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What Does SUSE’s Independence Mean?


SUSE has completed its transition from Micro Focus to EQT, marking a new era in the history of the company. What does it mean and why does it matter?

SUSE started its journey as the first company to successfully commercialize Linux distribution. Over years SUSE has evolved from just being a Linux company to offer a full stack of infrastructure and application delivery including software-defined storage, Supercomputer (HPC), OpenStack, Cloud Foundry, CaaSP (Container as a Service platform) and more.

Today SUSE helps a wide range of customers whether it be nuclear reactors, cancer research, smart city, space exploration traffic management or powering tiny IoT devices, to name a few use-cases.

As SUSE is increasing its focus on emerging technologies it does need freedom and investment to freely invest resources with a long term plan. That freedom could be capped if the company is just another unit of another bigger company.

SUSE needed its freedom.

SUSE has a very interesting history. It was acquired by Novell back in 2003, but Novell struggled to maintain a balance between its own proprietary products and SUSE’s open source products.

Then Novell was acquired by Attachmate in 2011 and SUSE gain a bit of independence. Attachmate set-up SUSE as an independent division within the company, severing it from Novell.

Through Attachmate SUSE also gained a leadership that very well understood open source business model. Nils Brauckmann, along with comrades like Michael Miller and Ronald de Jong, has been sailing SUSE into the open waters of emerging technologies.

But SUSE needed something bigger than Attachmate to grow even faster. Attachmate agreed to merge with Micro Focus in 2014. Under Micro Focus, SUSE brought the whole green leadership team with it and gained even more independence as a semi-autonomous business unit of Micro Focus. Brauckmann was promoted as the CEO of SUSE and got a seat on the board of directors.

Under Micro Focus, SUSE had the financial resources to spread its wings that were clipped for a very long time. The company took a flight and we saw a plethora of open source-based products whether it be software-defined storage or Cloud Foundry. That’s when the company made its first acquisition in a very long time. SUSE acquired a storage solution OpenAttic and assets of HPE.

But that was not enough. SUSE started to feel the itch for complete freedom. The company managed to find a new buyer, EQT. In July 2018, Micro Focus agreed to sell SUSE to EQT.

EQT is not yet another software company like Attachmate or Micro Focus, it’s a growth investor. According to Michael Miller, President of Strategy, Alliances, and Marketing at SUSE, EQT is a private equity growth investor that invests in growing businesses to help accelerate their successful growth and create a return on that investment later.

Unlike traditional private equity investors who acquire promising businesses to squeeze as much juice as they could very quickly, EQT is different.

Miller said that firms like EQT find successful growing businesses to inject additional support and investment faster and more successfully to generate a return on that investment. Such growth investors keep a time frame of 3-5 years to see an ROI in an acquired company. Which also means SUSE has over 3-5 years to grow exponentially under EQT.

“That’s why I call them a growth investor,” said Miller.

A new era for SUSE

What’s interesting about this development is that consolidation is happening in the market. Red Hat was acquired by IBM, GitHub was acquired by Microsoft, Heptio was acquired by VMware, Hortonworks and Cloudera merged…Canonical is also open to an acquisition. On the contrary, SUSE is moving in the opposite direction and becoming independent.

If we ignore the technicalities, SUSE has become the biggest Linux, infrastructure and application delivery vendor. SUSE registered over $320 million in revenues in 2017. Quite short of Red Hat’s ~$4 billion, but now Red Hat is an IBM company. And the 3rd Linux vendor Canonical made only $110 million in 2018.

SUSE is finally finding its feet and standing on its own with EQT. The company has already made some changes to its leadership. They now have a CFO (chief financial officer) in Enrica Angelone who comes from Octo Telematics. Thomas Di Giacomo, the CTO of the company has become president of Engineering, Product and Innovation.

This independence matters because SUSE needs to be able to make bet on emerging technologies, without its hands tied behind its back. What’s unique about SUSE is that it’s one of those few companies that are pure open source. There is no secret sauce in there.

“SUSE’s return to the role of an independent open source software company comes at a pivotal point in the industry. Open source software is the favored way to build new solutions today and is irreplaceable as the foundation for most public cloud services,” Al Gillen, group vice president, Software Development and Open Source, IDC, said, “As one of the industry’s largest purely open source software companies, SUSE’s independence will benefit customers as the company builds on its heritage of technical excellence, value-driven partnerships and community engagement to deliver timely technology solutions to the market.”

What it means is that SUSE is very well positioned for the fourth industrial revolution. Things are going to get excited again.