Who Should Buy SuSE Linux?

In the early days of companies based around open source, the questions were: would they make any money? Would they survive? Once it was clear that they not only could survive, but also make money quite nicely, the next question became: what...

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In the early days of companies based around open source, the questions were: would they make any money? Would they survive? Once it was clear that they not only could survive, but also make money quite nicely, the next question became: what happens when they become successful enough to get bought by traditional software companies?

We've been finding out. Oracle's purchase of Sun has led to open source projects being abandoned, others being forked and suits alleging infringement of patents being filed. More recently, we've had the saga of Attachmate's purchase of Novell. This, too, has led to plenty of concerns about patents, but now that side seems to be dying down, if not entirely resolved, we're beginning to learn about the fate of other parts of the business, as Steven J. Vaughan-Nichols reports:

I had thought that after Attachmate bought Novell it would be keeping its open-source teams working. Indeed, Attachmate CEO Jeff Hawn had told me that, "Business will operate as usual." While Attachmate will be keeping SUSE Linux as a spin-off company, Mono, the open-source implementation of Windows' .NET, is being shut down and there have been hundreds of additional Novell layoffs. So much for business as usual.

As Bradley Kuhn points out, the death of Mono is not necessarily a win for free software:

The problem that I and others point out is this: it's dangerous to write new code that relies on technology that's likely patented by Microsoft — a company that's known to shake down or even sue Free-Software-using companies over patents. But the value of Mono (while much more limited than its strongest proponents claim) is still apparent and real: it has a good chance to entice developers living in a purely Microsoft environment to switch to a software freedom environment. It was therefore valuable that Novell was funding developers to work on Mono; it's a bad outcome for software freedom that those developers will lose their jobs. Finally, while perhaps some of those developers might get jobs working on more urgent Free Software tasks, many will likely end up in jobs doing proprietary software development. And developers switching from Free Software work to proprietary software work is surely always a loss for software freedom.

So that obviously raises the question: does Attachmate really care about pursuing a free software strategy at all? And if it doesn't, what will happen to SuSE Linux? Interestingly, Dave Neary was pondering this back when the deal was first announced. As he noted then:

If you are a Dark Hand type of guy, the financier who wants a return on investment and doesn't really care about innovation or changing the world, then your goal is to buy assets, perhaps sell a subsidiary or two to recoup some of the costs of the deal, perhaps change the management team, and keep the profitable business for a 5 year horizon before selling it on to make a profit. Your anticiated ROI for this type of deal would need to be around 8% to 10% per year.

So you sell on some patents & copyrights that you're not really interested in (presumably with a free license to use said patents for a period of time), you split your business up into the cash cow moneymaker (Old Novell) and the new, growing business that can sell at a high valuiation relative to its earnings (Suse Linux), and you line up a buyer for the speculative Linux business.

It's worth reading the rest of the post, where Neary fills in some of the details and numbers. But here I'd like to build on his analysis and ask: assuming for the moment that SuSE will indeed be sold at some point, where would be a good home for it?

There are actually two answers to that question. The first is the one that will get answered by the market: who will see the acquisition of SuSE as making good business sense. That might include all kinds of crazy options that you and I might not want to contemplate – for example, how about Oracle buying its own distro? What about Microsoft...?

The second is what I would like to ask people's views on here: in an ideal world, who would you choose as SuSE's new owner? I don't think there's any obvious answer to that question (but you might...). For me, that makes it particularly interesting, because it means that it touches on larger issues – notably the one I mentioned at the start of this post: that is, what happens when companies based around open source get bought?

That matters, because ultimately it is likely that practically all open source startups will be bought by other companies. After all, most have been set up with venture capital money, and these backers will want to harvest their investment+profit at some stage. That might not apply to privately-funded ones like Canonical, but there aren't exactly many of those around last time I looked.

Indeed, given that even the biggest open source company – Red Hat – is relatively small compared to existing software giants, presumably it, too, will be bought one day. And that will probably be even more problematic. So let's start thinking about SuSE and where it might go in the hope that it gives us some insight into the optimum outcome for Red Hat, too.

Follow me @glynmoody on Twitter or identi.ca.

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