[TriLUG] FW: Turbolinux Challenged in Tough Linux Market

Thu Aug 8 08:28:16 EDT 2002

FYI...

INTEGRATING WINDOWS AND UNIX --- August 08, 2002
Published by ITworld.com -- changing the way you view IT
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HIGHLIGHTS

* TurboLinux's financial woes could put the UnitedLinux project in 
  serious jeapordy.

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Turbolinux Challenged in Tough Linux Market
By Tom Krazit

An effort aimed at publishing a Linux version that runs software
programs from four different distributors of the open-source operating
system could be in peril as Turbolinux Inc. struggles to stay afloat.
But even if the company manages to stave off layoffs and office
closings, an unfocused business model has the company headed in an
uncertain direction that could kick off consolidation of the Linux
distribution market, analysts say.

The future of Turbolinux looked bright after the Brisbane, California,
company joined with three other Linux distribution companies earlier
this year to create UnitedLinux, a joint effort whose ultimate aim was
to make the operating system more viable in the corporate market.
However, reports surfaced this week that cloud at least the company's
immediate future as word circulated on the Internet that Turbolinux had
shuttered its headquarters.

The president and chief executive officer of Turbolinux, Ly-thong Pham,
issued a statement to Linux Today, an industry publication, that while
the U.S. office is being restructured, the company remains open for
business and will provide more details on restructuring plans next
month.

Representatives from the U.S. office of Turbolinux did not respond to
repeated requests for comment. The Japanese branch office was told that
an expected round of funding from investors had not come through, and
the company was "forced to conduct (an) urgent restructuring on July
15," said Fumiko Doi, marketing director of Turbolinux Japan. These
layoffs caused the shutdown rumors, but they only affected the U.S.
office, and do not mean the company as a whole is in danger of failing,
she said.

The very nature of Turbolinux' business is cause for concern, said
analysts.

The source code for open-source software, such as Turbolinux's
distribution, can be viewed and modified by anyone under the terms of
the GPL (General Public License). So, if another company coveted a
feature of Turbolinux's distribution, it could merely view the source
code, and create its own distribution based on the same code, said
George Weiss, vice president and research director for enterprise
servers and storage at Gartner Inc., based in Stamford, Connecticut.

"This is the strength and weakness of the open-source model: (the
technology) is there, and it's not dependant on any one body, but it
lowers the overall profit potential that vendors would like," said
Weiss.

Turbolinux had tried to differentiate itself as a Linux distributor to
Asian countries. The company has offices in Tokyo, Beijing, Hong Kong,
Taipei, and Seoul, and made versions of Linux optimized for Asian
languages. But it missed out on a huge market in its own backyard.

The Chinese government has embraced open-source software, but chose to
sponsor a version of Red Hat Inc.'s distribution over Turbolinux's, said
Dan Kusnetzky, vice president of system software at IDC, in Framingham,
Massachusetts.

Analysts attribute most of Turbolinux's troubles to the company's
haphazard marketing and product strategies. Turbolinux was trying to
move away from being a Linux distributor to selling products that run on
top of Linux, said Stacey Quandt, an analyst at Giga Information Group
Inc. in Santa Clara, California. But it developed products that faced
stiff competition, or didn't achieve what was promised.

The company developed PowerCockpit, which is a server provisioning and
management product for large server environments that could run on
either Linux or open-source archenemy Microsoft Corp.'s Windows
operating system. But this product pitted Turbolinux against UnitedLinux
partner Caldera and IBM Corp.'s Tivoli Systems Inc., both market
stalwarts, Kusnetzky said.

Turbolinux also attempted to conquer load balancing with the release of
Cluster Server, designed to maintain uptime for Web applications.
However, despite the name, it's not a true clustering product as defined
by IDC, said Kusnetzky. It does not create the single application
development environment through one machine characterized by clustering
products, he said. Cluster Server is also pitted against Microsoft's
Application Center 2000, and other open-source products.

And EnFuzion, the company's parallel computing software, competes
against Sun Microsystems Inc.'s free Grid Engine, and the open-source
Beowulf product. While there might be valid reasons for purchasing
Turbolinux's product over a free product from Sun, Turbolinux did not do
a good enough job educating customers as to those reasons, Kusnetzky
said.

"(The software products) didn't give them any traction in the market,
and they have not gelled at all. They are going from a volume strategy
(with the Linux distribution) to a low- volume services-oriented
business model," Weiss said.

The troubles of Turbolinux do not bode well for UnitedLinux, the
analysts said. Each member of UnitedLinux is mainly a regional player,
trying to band together for safety in a market ripe for consolidation,
Kusnetzky said.

In May, Turbolinux announced it had created UnitedLinux along with
partners Caldera International Inc., SuSE Linux AG, and Conectiva SA,
with the goal of creating a single version of Linux on which the four
companies would standardize their products. This would mean users could
avoid having to reconfigure software products from any of the four
vendors to run on a distribution from one of the other vendors. However,
the companies did not extend an invitation to industry leader Red Hat to
join the group until one day before it was announced.

Weiss noted that the group can't build a strong presence to compete with
Red Hat if the individual members are too busy solving their own
problems.

"This points to the delicate nature of their partnership. They're
attempting to create something of a standard or a common development
platform for independent software vendors, and why would they generate
any enthusiasm if the individual members themselves are in one way or
another weak?" he said.

As if this weren't enough, Turbolinux faces a difficult situation with
the continuing shrinkage of IT budgets. In difficult times, users are
more likely to turn to traditional vendors, such as Hewlett-Packard Co.
and IBM, which have embraced Linux as an alternate technology, Weiss
said.

And since venture capital funding has dried up for many technology
companies, Turbolinux will have to scramble to come up with capital or
drastically cut costs to survive. Neither Kusnetzky or Weiss had much
faith in the long-term prospects for the Linux distribution market, both
predicting company failures or mergers within the next year, but Linux
itself isn't going away.

"We are expecting consolidation in the Linux distribution market, but
don't see the software itself disappearing. The problem is, how do you
sell a product that an enterprising person could get for free?"
Kusnetzky said.

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About the author(s)
-------------------
Tom Krazit is a correspondent for the IDG News Service.
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