SUSE Finalizes Transition to Again Be an Independent Company

Eight months after announcing it would sell to an investment company and once again be an independent company, open source and Linux vendor SUSE is again operating under its own power.

SUSE’s acquisition by investment company EQT Partners is final and the company is no longer part of its former owner, Micro Focus. By coming out of Micro Focus’ shadow and leadership, SUSE says it now plans to grow its partner and customer relationships and focus even more to create, sell and service its open source-based enterprise products.

When the $2.5 billion acquisition was announced, analysts saw it as a move that should be beneficial to partners and customers as SUSE gains more control over its path in the IT industry.

The acquisition ends more than four years of SUSE ownership by Micro Focus and is the fourth involving SUSE since 2004. SUSE’s previous owners also include Novell and Attachmate.

Under the latest arrangement, SUSE will operate on its own instead of under a corporate umbrella, while having an investor that will help the company continue its business growth and open-source mission.

Nils Brauckmann, SUSE’s CEO, said the new arrangements will help his company as it moves forward.

SUSE’s Nils Brauckmann

“Current IT trends make it clear that open source has become more important in the enterprise than ever before,” he said. “We believe that makes our status as a truly independent open-source company more important than ever.”

For customers, SUSE’s open-source products, flexible business practices, a lack of enforced vendor lock-in and the company’s mature service and support network will combine with its newfound independence to help drive additional growth, said Brauckmann.

“EQT’s backing and SUSE’s independent status will enable the company’s continued expansion as advanced innovation drives growth in SUSE’s core business as well as in emerging technologies, both organically and through add-on acquisitions,” he said.

Charles King, principal analyst with Pund-IT, told Channel Futures that while SUSE’s independence technically means little in the big picture, the announcement is likely meant to stem any doubts among customers and partners, while also aiming a shot across its bow at open source market leader Red Hat, which IBM is in the process of acquiring.

As part of the changes at SUSE, a new chief financial officer, Enrica Angelone, and a new chief operations officer, Sander Huyts, have been named, while Thomas Di Giacomo, formerly chief technology officer for SUSE, has been appointed as the president of engineering, product and innovation. 

Pund-IT’s Charles King

“The press release says all the right things but EQT’s decision to bring in a new COO and CFO clearly suggests the company’s business strategy and execution required different hands,” said King. “It’ll take some time to see how it works out practically.”

One of the biggest things that could come out of SUSE’s new situation is financial and leadership stability for the company as Red Hat merges with IBM — which will change the open-source landscape, said King. “Going up against a dominant competitor like Red Hat was one thing. But adding in IBM’s deep pockets and reach into enterprise customers will make SUSE’s future distinctly challenging.”

Gary Chen, an analyst with IDC, said he expects business as usual from SUSE in the short term following the EQT investment.

“Longer term, it could definitely mean larger changes with more investment and shifts in the market dynamic once the Red Hat-IBM deal closes.”

For SUSE, EQT seems to be a growth investor and is giving early signs that it will …

… fund SUSE at a higher level than before, allowing it to ramp up engineering and its go-to-market strategy, said Chen.

IDC’s Gary Chen

“They’ll be looking to put SUSE on a faster growth track,” Chen said.

One other benefit of the EQT investment, said Chen, is that SUSE will gain latitude for more open source innovation and exploration.

“There could be a higher level of participation in communities and more technology development internally at SUSE, which could lead to an expansion of the portfolio into some of the hotter areas like containers, microservices, edge computing, IoT, AI and more,” said Chen. “That’s where the growth is and SUSE must expand the business significantly beyond the operating system to be viable for the future.”

As the Red Hat-IBM deal moves forward, SUSE will look to capitalize on any missteps and opportunities that might occur there, added Chen.

“One other possibility is that SUSE itself could again get acquired. Open source is hot and some other large companies may feel they want an open-source asset to compete with IBM-Red Hat.”

In addition, SUSE could work more closely with Red Hat and IBM customers and partners who might not be comfortable with that huge coming change, said Chen.

“I think they’ll look capitalize on Red Hat partners that may feel threatened by the acquisition; for instance, Red Hat partners that compete in some way with IBM,” he said. “And they’ll look to convert any customers who may look to jump ship obviously.”

SUSE will have to be reactive to how IBM manages the acquisition — and no one has any idea how that will unfold yet.

“There’s a lot of product and technology reconciliation that IBM needs to do with Red Hat, so there could be opportunities there,” said Chen. “I think what’s most important is that SUSE has the autonomy and the funding to be able to react fast and capitalize as the opportunities present themselves.”