During the Autotask Community Live conference — which attracted roughly 300 managed service providers — Ubuntu Server Edition made a surprise appearance and a surprise encore. Twice during the event, managed service providers (MSPs) told me how they were building their businesses on top of Ubuntu Server Edition. The two prime examples involve Rezitech and Network Depot. Here’s the scoop.
Rezitech CEO Travis Austin told me how Ubuntu sits at the foundation of his data center. Atop Ubuntu run virtualized Windows services such as Kaseya, Active Directory. Austin also described how he’s running VoIP atop his Ubuntu-driven network. I was floored. In his spare time, Austin writes widgets and other software for Autotask Community — an online destination for Autotask’s customers.
Meanwhile, Network Depot, the company behind the Virtual Administrator MSP suite, embraced Ubuntu Server Edition for its NAS (network attached storage) platform, according to Rich Forsen, president of Network Depot.
Forsen says Network Depot will use Ubuntu in conjunction with Kaseya BUDR services as a centralized, low cost, easy to manage NAS device with Webmin and Samba enabled. The platform will be based upon the Shuttle K45 platform allowing Network Depot to create a 1TB Gb Ethernet NAS solution (the shuttle provides space for up to two drives) for an anticipated cost of under $350. Network Depot chose Ubuntu based on cost and ease of integration.
Reality Check
I am not suggesting that Linux or open source will take over the IT channel or the managed services industry. However, customers are opening their minds to Windows desktop alternatives. During a panel discussion at the Autotask conference, N-able VP of of business development Derik Belair estimated that 10 percent of customer desktops run Mac OS X or Linux.
Ubuntu Linux first caught my serious attention when Dell announced plans to preload selected desktop PCs with Ubuntu in mid-2007. That factoid provided the early inspiration for WorksWithU, MSPmentor’s sister site focused on Ubuntu for business.
During the Autotask conference we didn’t go looking for Ubuntu news. But it definitely found us.
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So out of all the companies making use of Ubuntu server.. how many of those companies are paying support contracts to Canonical as a way to sustain ongoing Ubuntu developments? If companies are adopting Ubuntu server but not paying Canonical for services can Ubuntu server be sustained as a product offering?
Canonical maybe able to rationalize a strategy of positioning the linux Desktop as a loss leader to build Ubuntu brand value and to drive Ubuntu server adoption without it being a revenue stream strong enough to fund ongoing development.
But at some point Canonical has to actually start making money and be self-sufficient. Offering free technical support to people like Wikimedia and to the French Police to help make deployments happen doesn’t help build a service revenue stream..just deployment numbers. If you continually give away your value-added support services..you are de-valuing those services and making it harder for yourself to sell them later.
Wasn’t the server market suppose to be a money maker for Canonical? Is that happening? Who’s buying support contracts for server deployments? Are IT services companies like Network Depot paying for support are are they relying on their own in-house expertise and then billing customers for that in-house expertise instead of passing a portion of those charges back to Canonical? Are companies like RightScale doing the same thing in the cloud? Leveraging, Canonical’s no acquisition cost for Ubuntu to build an acquisition cost based business without putting money back into Canonical to sustain Ubuntu moving forward?
At this moment, out of all the companies and institutions listed in workwithU’s growing database of Ubuntu deployments, how many are willing to go on record as paying for support services from Canonical with details concerning the proportion of the deployment covered by support contracts? If not support services, are they paying for landscape in significant numbers?
Ubuntu isn’t Debian. Ubuntu is not structured as a completely decentralized network of peer support who maintain critical infrastructure to sustain the project. The path of Ubuntu sustainability depends by design on the sustainability of Canonical as a for-profit entity whose centralized management services can not be replicated by the Ubuntu user community.
Are the companies who are deploying Ubuntu as critical to lower the cost of their own service offerings to customers aware that the future of Ubuntu rises and falls with the future of Canonical? Are they doing their part as for-profit businesses to materially support Canonical in order to make sure Ubuntu as a solid future?
-jef
Rezitech CEO Quoted on MSPmentor.net and worksWithU.com…
Travis recently met up with industry media mogul Joe Panettieri at the Autotask Community Live 2009 event. Joe was impressed with Rezitech’s use of open source technology to provide a rock-solid backbone to Rezitech’s enterprise customers.
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Jet: you are asking the hard questions and I respect that. I am mobile right now but online tonight with extended reply.
