First, some context: In its latest quarter, Novell's top-line revenues shrank but cost-cuts and operational efficiencies allowed the company to bolster net income. It's a familiar, mixed-news story for Novell. Wall Street's reaction ranges from ho-hum to slightly negative, as Novell's shares are down about 2 percent in early morning trading today. How are partners feeling? The VAR Guy hopes to get some answers at the upcoming Brainshare conference.
SUSE Linux MilestoneNow, the piece of the news The VAR Guy overlooked. Novell CFO Dana Russell said that the SUSE Linux business was at break-even, what he called "a significant milestone," according to The Register. That's important news... but is it great news?
The Register notes:
Maintenance and subscription revenues for SUSE Linux products accounted for $37.5m in revenues, up 6.4 per cent compared to a very weak Q1 fiscal 2009 but down 3.9 per cent from the quarter ended in October 2009. Russell said that Linux invoicing was up 75 per cent in fiscal Q1, but again this was against an easy compare a year ago. The company did not provide an amount for how much in invoices Novell sent to Linux shops in the quarter and did not talk about how much of the Microsoft certificates for SUSE Linux had been distributed, or more importantly, what the renewal rate was on the certificates that Microsoft's customers activated three years ago and which came up for renewal.Translation: Even as Novell celebrates a key SUSE Linux milestone, the milestone itself raises some questions.
The biggest question on The VAR Guy's mind: What does Novell's SUSE Linux business say about the overall open source industry? As one of the world's highest profile open source products, SUSE Linux is only now breaking even??? Are smaller open source companies breaking even faster? Or is it inherently challenging for open source companies to achieve profitability?
The VAR Guy is raising some big questions. After he sips some coffee, he plans to makes some phone calls to key sources and return with some answers.