Novell is a Linux company with SuSE buyout

After hinting all year of its interest in getting chummier with Linux, Novell last week made its boldest move yet by announcing plans to purchase Germany’s SuSE Linux for $210 million.

The buyout of SuSE, considered by analysts and users to be the top rival to Red Hat as an enterprise Linux platform provider, follows Novell’s purchase of Linux desktop software and management firm Ximian in August.

Talk of Novell buying out a Linux company began when Novell CEO Jack Messman pledged allegiance to Linux at the company’s user conference this spring. At the conference, Messman said Novell would make a strategic shift to Linux over the next 18 months, with many of its management software products being ported to the platform. He also said Novell would in the future offer its operating system on both the Linux kernel and Novell’s NetWare kernel code.

Novell had to do something. NetWare has continued to lose market share to Linux over the last several years. In 2002, Netware sales shrank by 12% while combined Linux revenue grew by 17%, according to IDC.

Novell made clear its strategy as it announced the SuSE purchase – to go directly after market leader Red Hat. This means Novell will shift its Linux support focus away from Red Hat toward SuSE. Novell had offered some services and training for Red Hat Linux. Novell said it would still remain active in contributing to the open source community.

Analysts say the move gives Novell a comprehensive Linux product menu from desktop to servers, between its Ximian and SuSE offerings. Novell still also has a sizable installed base of 90 million users, according to the company. Novell is in a stronger position to initiate Novell-to-Linux migration, or at least tighter Novell-Linux integration, in many enterprises.