Financial

SUSE poised for growth with new owner

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Michael Miller, SUSE president of strategies, alliances and marketing.
Michael Miller, SUSE president of strategies, alliances and marketing.

The newly-independent open source company SUSE said this week it is looking forward to pursuing its own strategy under a new owner.

The company, with headquarters in Nuremberg, Germany, has changed hands a number of times, and has still managed to show continuous growth. In July 2018, Micro Focus said it would sell SUSE to EQT Partners, for $2.535 billion, and this deal was completed a little over two weeks ago.

SUSE is now growing at 15% year-on-year, and is about to pass $400 million in revenue this financial year. It has also added 300 new employees in the past year, taking the staff complement to 1 750 worldwide in 43 countries.

SUSE is run as an independent business, under CEO Nils Brauckmann and his management team.

The acquisition by EQT means that if SUSE needs additional investment, or any mergers or acquisitions, for example, it can request this investment from EQT.

Michael Miller, SUSE president of strategies, alliances and marketing, told ITWeb Brainstorm at its SUSECON 2019 conference in Nashville, Tennessee, this week that the company has grown through each of the different ownership stages.

"It's not that the last stage was bad; it's getting better incrementally, and allowing us to do more each time."

Miller said he cannot provide any details about its mergers and acquisition strategy, but as an open source company, it is "not about acquiring intellectual property", but rather about acquiring talent and technology capabilities, such as in the application delivery and management space. It is also interested in acquiring security and networking technologies for its enterprise clients.

Power of open source

Open source companies are now extremely valuable, as can be seen by IBM's move in October last year to acquire SUSE's competitor Red Hat for $34 billion.

In an on-stage conversation with Miller, Brauckmann said he had been surprised by IBM's move and the price it paid.

Many in the market thought this presented an opportunity for SUSE, in that it is seen as an independent trusted adviser, he noted. "SUSE [...] turns out to be the largest independent open source company as the 'red' got sucked into 'the blue' and turns into purple."

Brauckmann said he respects both companies; IBM is a long-time SUSE partner and the companies will continue to work with one another.

"There will likely be companies, or independent software vendors, or cloud service providers, that will not be comfortable betting all of their business on IBM and Red Hat. There might be a degree of lock-in that is risky for them."

Miller said IBM's acquisition of Red Hat signals a remarkable change in the industry, and now that open source has become the de facto standard and driver of innovation, "open source companies are becoming very desirable".

He said IBM is pursuing a hybrid and multi-cloud strategy, and the acquisition of Red Hat will allow it to pursue that strategy more effectively. This is also central to SUSE's strategy, he noted.

As to rumours that SUSE may be a target for acquisition, Miller said he cannot comment.

He said, however, that the right thing to do is focus on its own customers and partners. "The wrong thing to do is to become distracted."

Miller and Brauckmann talked of the company's "laser focus" on refining their solutions, being more agile in reacting to market changes, and working more closely with system integrators and public cloud providers to support multi-cloud strategies.

"We've got a lot to keep us busy," said Miller.

Trajectory

SUSE was founded in Germany in 1992 and was the first company to market Linux for the enterprise.

It was acquired by Novell for $210 million in 2003, and then Novell was acquired by Attachmate in 2011.

Attachmate merged with Micro Focus in 2014. In July 2018, Micro Focus said it would sell SUSE to EQT Partners, for $2.535 billion, and this deal was completed a little over two weeks ago.

EQT is seen as a growth partner, and has raised EUR50 billion from over 600 global professional investors. It has spent more than EUR22 billion investing in companies across the world.

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