At first glance, Zentyal seems to be making all the right moves -- raising more than $1 million to promote Linux into the small business server market. Zentyal is building a partner network for VARs -- striving to counter Microsoft Small Business Server along the way. But The VAR Guy wonders: Can Zentyal really succeed in the SMB server software market -- where so many other Linux distributions have failed?

Further complicating matters: Can Zentyal's small business server software thrive when so many SMB customers are shifting their server budgets to cloud services?

Let's start with some upbeat anecdotes. Zentyal raised $1 million in Series A venture capital from Open Ocean Capital in December 2011. Open Ocean Capital previously backed MySQL, the wildly popular open source database that Oracle ultimately acquired when it purchased Sun Microsystems.

On the partner front, Zentyal in November 2011 claimed to be in "conversations" with more than 1,000 IT providers worldwide. Around the same time, Zentyal partnered with Canonical, promoter of Ubuntu Linux. The deal calls for Zentyal channel partners to promote Zentyal small business servers, Ubuntu desktop and Ubuntu application servers.

Late to the Party?

Intriguing stuff. But here's the core challenge: Zentyal may be targeting a market that's past its prime. The VAR guy believes small business server sales will contract as more SMB customers shift to cloud services. With that potential reality in mind, rival Linux providers like Red Hat are attacking the SMB market purely through cloud services rather than on-premises servers.

Heck, even Microsoft faces an uphill battle in the SMB server market. During an Intermedia Partner Summit in New York last year, most attendees said they had stopped reselling Microsoft Small Business Server and shifted their focus to hosted Exchange, online storage and other cloud services.

Keeping the Cloud In Perspective

Still, perhaps The VAR Guy is overestimating the cloud's impact on small business servers. Zentyal in December 2011 claimed to be generating more than 30,000 downloads per month and also claimed to be a "break-even" business, meaning that the company was no longer losing money.

Moreover, the Zentyal partner program includes tiers for managed services providers and cloud services providers -- a clear effort to attract next-generation partners rather than traditional hardware resellers. Gold Partners, for instance, can host Zentyal in their own cloud.

How many gold partners will take advantage of that cloud perk? The VAR Guy is watching for updates.