat.

SuSE had hoped to move into the black in 2002, but has had to shift its target. "The goal is to be profitable this year--meaning as soon as possible," Dyroff said.

IBM, a strong Linux advocate, is a already major SuSE partner. The Linux seller has moved more aggressively than rival Red Hat to embrace IBM's broad span of servers. It started by offering Linux for IBM's zSeries mainframes, then moved on to products for Big Blue's pSeries machines (which usually run Unix), for its higher-end xSeries Intel servers and finally for its midmarket iSeries machines.

"We have made partnerships with several huge (resellers), including Mainline Information Systems, in the IBM partner community," Dyroff said. "They are now extending their coverage in the marketplace from the mainframes to the pSeries, iSeries and xSeries."

To succeed in the partnership plan, SuSE will have to win deals with respected business partners and will have to improve its software so it's "ready to go out of the box and doesn't require a rocket science degree to install and configure," analyst Dortch said.

SuSE's plan has three levels of partnership--member, advanced and premium. With advanced and premium partners, SuSE will share customer revenue by passing along sales leads, Dyroff said. Those levels require more commitment from allies, though--for example, partners must have at least one employee with skills certified by the Linux Professional Institute and, later in the partnership, by UnitedLinux as well.

UnitedLinux is a consortium of four companies that use SuSE's version of Linux. One of those companies, SCO Group, sued IBM last week for allegedly breaking its contracts and stealing trade secrets by moving Unix software into Linux.

SuSE said in a statement it's re-evaluating its SCO relationship as a result. The German company still is committed to UnitedLinux, according to Dyroff.

The new versions 8.2 of SuSE's Personal and Professional Linux products, are set to be unveiled Wednesday at CeBit. The upgrades will cost $39.95 and $79.95, respectively, including a two-year subscription to the a new update service that automatically notifies users when improvements and bug fixes are available. They will be available in stores on April 14, he said.

Version 8.2 will include the new KDE 3.1, which is user interface software that introduces the first components of the Kroupware project's efforts to reproduce some Microsoft technology, such as Outlook and Exchange.

SuSE also sells a higher-end SuSE Linux Enterprise Edition (SLES), which costs more than the professional and personal software but includes from larger software companies such as Oracle and better support from SuSE. SLES won't be upgraded until the next major version of the Linux kernel is ready for mainstream use, which Dyroff predicted would be in 2004.