SuSE Linux AG is close to wrapping up OEM deals with Sun Microsystems Inc. and Hewlett-Packard Co. that will call for the Linux distributor to bundle its version of the open source operating system on select client and server systems from Sun and on HP's lower-end servers.
According to sources familiar with the company's plans, Sun will bundle SuSE Linux 8.2 with its lower-end Intel-based desktops and servers while HP will bundle it with several of its low and mid-range servers. The two deals figure to help the German-based company, now No. 2 among Linux distributors, to gain some ground on market leader Red Hat Inc.
SuSE has been gathering some momentum in the Linux-based desktop market of late, landing a couple of sizeable deals including a contract to supply the city of Munich, Germany, with 14,000 copies of their version of the operating system, throwing out Windows in the process.
But while the upcoming deals, which are expected to be announced by the end of this month, will better position SuSE among competing Linux distributors, it will do little to threaten Microsoft's stranglehold on desktop users, analysts believe.
"I don't think Microsoft shops are going to move to Linux [on the desktop] in significant numbers, but I think such deals can help them capture new business that otherwise might have gone to Microsoft, and it may accelerate some Unix shop to make the move to Linux on the desktop," said Al Gillen, senior analyst with IDC in Framingham, Mass.
With the upcoming bundling deals, SuSe relationship with Sun appears to be strengthening. Earlier this month SuSE rolled out its SuSE Linux Desktop aimed specifically at enterprise desktop users, which is bundled with Sun Microsystems' StarOffice 6.0 and OpenOffice.org 1.0.2. At that announcement SuSE president and CEO Richard Seibt said that while servers would continue to account for the majority of his company's sales, he will continue to aggressively push his company's desktop applications.
"While the server business will remain most important to us, we think the desktop business will be much larger for us over the next 24 months than it is now. We think it could become 30 percent of our business," Richard Seibt said.
SuSE officials declined to comment on any talks with either Sun or HP.