Xandros buys Linspire in enterprise Linux bid

New York-based Linux company Xandros on Wednesday bought Linspire, another open source distributor in a bid to increase its presence in the enterprise, an executive said.

Xandros, which originally launched in Ottawa, did not disclose what it paid for Linspire, which was founded in 2001 and is headquartered in San Diego, Calif.

In buying Linspire, Xandos wants to be able to compete head-to-head with rivals Red Hat, Novell, SUSE Linux, and Microsoft, said Vince Londini, research analyst with London, Ont.-based Info-Tech Research Group. Already, Xandros’ approach is to provide a Linux-based operating system that looks a lot like Windows, said Londini, “so it’s not so hard to say ‘Come on over the water’s fine,’ sort of thing.’”

Last year, Xandros acquired Scalix Inc., a move that gave it an enterprise-class e-mail server software suite. The purchase of Linspire is “just a natural step”, said Londini, adding that the lack of noise preceding the deal makes it a bit of a surprise.

Londini isn’t ruling out more acquisitions of this sort by Xandros in the near future.

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Xandros’ CEO, Andreas Typaldos, has acknowledged that the move forms part of the company’s desire to expand into enterprise markets. “This is part of Xandros’ larger plan and vision for being a full product company to service both the consumer/OEM and enterprise markets,” he said.

Typaldos is optimistic there will be more acquisitions of this nature in the near future, given “Xandros is essentially trying to build a strategic technology footprint and we’re doing that by trying to build the company quite a bit” through hiring talent and acquiring technologies.

But besides consolidation and competing on the enterprise front, Londini said the acquisition has a great deal to do with Xandros acquiring Linspire’s CNR technology to better support its consumer presence, which “exploded” with ASUS Eee laptop last year. CNR is a marketplace that encourages third-party Linux application development from where Linux desktop users can search, download and install Linux applications.

The news of the acquisition also arrives in light of news that Red Hat Inc. will open source its Red Hat network, which works a lot like Linspire’s CNR, noted Londini.

However, Red Hat and Xandros hail from different places, said Londini. Generally speaking, Red Hat has roots in the enterprise space and has subsequently extended to the consumer space, although it has said it’s not competing for the consumer Linux desktop market. It’s vice-versa for Xandros.

Typaldos insisted that although Xandros is a Linux company, “fundamentally, is much more complementary, rather than competitive” to Red Hat and SUSE Linux. Xandros’ strategy is to recognize the ecosystem of Linux companies and Microsoft “and to provide value add in the enterprise that can essentially leverage those investments” that customers have made in those ecosystem vendors, he said.

Red Hat is not focused on OEMs and desktop applications like Xandros, said Typaldos.

As for striving to take open source mainstream, Typaldos said it’s already in the enterprise, especially with regard to the management tool space. He noted Microsoft’s System Center extensions that manage both Windows and Linux, and the fact that Xandros and Microsoft have agreed to build application management packs that run on the System Center. Also, Xandros is working with ASUS Eee on its netbooks that run Linux and Windows side by side.

According to surveys by Info-Tech Research, open source continues to move mainstream but primarily through supported subscription-type models like Red Hat and SUSE Linux. Currently, Red Hat ranks first with a revenue of 800 million to a billion dollars, followed by SUSE Linux with 400 million. “But as the market develops, there is room for another player here. Probably not room for three or four which is why Xandros bought Linspire,” said Londini.

On the other hand, Linspire sees a financial benefit in the acquisition, said Londini, “which makes sense because both are trying to make a play for the business environment.”

But Kevin Restivo, analyst with Toronto-based research firm IDC Canada Ltd., said the acquisition by Xandros may be a move toward strengthening its presence in the enterprise market, but Linux distributions in general face a number of business hurdles.

“The overarching problem for any Linux distribution company at this point in time is awareness,” he said.

The fact that established operating systems like Windows and Mac are “singed into people’s minds” makes them the de facto software, said Restivo. “[Linux] will appeal to users in any sort of price sensitive situation if you’re looking for a reliable operating system where updates are able to be incorporated into their version [in the future],” he said.

But he added that as Linux distributors have made it easier to use the operating systems, “they are now in the realm of reality for the mainstream user.”

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