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SMB space could be a win for Novell

As the dust from BrainShare settles this week, users and analysts dissected the latest push from Novell into the small and medium-sized business space.

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Microsoft may have taken a bit of steam out of Novell's engine with a conveniently timed press release before the BrainShare conference last week, but Novell may get the last laugh.

Even after a much debated report on NetWare migration was issued by Boston-based Yankee Group, Novell continued to push Linux on all fronts, specifically its Linux Small Business Suite 9.

And with the small and medium-sized business (SMB) push, one analyst saw a scenario where Novell could do little wrong.

"First off, the fact that Novell SuSE Linux works with IBM would go in the plus column. Just look at IBM's general SMB trends -- there are [more than] 40 products in its Express portfolio," said Jim Balderston, senior industry analyst for The Sageza Group Inc. "You start putting those together with Novell and there's a real opportunity here."

For further evidence of the latent potential in Novell's SMB offering, Balderston said to look no further than Novell's pricing model.

"Look at what they're offering: a server-to-desktop Linux offer that will be priced at $475 per five-user license," Balderston said. "The price points of these products will certainly turn more than a few heads."

According to Novell, Linux Small Business Suite 9 will support up to three servers and 100 users, and is scheduled to be available at the end of March. It will be sold and supported by vendors such as Hewlett-Packard Co. and Dell Inc., and both companies will ship hardware with the product installed. Dell has already announced that it will sell the product on its PowerEdge servers.

"Novell can do very little wrong in pursuing the SMB market, which continues to grow as a revenue source for IT vendors, as these companies become more and more sophisticated in their IT deployment decisions," Balderston said.

Novell, Balderston said, has the ability to bring its enterprise-class product experience and pedigree to SMBs and to assist in getting these sophisticated deployments to market.

"As more and more SMBs become integrated into their larger customers' supply chains, they are going to have to provide enterprise-class reliability and interoperability or lose business opportunities," he said. "The SMB is now being forced to find cost-effective ways by which it can play within the large elephant enterprise IT framework in a fashion that will allow it to grow and scale as needed in the future."

Target: Redmond and Red Hat

Novell's latest offer should also entice Microsoft users who are looking for a less expensive alternative to proprietary software. In addition to the pricing mentioned above, Novell is also offering a $25 per five-user license for customers upgrading from certain Novell products or from competitive products.

"Microsoft is clearly the target in this Novell initiative, and if the company follows through on creating a vibrant ISV [independent software vendor] and partner ecosystem, then Novell will have an opportunity to make real headway in the SMB space," Balderston said.

David C. Niemi, a Linux user and consultant, agreed, noting that he sees a "Windows crossover" component to the Linux SMB market where an offering like the Small Business Suite 9 could capitalize.

"[Windows crossovers are] small companies, mostly outside the U.S., who don't want high licensing fees will likely be looking at complete small office software suites, including OpenOffice, e-mail, small databases, desktops, file and print services, and GUI interfaces for everything," he said. "They'll be interested in the ability to run the occasional specialized Windows application, compatibility with Windows, ease of use, training and a variety of support options."

Przemek Klosowski, founder of the Washington, D.C., Linux users group, echoed his fellow Linux users' beliefs that Novell could excel with small businesses, especially when compared to rival and industry leader Red Hat Inc.

"Novell traditionally had a good rapport with business; I think their past success is at least partly due to them delivering a complete solution," he said. "Red Hat is excellent technically, but their standard offering is more a rich heap of parts."

Niemi added that he believed Red Hat is aimed squarely at large businesses, leaving an opening for SuSE. Smaller businesses occasionally use Red Hat Enterprise, he said, but are more likely to opt for Fedora, SuSE or another distribution.

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