Where Is i5/OS Small Business Suite?

by Timothy Prickett Morgan

A little more than a week ago, Novell announced an aggressively packaged and priced stack of Linux software aimed at small businesses called, appropriately enough, Linux Small Business Suite. The announcement got me to thinking, once again, about a recurring issue I have with IBM and the iSeries line: They seem to think that small businesses are a lot richer than they actually are.

Despite the impressive progress that Big Blue has made with the i5 520 Express machines, these configurations are still way too expensive at the front end compared to alternatives--and with the pricing that Novell just announced for its software stack on Linux Small Business Suite 9, the gap has just opened up a bit further. As I have said before, IBM needs to change its game plan even more radically to attract a larger small business customer base. Dell and Microsoft are making a killing selling very inexpensive servers--they get a couple grand for a complete configuration, compared to at least $10,000 to $25,000 (at street prices, not list) for a configured 520 express machines in the same power class. While the iSeries enjoys some ease of use and ease of programming benefits, IBM has not demonstrated to the market that those benefits beat the competition by a factor of five to ten times. And if the iSeries does enjoy such a usability advantage, it has done a terrible job quantifying that.

Let's take a look at Novell's Linux SBS 9. Having a trimmed down version of an operating system that is targeted at small and medium size businesses is not a new idea. SMB shops have different needs and skill sets--particularly very small customers--than big midrange shops or larger enterprise shops. One size has never fitted all--this was the case with NetWare, with the System/3X (which had SSP-based machines for small customers and CPF-based machines for more sophisticated customers), with Windows, with Unix, and with Linux. Novell's NetWare was an SMB platform from the get-go, and Unix vendors never seemed to understand the SMB market at all. But Microsoft and Linux distros like Novell have SMB in their blood. They get it. And in the late 1980s and early 1990s, IBM clearly and consistently demonstrated superior performance and usability and competitive pricing with the AS/400 line. Yes, the AS/400 used to have the best bang for the buck for SMBs, in case you have forgotten--and ease of use was an extra bonus feature, not an unquantified (but no doubt justified) reason for charging more for an AS/400 and an iSeries.

Novell has upped the ante in the SMB space by announcing Linux SBS 9. This is more than a cut-down Linux server aimed at SMB shops. In fact, Linux SBS is not a cut-down version of Linux at all. It has the core SUSE Linux Enterprise Server 9 software that comes in the full-blown SLES 9 server that Novell has been selling since last August. It also includes the Apache 2.0 Web server, plus the integrated firewall and virtual private networking software that SLES 9 has. If Novell had just stopped there and said it could only run on servers with one or two processors, it would have created something more akin to Microsoft's own Windows 2003 Small Business Server or the former SUSE's Linux 8 Standard Edition, which was a streamlined version of SUSE aimed at SMB shops.

But Novell didn't stop there, because it correctly understands--as does Microsoft and as does IBM's iSeries business--that SMB customers want to buy one set of software for a couple of servers that does just about everything they need. To that end, Novell's new Linux SBS 9 includes its GroupWise 6.5 email, calendaring, and groupware server as well as licenses to Linux Desktop 9, the new desktop variant of SLES 9 that is behind Sun Microsystems' Java Desktop System software and that Novell will be positioning against Windows in corporate accounts that are tired of all the feature creep in Windows and the security risks. Linux Desktop 9 includes the OpenOffice office suite, which is a clone of the Microsoft Office suite, plus the Evolution email client, the Firefox Web browser, and a multi-network instant messaging client that spans AOL, Yahoo, and MSN networks.

Linux SBS 9 has a license that allows it to be run without any additional licensing fees on up to three distinct servers, which is important. The fact is, small companies are cheap and they would only buy one license and replicate that software to multiple servers anyway. And as long as Novell didn't tie a license to a specific machine, Novell would have been none the wiser. Besides, Novell doesn't own SUSE Linux (or any other Linux, for that matter), and customers can download it without paying a dime for it anyway. Novell giving customers tech support on up to three servers is just a measure of goodwill and good sense.

