Novell Says SLES 10 Has Impressive First Ten Days

Published: August 8, 2006

by Timothy Prickett Morgan

If the first ten days in the aftermath of the launch of SUSE Linux Enterprise Server 10, the brand-spanking-new server operating system from Novell, is any indication, then perhaps there is finally some hope that Novell's plummeting NetWare business will not take the company down with it. While it is always dangerous to be too optimistic at the early part of any product launch, the numbers that SLES 10 put up in its first ten business days are not too shabby.

SLES 10 was launched on July 17, and in the first ten days, over 165,000 users came to the Novell download site and got a copy of either SLES 10, the server version, or SUSE Linux Enterprise Desktop, the PC client version. Novell has launched a much-improved, unified online tool for managing licenses and subscriptions (which I know about because I used the old tool and the new tool), and this may sound like a small thing, but former SUSE customers who have, like IT Jungle, suffered through the transition to Novell and its kludgey systems will welcome this change. The license management system is simple and intuitive. Anyway, more than 286,000 Novell customers have gone to try out this new Novell Customer Center, according to the company. The SUSE Linux Enterprise site had over 312,000 hits in the first ten days, and software downloads have increased by 800 percent compared to the download rate prior to the July 17 launch. Novell says that a SLES 10 or SLED 10 license is downloaded every five seconds, but it did not provide an official download count.

That's why we have calculators. If you assume that download rates stay the same, more or less, on the weekends and that this average of one license every five seconds has been sustained up until today, then that works out to fully 22 days since the launch. This is about 380,000 SLES and SLED 10 licenses, roughly, by my math. And for a full 13-week quarter, that download rate would work out to about 1.5 million licenses. It is tough to say how many of these are server or desktop licenses, but even if half were servers, that is still a run rate of about 3 million licenses a year. Novell doesn't provide figures, but it was pushing about 30,000 licenses a quarter in 2005. Of course, Novell has to convert those downloads into paying customers, and at a 100 to 1 ratio, 3 million server licenses would only work out to 30,000 paid licenses, times $349 is only $10.5 million for basic licenses for a year. If Novell could convert these 30,000 licenses to standard support, that would more than double the money; add in some premium support, and you might be talking about $30 million. To make good financials, of course, Novell needs a much higher conversion rate of downloads to paying customers than 1 in 100; something like 1 in 25 will give Novell its current Linux sales rate, and 1 in 10 would significantly boost its revenues.

The very low prices Novell has set for SLES 10 will go a long way toward making that possible. The most impressive numbers that Novell put out for SLES 10, at least in my opinion, is the flat, partition-agnostic pricing scheme for the software license and the support for it. If Red Hat thinks it can charge a premium for virtualized instances of its future Enterprise Linux 5 software--as it has been hinting it might as a trial balloon to customers--then I think Novell's aggressive pricing with SLES 10 has pretty much killed the idea. I also think Red Hat will not be able to charge extra for Xen hypervisor support, since Novell is not. XenSource and Novell have cut a deal to integrate Xen into SLES 10 and Novell provides front-end tech support for it as part of its standard licensing and support. Red Hat will either have to package Xen in a much different manner, or just roll it in for free as Novell has done.

With SLES 10, Novell is charging the same amount for licenses to the software, regardless of the number of sockets or cores in the processor (from one to 32 sockets, Novell just doesn't care) and regardless of the type of processors (X86, X64, Power, or Itanium). With one caveat, of course: Mainframe customers pay $11,999 for the basic license per engine, which is mainframe-speak for core. This license is just for the software and its 90-day installation support and a one-year subscription to patches and updates. On all other machines, regardless of whether it is a single-core Celeron D entry server or a 32-socket Xeon MP, Itanium, or Power5 behemoth, such a basic license costs $349 at list price and will probably dip to $289 on the street through Novell's reseller partners. Moreover, to get standard business-hour support added to the license costs $799, and to get 24x7 support costs $1,499, which puts SLES 10 in the same price range as SUSE was charging for SLES 8 when it was still an independent company back in Germany.

That $1,499 price point for full-tilt-boogie support is something that I have personally argued with the top brass about at Novell. My Novell sales rep once told me I had to pay $5,800 to support my Linux servers under a standard Novell contract in the wake of the SUSE acquisition. And I said there was no way I would do that, and I would go on a per-incident support before I would pay that. I also said that $1,500 was what I was willing to pay a year to get premium support on my key servers. Novell's own NetWare-style pricing (read, way too expensive) did not fit with SLES 8 or SLES 9 customers, and I think that Novell's initial strategy for pricing on SLES support really hurt the expansion of its Linux in the market. You can't undo damage in the IT market, but you can recover from mistakes, and Novell seems bent on making up for lost market share.

Red Hat Enterprise Linux 4, by contrast, still has multiple versions, aimed at machines of different scalability ranges, and the Xen hypervisor does not come out until RHEL 5 at the end of this year. Red Hat's RHEL ES Basic Edition support costs $349, and only works on two-socket servers. Upping the support on such a machine to Standard Edition give business-hour tech support with real people, and this costs $799. If you want to deploy Linux on a bigger box, you have to go to RHEL AS Standard Edition, which costs $1,499, and if you want 24x7 support, then you need RHEL AS Premium Edition and that costs $2,499. Only RHEL ES runs on IBM mainframes and Power servers. Red Hat is, like Novell, gouging mainframe shops. Standard support costs $15,000 per engine on mainframes, and premium support costs $18,000.

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