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The other Linux

SuSE CEO Richard Seibt operates a company that dominates Europe's Linux market. But he has big ambitions for expanding his company's foothold in the United States.

Richard Seibt once had the unenviable task of managing IBM's OS/2 business in an ultimately losing battle against Microsoft for the hearts and minds of computer users.

Through one of history's quirks, Seibt again finds himself in a mano-a-mano struggle against Windows--but this time he heads SuSE, a company whose operating system is causing major headaches for the folks up in Redmond.

In late spring, SuSE was selected by the city of Munich in a much-publicized and rare defeat for Microsoft, which actually came in with a lower bid. Whether Munich was a harbinger or a one-off example of the vagaries of IT decision making, it was seized upon by open-source proponents as a big victory for their side.

Seibt, who still remembers the bruises from his first tangle with Microsoft, is hardly ready to declare victory. Still, he does see clear momentum building around Linux--despite the turmoil in the open-source community triggered by the SCO-IBM lawsuit.

After a long career at Big Blue, where among other things he was managing director of IBM Germany, Seibt joined SuSE in January. He recently sat down for a roundtable discussion with CNET News.com's Editorial Board to talk about the future of open-source software and his plans for expanding the company's profile in the United States.

Q: You recently beat out Microsoft for a big deal with the city of Munich--even though Steve Ballmer went out of his way to make a personal appearance and reportedly was willing to underprice the Linux bid.
A: That's absolutely right. When a consultant's recommendations came up with an evaluation that the city should go for Linux, that was when Steve Ballmer decided to fly from Switzerland to Munich. He went to the mayor and said they would do whatever it takes.

Do you think national politics at all played a part in the decision to go with a German open-source software company?
I met the politicians from both parties and I was surprised at how well informed they have been about open source and Linux...At the end of the day, they had the same opinion: Let's go for open source. So I don't think there was a lot of politics.

But the fact you are a German company didn't hurt your chances.
Actually, I'd say it was the other way around. It was the fact that they have been treated by Microsoft not as they had expected over the years. It was more about that than that we were a German company.

It is very important that the city of Munich decided to change from Microsoft to Linux. Even more important was that Ballmer decided to fight that fight--that was probably the biggest mistake he could ever make. I like history and what famous people said. It was Gandhi who said, "First they ignore you, then they laugh at you and then they fight you--and you win." This is a perfect description for a disruptive technology where the market leader has a challenger and they can't cope with it.

As it competes against Linux overseas, do you think Microsoft's identity as a U.S. corporation will become a factor? That is, Microsoft is a very visible extension of American high-tech prowess and that may not play well in some countries because of current events.
No. Cities, companies--they decide based upon technology, cost and the service they get. I don't believe the "Let's buy American or Let's buy German" attitude plays any role. Microsoft may be looking for reasons, but look at how well IBM is doing in Germany. There's no sign that any IT companies from Germany are going to beat IBM or anyone else because they are German. I'm sure that's not the case.

Do you think Linux's acceptance in Europe will be helped by the European Union's current investigation into Microsoft?
I don't believe that companies make decisions because of the EU or other activities like that. They make decisions based on technology, cost of ownership--things like that.

You have to believe Microsoft is going to do whatever it can to prevent another Munich. If they decide to pull out all the stops, how will you be able to stand up to that kind of competition?
Microsoft has very deep pockets and their monopoly margin is very high. So whatever they do, if they make that decision, they can do it--but they'll destroy their current business model and the share price.

From a customer perspective, the Munich deal has implications...that (Microsoft) will start to negotiate on a price point that's 90 percent below their list price. It's unbelievable. Cutting prices when you have offered high prices before means that all other customers will want the same thing too. Their other reaction will be: "What have I paid before?" And that causes disappointments, loss of trust and loss of relationship.

We haven't talked about the SCO suit and where SuSE stands. Will you put money into the fund started by Red Hat to fight the lawsuit or does your cross-licensing deal with SCO still provide you with protection?
We have a joint-development agreement with SCO...and part of that contract is a cross-licensing agreement. And our lawyers tell us that we are protected.

But don't you think that if you're really part of the open-source community that you need to take a stand about this suit as opposed to saying, "Well, we have a cross-license so we're okay."
No. We applaud what Red Hat did and we did the same in Germany some weeks ago. We went to court together with the Linux association in Germany. (SCO) is not any more allowed to tell the public or customers that there's code as part of Linux which is intellectual property from SCO. If they still do that, they must pay a fine of 10,000 euros per case.

What do you think of IBM's countersuit? And do you think the GPL license is strong enough to bear the weight of a trial?
I fully believe it's strong enough to succeed...the case will show that it's strong enough.

