New 'Linux in the Channel' Study Indicates High Profitability Margins for Solution Providers and Integrators Selling Linux-Based Solutions

August 15, 2006; 06:28 AM

LINUXWORLD, SAN FRANCISCO - The results of the IT industry's first "Linux in the Channel" study (www.linuxinthechannel.com) conducted by the Institute of Partner Education and Development (a sister company to CRN Magazine) -- was released today at the LinuxWorld Expo in San Francisco. A poll of more than 400 solution providers yielded data that suggests that resellers with an established practice around Linux-based solutions are experiencing sustainable and profitable revenues. Additionally, the research provides new insights on where the most successful Linux Solution Providers are focusing their investments and efforts that both established and aspiring Linux Solution Providers should factor into their business planning decisions.

The study, sponsored by AMD (www.amd.com), HP (www.hp.com), Levanta (www.levanta.com) and Novell (www.novell),- was conducted independently by the Institute of Partner Education (www.iped.com), and the results are now available for free download at: www.linuxinthechannel.com.

"When evaluating technologies, the solution provider community first and foremost weighs the profitability opportunity," said Rick Vieth, Sr. Practice Manager at the Institute of Partner Education and Development. "What the data from this study shows is that the solution providers that have established Linux practices are experiencing higher profitability margins than those that are not. It also suggests that for the solution providers that may only be dabbling in Linux, or doing just one installation per quarter or less, they are potentially missing out on significant profitability opportunities ... and in some cases potentially doing their customers a disservice."

Key findings in the "Linux in the Channel" study include:
    -- Application services, web hosting and databases are the three most important horizontal Linux solutions for solution providers
    -- The highest correlating technical reasons for Solution Providers that prefer Linux solutions is that the OS has better security, reliability and performance than other operating systems
    -- Cost saving is the most strongly held overall reason for Linux as the best choice of operating system
    -- Lack of in-house expertise, application breadth and difficulty of managing Linux are the top three obstacles that Solution Providers site for customer acceptance of Linux
    -- Better technical support, stronger ecosystems and clearer revenue models are the top three Linux vendor actions sought by Solution Providers
    -- Windows accounts for half of operating systems replaced by Linux for Solution Providers surveyed
    -- Solution Providers plan large increases in the percentage of employees capable of selling Linux

"This 'Linux in the Channel' study reveals that the solution providers who were the first-movers on Linux have experienced tremendous profitability," said Stuart Cohen, CEO of OSDL (www.osdl.org). "The findings are very timely, as a growing percentage of Linux vendors areincreasingly engaging indirect sales partners to help them reach a broader audience. This study is a great discussion starter that OSDL hopes will trigger other leading vendors to put resources into meeting reseller needs and educating the market about Linux in the channel."

"AMD's commitment to its customers and ecosystem partners is to make as easy as possible the development and implementation of innovative solutions based on industry standards," said Kevin Knox, vice president, Worldwide Commercial Business, AMD. "The findings of the 'Linux in the Channel' study confirm that AMD's support of the channel helps our customers identify new sources of revenue by delivering IT solutions that meet end users' unique needs for high performance, productivity, and reliability."

"As the study has stated, the industry sees a sizable gap regarding in-house expertise managing Linux, which is the reason we work so hard to instill confidence with stack integration and testing," said Christine Martino, vice president, Open Source and Linux Organization, HP. "HP sees this as a great opportunity for resellers to build out their businesses by offering consulting and integration services. HP is driving this effort with our new HP Open Source Middleware Stacks channel offering which provides channel partners with tested open source stacks."

"This study confirms that despite the general evolution of Linux, one of the perceptions that's still out there is that it's tough to manage," said Matt Mosman, CEO at Levanta. "The fact that this myth is still out there is something that the solution provider community and vendors need to team together -- because with the right management solution, systems administrators tend to find Linux much more manageable and reliable that other operating systems."

"Linux provides a great opportunity for solution providers to grow their business," said John Judge, Vice President for Alliances at Novell. "This study confirms what many Novell channel partners already know - that they can build a robust and thriving services business around Linux. Solution providers and integrators can work with their customers today to deploy 'business critical' applications on SUSE Linux Enterprise 10, and in the process generate significant opportunities for consulting, training and migration services."   

About the Institute of Partner Education and Development (IPED)
The Institute for Partner Education & Development (IPED) empowers technology companies with channel education, intelligence and analysis to develop, deploy and execute channel strategies and programs that drive revenue. IPED content is based on two-decades of channel experience and more than 50,000 annual surveys of business partners and end customers.

About AMD
Advanced Micro Devices (NYSE: AMD) is a leading global provider of innovative microprocessor solutions for computing, communications and consumer electronics markets. Founded in 1969, AMD is dedicated to delivering superior computing solutions based on customer needs that empower users worldwide. For more information visit www.amd.com.

About Levanta
Levanta is a leader in Linux management and data virtualization. Levanta's unique technology marries change control with data virtualization, delivering dramatically faster and more flexible control of Linux on commodity hardware, racks, blades, boxes, and even virtual machines. Levanta's customers include industry leaders in financial services, entertainment, government, retail and telecommunications. Levanta has partnerships with IBM, HP, Novell, and Red Hat. A private
company, Levanta is headquartered in San Mateo and can be found on the Web
at www.levanta.com.

About Novell
Novell, Inc. (Nasdaq: NOVL) delivers Software for the Open Enterprise(TM). With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. With over 20 years of experience, 5,000 employees, 5,000 partners and support centers around the world, Novell helps customers gain control over their IT operating environment while reducing cost. More information about Novell can be found at www.novell.com.

About OSDL
OSDL - sponsor of Linus Torvalds, the creator of the Linux kernel and other key Linux developers - is dedicated to accelerating the growth and adoption of Linux-based operating systems in the enterprise. Founded in 2000 and supported by a global consortium of major Linux customers and IT industry leaders, OSDL is a nonprofit organization that provides state-of-the-art computing and test facilities available to developers around the world. With offices in China, Japan and the United States, OSDL sponsors legal and development projects to advance open source software as well as initiatives for Linux systems in telecommunications, in the data center and on enterprise desktops. Visit OSDL on the Web at
www.osdl.org.   

NOTE: OSDL is a trademark of Open Source Development Labs, Inc. Linux
is a trademark of Linus Torvalds. Third party marks and brands are the
property of their respective holders.