Linux SBS 9 also includes licenses and support for up to 100 desktop clients, which is a new twist on the whole SMB server racket. Microsoft doesn't do this, and neither has SUSE or Red Hat. Novell is being smart and realizes that even though some shops would love to move to Linux on both desktops and servers, their end users have many applications that cannot be changed to Linux variants. So the SUSE server at the heart of Linux SBS 9 is licensed to talk to up to 100 Linux or Windows clients--the customer gets to choose. The suite also includes Novell's eDirectory 8.7.3 for managing server access and directories and iManager 2.0.2 for managing the server. It does not include the current ZENworks 6.5 systems management software, and it will not include the forthcoming ZENworks 7 software. If you want Novell's top-end management tools and you are a small business, you are going to have to pay for them.

Linux SBS 9 will be available starting March 31, and runs in 32-bit mode on X86 processors (that means Intel's Pentium and Xeon chips and AMD's Opteron chips). The base server costs $475 for a five-user license. That license comes with five free technical support incident calls, which is worth many thousands of dollars at Novell's current support pricing. If you want to get upgrade protection on an annual basis for Linux SBS 9, you pay $150; if you want to get upgrade protection for as long as you want to use the product, you can pay Novell $231. Customers with the NetWare SMB product server, which is called Novell Small Business Suite 6.5 and which pre-dates the SUSE acquisition by years, can deploy Linux SBS 9 for free and can run NetWare and Linux side-by-side. (Novell didn't say so, but presumably customers with active support on SUSE Linux 8 Standard Edition can also get Linux SBS 9 for free, too.) Shops with Windows NT 4.0, Windows 2000, or Windows 2003 servers or the Small Business Server 2000 or Small Business Server 2003 variants of these platforms, or with any prior edition of NetWare or the NetWare-based Small Business Suite, have to pay $252 to upgrade to Linux SBS 9. It is unclear what it costs to add each Linux SBS 9 user above the initial five users and up to the maximum of 100 users.

Linux SBS 9 is not, says Novell, supported on 64-bit X86 or Itanium platforms or 64-bit Power platforms, even though the underlying SUSE 9 Linux is supported on those platforms. GroupWise and other key features of the suite are not supported on the Power platform, which means Linux SBS 9 cannot run on the iSeries in a Linux partition. Which means IBM has some time to act and instigate a similar deal to peddle i5/OS and the iSeries to real small businesses, not the mythical ones with deep pockets that the i5 520 Express machines seem to be aimed at.

So, here is what I would do. First, the Linux SBS 9 suite does not have a relational database tightly coupled with it, nor is it a suitable platform for ERP-style applications like OS/400 and its integrated database. So that is one advantage a so-called i5/OS Small Business Suite would have. IBM needs a $2,500 box that seats 10 users and a $5,000 box that seats 20 users. That's $250 per seat. If IBM has to cap the CPW for each seat (instead of capping it for a specific machine, as it does for the three different i5 520 Express machines) to keep this hypothetical i5 510 Small Business Edition from overlapping with the 520 Express boxes, so be it. I don't like caps, but if governors are the price we have to pay to get a low-cost i5 in the hands of tens of thousands of new customers, so be it.

And because the iSeries is a solution box, I want to add one more thing to this: applications. Specifically, I think this i5 510 Small Business Edition should come with Intuit's QuickBooks, including the various industry-specific editions, Peachtree Software's eponymous accounting software and industry specific variations, and similar programs. These are the first applications that real small businesses buy when they graduate from running spreadsheets to needing real accounting software. I want all of these applications to run as natively as possible on the iSeries--perhaps on a mix of C code and DB2/400 databases running on the iSeries and an inboard Wintel server controlling the network and the screens--so first-time iSeries buyers who are small businesses get a good, relatively inexpensive taste of how good an iSeries server can be.

Then, when their businesses grow and they outgrow the functionality that this basic accounting software gives them, they can graduate to the rich, deep ERP suites that are still the hallmark of the iSeries business.