Are you at all worried about software patents? Do you think they pose a problem for the open-source community?

My opinion is we need a GPL. We don't need software patents.
My opinion is we need a GPL. We don't need software patents.

If you're going to displace Microsoft on the desktop, one of the important pieces is an office suite. Do you think OpenOffice needs to be better? Are you putting any developer attention on that project?
I believe the functionality of OpenOffice or Sun StarOffice doesn't need a lot of changes. I've been using StarOffice for 10 years and haven't had an issue. There might be a need for additional work but I think the open-source community will fix that.

So you don't think SuSE needs to devote any resources to that? It's good enough?
At this point in time, I don't believe so. On the other hand, Sun--with Mad Hatter--will make sure that all the functions that are needed will become available. Think about the 44,000 employees who use Sun's StarOffice--and it works.

SuSE technology is at the core of Mad Hatter (A Sun project to outfit businesses with low-cost PCs running on Linux software that can be easily configured by IT administrators.) Do you get payment every time Sun ships one of those desktops?
We have agreed not to disclose terms of the contract.

You were managing director for IBM in Germany and one of your jobs was to promote OS/2. Given that experience--which from an IBM perspective didn't fare very well against Microsoft--are there parallels to what you're now trying to do with Linux?
There are some similarities. My people are 100 percent committed to Linux and open source--and it was just the same with OS/2. Thinking about the product from a technology perspective, there is a huge difference. OS/2 had a different kernel on the client and server and that caused a lot of problems for the customer. I believe OS/2 was a new operating system and Linux is a Unix-based operating system, even though it's open source. Lots of applications are easily available and there's a skill set available that can be used. We also don't have the positioning issue where OS/2 was positioned as the better Windows. Linux is a high-end operating system, so there is the biggest difference between the two.

From the desktop perspective, there are similarities. We call on customers who may say, "We are using Microsoft Office." And this was just the same. We can say there is StarOffice and it's much the same. But times have changed as well. We are talking about browser-based architectures. We are talking about thin clients. And the competition from Microsoft is the same.

Do you think that Sun, IBM and HP are stringing you along and that at a certain point they will decide to put out their own Linux distribution? They do their own service and support, so why wouldn't they want to eliminate the middleman--or buy them?
I don't think that will happen. All of them know the history (of the Unix market) and what happened. If HP makes up its own distribution, then IBM will do the same. And this ends up with endless distributions and differentiation--and that's what the industry doesn't want.

But choice means more than the two alternatives presented by SuSE and Red Hat.
But what does choice mean? For instance, on the hardware, they wanted to compete from PCs to servers; they don't see the OS as a differentiator. If they all made their own distribution, then they'd have to certify their software, and it adds cost to the bottom line.

But if they're getting rid of Unix, that would suggest there's room for more Linux distributions. It's all open source. It's all transparent.
If you ask them, they will tell you they want to support two distributions.

Red Hat says the immediate target is the universe of Unix systems, particularly those running on RISC processors, while the longer-term target is Windows. Do you agree or are things different on the other side of the Atlantic?
We agree. But there are a lot of customers already making the migration from Windows Server to the client. Large corporations are thinking that it's time to change. When I joined SuSE six months ago, I was 100 percent sure we didn't need to focus on the desktop. But I've changed my mind simply because of customer demand.

Red Hat and SuSE are both fighting an open-source fight. We both believe we have one enemy--and that's Redmond and nowhere else.
Talking about the competition with Red Hat, you've said it is a two horse race. If so, how many noses ahead are they?
Our heritage is Europe, while their heritage is the United States. Red Hat went public and got a lot of media coverage. Because Europe is, from a financial market perspective, 12 months to 18 months behind the United States, we missed the IPO. Otherwise, it would be an easier race.

Will it look the same two years from now?
I don't believe this will continue.

What's the big difference between you and Red Hat?
I think the big difference is coming out of the technology. There's a common code base, which means a customer only needs one skill set to deploy SuSE's enterprise server on all the platforms he might want to run--from the desktop to the zSeries, or the largest server. The maintenance is driven by tools like YAST (Yet Another Setup Tool) installation software. That's a differentiator.

On top of those two things, it comes down to reliability, performance and stability. This is something that might vary. Sometimes we're ahead and sometimes they're ahead. Meta Group gives us a 12 month to 18 month technology advantage. But Red Hat and SuSE are both fighting an open-source fight. We both believe we have one enemy--and that's Redmond and nowhere else. From that perspective, we are working closer together.

You're strong in Europe, and Red Hat is strong in the United States. Does that suggest closer collaboration? Maybe a merger within five years or so?
I don't know what will happen in five years. Today there's no need because the market is big enough for the two most important players.