Joe,
Believe it or not I want Ubuntu to be sustainable. Competition in the market is good and Novell isn’t really shaping up to be the sort of competition to Red Hat that I’d like to see. A corporate backer behind Ubuntu server is going to be the next competitor of merit. The question is..is it going to be Canonical?
At some point building brand value has to turn into dollars. The question is which service based companies is getting the dollars from that brand value that Canonical and the Ubuntu community have built together. Is it Canonical? Or is it the services companies who are building business models downstream of Canonical? And if it is those downstream companies who are building profitable service businesses, do they have the necessary access to Ubuntu infrastructure to take a driving role in where Ubuntu is going? If corporate entities are going to be the ones who can drive re-investment long term into the Ubuntu community are the right companies..the successful companies.. who are making a profitable business on top of Ubuntu in a position to do exactly that?
-jef
Jef: We’re on the same page in many areas. Canonical DOES need to be a sustainable business. And I believe the fastest path to revenue/profits involves Ubuntu Server Edition. Red Hat and Novell have proven that businesses are willing to pay for server software support.
It is going to take time (years) for Canonical to succeed on the server. 9.04 and 9.10, with the cloud focus, should help. And I suspect we’ll see Dell and IBM make Ubuntu server moves within 12 months. Just a solid hunch.
Last I heard, Canonical’s annual revenues were approaching $30 million. That’s impressive, assuming it’s true. But it doesn’t answer your key question: How and when will Canonical become profitable?
We will keep those questions in mind as we cover Canonical and the Ubuntu industry. Sorry I don’t have more time to write but I’m traveling on business. I will be sure to stay in touch and thank you for reading WorksWithU.
Keep asking the hard questions. We respect you for posting them.
-jp
Editorial Director
WorksWithU
Joe,
the key question is how is Canonical going to compete with downstream services companies who are taking Ubuntu server and building exactly the value added services in the same area Canonical thinks it can build a services business on..before Canonical actually gets an offering in the space. Canonical has made a calculated move to not tie brand value strongly with their own revenue streams making it very easy for downstream companies to advertise their own Ubuntu support services putting downward pressure on Canonical’s own branded services.
Have you looked at RightScale’s cloud service offerings..they aren’t exactly cheap..but clearly there is value there and customers are willing to pay for that value. Is RightScale moving some of that revenue back up to Canonical in a partnership arrangement or are they doing the same thing they did with CentOS and leveraging Ubuntu as a commodity component in their own services offering without a revenue sharing arrangement? Is Canonical going to do a better job than RightScale in leveraging Ubuntu brand value in the cloud services when Canonical gets around to unveiling a cloud services revenue model?
And just as importantly is Ubuntu structured to make it possible for a business like RightScale to compete with Canonical for technical leadership of Ubuntu and set the direction for the Ubuntu community? If Ubuntu is setup to really encourage and support downstream business entities to leverage the Ubuntu brand this directly, shouldn’t the project itself be structured so those very same companies are encouraged to drive Ubuntu forward?
I’m sure customers are paying money for value add services for Ubuntu…the real question is…who are those customers paying and what are they paying for exactly? We know Dell retail customers aren’t interested in Canonical support contracts for the desktops and laptops. Next time your in a technical audience do a little experiment. See how many people bought Ubuntu pre-installed Dells, then see how many of those people have active ongoing support subscriptions with Canonical.
Now maybe Canonical’s upcoming Ubuntu One services will garner some income directly from Ubuntu users. But there’s a lot of competition in that space from existing web services providers so it’s not a slamdunk there either.
How much of Canonical’s “approaching 30 million” revenue is customer support? Either through end-user services or landscape versus revenue from OEM servicing support for customized netbook development? And hard numbers in anywhere that you’ve seen concerning landscape adoption? I find it very interesting that the launchpad adoption numbers are made quite public…but landscape adoption numbers..completely hidden. You’ve got the pulse of large scale server deployments right? Are there any testimonials that you know of right now..from paying landscape customers? Not gratis users who have been gifted support by Canonical..people paying for landscape services specifically. I’ve been looking for them. I can’t find them. If you can find them…please, do an article series.
If its mostly revenue from the netbook goldrush and not subscription services..that’s going to be a big concern moving forward as the netbook OEM space is only going to get more competitive especially if Google is circling the space and talking up OEMs about Android based devices. All the other linux vendors in the space have come out with a splashtop like offering to sell to OEMs. Both Xandros and Linpus have been talking about their splashtop competitors. Canonical doesn’t seem to be in that foot race at all..which is very interesting. Doubly so if netbook development services makes up a significant amount of their current revenue breakdown. But we just don’t know.
-jef