Linux Firms Expect to Thrive on VARs' Windows Frustrations

For a managed service provider on a fixed-fee model, downtime and service calls mean less margin.

A pair of Linux vendors appearing on the SMB (small and midsize business) landscape—Xandros and Collax—expect to capitalize on that rock and hard place with a Linux end run around the downtime and outage issues that eat into that margin, executives and partners from both companies said.

Xandros and Collax have developed Linux offerings scaled and priced for the SMB market and, more importantly, they say, compatible and interoperable with Microsoft and Windows environments. Both companies expect their offerings to be attractive to MSPs trying to reduce the outages and response calls that shave their profit from their fixed-fee contracts.

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"If you're responding to a fixed-fee contract, every time you answer four or five calls a month, you've just blown your margin," said Stephen Gamble, senior director of channel development at Xandros, a Linux vendor marketing to SMBs. "You don't have those problems with Linux. You just let it run and run. It's the reason enterprises went the Linux route years ago."

"Those VARs, solutions providers and installers who only had Windows to offer to their clients had been limited to selling in an oversaturated market with very small margins, sometimes as low as 0.2 percent," said Andreas Typaldos, Xandros' chief executive officer. "When a VAR gives a customer a Xandros Linux server and it doesn't break down, the VARs' maintenance contract becomes profit that allows it to enhance customer support and get more products out."

Xandros, based in New York, announced a formal partner program in June. Collax, a German company, is moving its headquarters to Bedford, Mass., and beginning U.S. operations this fall. It is recruiting a partner program this summer.

Both companies are to be 100 percent channel organizations, to rely on the trusted adviser role VARs play in the SMB space, executives said.

Click here to view exclusive channel research from Amazon Consulting.

Xandros and Collax believe their products break the roadblocks keeping Linux out of the SMB market by scaling the products to SMBs and building interoperability and Windows compatibility into the platform, said Gamble and Paula Hunter, Collax's vice president of marketing in North America.

"[Previously,] Linux required too much retraining of IT talent," Hunter said. "A Microsoft VAR, selling Microsoft Small Business Server [SBS], would find putting together a Linux package foreign and expensive, and so they didn't. We've scaled it down to fewer choices and options, [reducing] the complexity. A partner needs it to flow quickly. It touches their hands but doesn't require modification. Keeps support cost down."

The issue of interoperability will also lead to greater acceptance by sometimes skittish customers, said Mike Chudy, owner of PowerTAC, of Winnipeg, Manitoba, a Xandros partner.

Xandros has built its offering to be "Windows-like," eliminating much of the Linux curve, Typaldos said.

"They're playing the game Microsoft played when it developed the Exchange server to replace the others," Chudy said. "You create the integration and the path to migrate, and then you come in and take over with full interoperability.

"Exchange was meant to be fully compatible with Lotus, IBM and the competitors, and once it was in there, it started taking over."