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THINK ABOUT IT: Money for nothing

THINK ABOUT IT: Money for nothing

With vendors throwing increasing weight behind open source technologies, is it also time for the channel to also embrace something they can’t charge for? Open source, and particularly the Linux operating system, is being hailed as the greatest challenge to Microsoft’s hegemony on low-end servers, and potentially even desktops. But to date resellers don’t seem that interested.

IBM, Sun Microsystems, Novell and other vendors have realised Linux has potential to upset the status quo, and have invested heavily.

Numerous commercial businesses, such as Red Hat, are based purely around open source technology. Despite struggling initially, many are making the open source business model work.

The issue of open source technology becomes more critical when you consider that its rise will most likely come at the expense of Windows — a lucrative software platform for many channel companies. And its rise is undeniable. In terms of global server shipments, analysts at IDC expect Linux to leap from 12 per cent of units in 2003 to 29 per cent in 2008. The future of Linux on the desktop is less certain however, despite numerous new graphical user interfaces eliminating most usability issues.

An attempt by Dell four years ago to offer Linux on PCs was abandoned in November 2001 because of a lack of interest, although the company reports strong sales of desktop PCs sold without operating systems. Many of these machines are being bought by Linux enthusiasts who install their own OS.

To date, few resellers have focused on open source. There are a growing number of open source systems integrators and consultants, but their numbers remain small. Most technology is sourced by customers directly from its developer, most often over the Web, and integrated internally. But there are signs that the tide of opinion is beginning to turn. The managing director of Ingram Micro Australia, Steve Rust, has witnessed a large increase in interest in open source technology from both channel and vendor partners.

“We are seeing open source technology evolving away from its traditional roots of technically savvy developers into the mainstream reseller and service provider community,” he said.

Red Hat is also actively pursuing a channel strategy. It plans to quickly increase the percentage of its channel sales from 40 per cent to 70 per cent, using partners such as Volante, Frontline, and Civica.

Red Hat’s director for partners and alliances, Sandeep Chandiramani, said there were great opportunities for channel companies in providing systems integration services around open source.

Likewise, the spokesperson for Open Source Industry Australia, Con Zymaris, said there was great scope for whitebox makers to start loading Windows machines with open source applications such as OpenOffice, or the GNU Image Manipulation Program (GIMP), which provides much of the functionality of advanced photo manipulation software.

Resellers can go one step further and create dual-boot systems featuring Linux and Windows, and offer literally thousands of open source applications on the Linux volume.

“The margin is not in how much can they sell this free software for, the margin is in how much more they can charge for a whitebox,” Zymaris said. “And it’s all pure profit — they’re not paying anything for the software,”

One problem facing open source technology is that it has difficulty matching the massive marketing machine that sits behind commercial software. The model of individuals contributing to software development in a non-profit environment doesn’t leave much funding for marketing strategies or sales plans.

Open source software has generally had to rely on more ad-hoc, although powerful, means of discovery, such as through Web searches or word of mouth referrals.

Zymaris said that there was no one big backing the Internet against competition from AOL, the Microsoft Network and CompuServe.

“The Internet had no marketing budget, but it blew them out of the water, just with time,” he said.

Whether open source has the same implications as the Internet remains to be seen. But any resellers ignoring its rise do so at their peril.


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