Novell Goes After SMBs with Channel Support Bundles

Published: January 31, 2006

by Timothy Prickett Morgan

Back when SUSE was still an independent company, it offered its eponymous Linux server, SUSE Linux Enterprise Server 8, at a price that was competitive with other Linux platforms as well as Microsoft's Windows Server 2003 platform. And even though it was a German company that was only getting started in the North American market, at least from personal experience, its German tech support operations were excellent--and very inexpensive compared to other platforms.

One side effect of Novell taking over SUSE more than two years ago is that while the support behind Linux went global in reach, it also suddenly got more expensive. And many customers, particularly those not used to paying enterprise-class pricing for tech support on their software, had something of a shock. And while the pricing and packaging of the Linux licenses and tech support were fine for larger customers, they did not necessarily make for an easy sale, which has the effect of making small and medium businesses and the reseller channel partners who tend to be their interface with the IT vendors of the world, a little less eager to invest in Linux technologies.

With a set of announcements that Novell made this week, the company is going back to its own and SUSE's small business roots and providing an integrated license and tech support offering that comes with attractive pricing and can be sold by either Novell or its resellers. The bundle includes the SUSE Linux Enterprise 9 license--which has the source and binary code to the Linux distribution, 90 days installation tech support, and a year's worth of patching through the Yast Online service--as well as real tech support services and a freebie training offering that Novell has been selling for more than the Linux license.

According to Ladd Timpson, global director of partner channel marketing, rolling the license, installation support, tech support, and training all into one package--with different tiers of pricing--Novell hopes to take the fight to Red Hat as Linux starts pushing down into smaller companies. "This is a compelling and easy to deploy package, we have competitive advantage over Red Hat, and we allow channel partners to provide a competitive alternative to other SMB platforms," he explains. In the SMB market, Windows is by far the dominant platform of choice, not only because it is the operating system that most small companies are most familiar with because of the overwhelming use of Windows on the desktop and laptop, but also because vendors of application software tend aimed at small businesses tend to target the Windows platform. These two factors create a strong feedback loop, and the idea is to get a feedback loop going for Linux in the SMB space. Software and services bundles, aggressive pricing, and ISV enthusiasm are all key ingredients of this.

First, the bundles and their pricing. SLES 9 as it has been distributed so far is now called the base configuration, which it includes the Linux software, 90 days of installation support, and one year of Yast Online patching; this has a list price of $349 at Novell, but you can usually get the software for less at a Novell distributor. (I bought IT Jungle's latest SLES 9 license at CDW for $292.) If you want the annual upgrade protection, it costs $327 at CDW.

Now, Novell is adding a Standard bundle and a Priority bundle. The Standard bundle provides the Base license plus 12x5 telephone tech support with a four-hour response time on any and all features of the distribution--not just the Linux kernel and key Linux features. The Standard bundle also includes 24x7 electronic support with a four-hour response time. (SUSE used to offer 24x7 electronic customer support with a one hour response, and in my limited experience--since we didn't have very many problems with SLES--they were often responding within less time than that.) And unlike Novell's small business tech support contracts, where you have to buy a block of tech support calls and you have a limited number of incidents, the Standard bundle has no limits on incidents. I have been complaining that this is not how small businesses--particularly those who are reasonably self-sufficient as IT Jungle is--want to buy software and tech support. (My Novell salesperson agreed with me, too, when I was complaining because he was tired of hearing it from customers as well.) It is gratifying to see that Novell is listening to its customers and helping make it easier for its reseller channel to sell products. The Standard bundle of license and support costs $799 with for a one year contract on a machine with two X86 or X64 processors; and a three-year contract costs $2,279, which shaves $100 off the cost. (These are suggested retail prices, and resellers will probably compete a little on price and drive street prices down a bit.) On a machine spanning from four to 16 processors, the Standard bundle costs $1,499 for one year and $4,279 for three years.

The Priority bundle includes the SLES 9 Base package plus 24x7 telephone tech support with a one hour response time, plus 24x7 electronic tech support with a four-hour response time. Here's the funny bit. When Novell wanted to charge me $5,800 for tech support and I balked, I told the company's top services executives (who I reached through my sales person, if you can believe it) that I thought $1,500 for 24x7 tech support was plenty of money to get from me, especially considering we probably only make one tech support call a year. My argument was that Novell should be glad to get money from a customer like IT Jungle, and I was being generous as far as my math was concerned. $1,500 for a company that might not have a tech support call--we haven't had one in well over a year--is an extremely fair price for a security blanket. Anyway, I was thrilled to see that the Priority bundle costs $1,499 a year on a single X86/X64 server with one or two processors. I am apparently not the only one who said $1,500 was enough--there must have been a lot of us complaining in chorus. A three-year contract for the Priority package costs $4,279. On a machine spanning from four to 16 processors, the Priority bundle costs $2,499 for one year and $7,1,29 for three years.

Each bundle also now includes a computer-based training CD called the Linux Essentials Training Kit, which Timpson says has a retail value of $495. Not everyone will be excited by this, but newbie Linux users sure will be.

Finally, Timpson bragged a little bit about the partner ecosystem that Novell has built up, which will be another key factor to driving the new bundles into the SMB space. He said 18 months ago, Novell had 42 hardware and software technology partners--server, system software, and application software suppliers--and now Novell has over 900 such partners. And the Novell catalog of hardware and software products certified for SLES 8 was around 100, but today, for SLES 9, it is over 1,900 hardware and software products. "We believe that demand in the SMB space is picking up because a lot of the hardware and software partners are lined up," he said, adding that Novell realizes that it still has a lot of work to do to grow the ecosystem.

The new bundled license and support offerings, which are sold as a single boxed set by Novell and its reseller partners, should grease the sales skids quite a bit. The bundles are only available on X86 and X64 platforms so far, by the way, and it is unclear if they will be rolled out on Itanium, Power, and zSeries platforms.