The virtualized Ubuntu release — complete with applications — initially targets IBM’s financial services and government customers. And it costs a scant $49.00 (US) per user for 1,000-user deployments. Prices fall further if customers buy in greater bulk.

Moves like this have got to drive the folks in Redmond crazy. The old per-seat PC Windows tax is on its death bed, folks.

• In the consumer market, low-cost Ubuntu Netbooks (from Dell and others) are putting the squeeze on Microsoft Windows margins.
• In the corporate market, thin clients from folks like Wyse and Novell are selling fast, and Novell’ year-over-year Linux sales are up more than 30 percent.
• And now again in the corporate market, IBM is changing the rules of the game by placing all the horsepower on servers that deliver virtualized Ubuntu to corporate deskops.

And it’s not just an attack on Windows. Remember, the $49.00 price point also includes Lotus Symphony productivity applications that compete with Microsoft Office.

Will all businesses switch to virtual and physical Linux desktops? Certainly not. But some will certainly give IBM’s pitch a try. Windows’ desktop market share recently fell below the 90% mark. This IBM move, with an assist from Canonical and Virtual Bridges, could inspire more vendors and customers to breakaway from Microsoft.

Are we looking at 85% market share for Microsoft Windows within three years? The VAR Guy sure thinks so. And even Red Hat, our resident blogger believes, must be starting to wonder if they should have found more aggressive ways to promote Linux desktops.

One caveat: The VAR Guy would love to know if IBM, Canonical and Virtual Bridges will allow solutions providers to offer this new, virtualized Ubuntu suite through the channel.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

First, some background: The VAR Guy typically doesn’t blog about financial results. He’s not a financial analyst. He doesn’t own NOVL stock. So why blog about Novell financials? Novell is one of the key companies that will make-or-break open source’s success in the IT channel. And the financial results provide important clues about potential channel directions.

Let’s end the babbling back-story and cut to the chase. Here are four key facts from Novell’s financials:

1. Top-line Revenue: Novell’s overall quarterly revenues were $245 million, flat compared to last year’s corresponding quarter but $5 million below Wall Street’s expectations, according to Reuters.

The VAR Guy’s Spin: Bummer. But our resident blogger isn’t so concerned about Novell’s top-line revenues. Rather, he’s preoccupied with SUSE Linux revenue growth.

2.  SUSE Linux Revenue: According to Novell’s press release, the company “reported $36 million of product revenue from Open Platform Solutions, of which $33 million was from Linux Platform Products, up 33% compared to the same period last year.”

The VAR Guy’s Spin: Mixed reaction. Thirty-three percent growth is impressive in a horrendous economy.

But consider this: Novell says it generated $120 million for the year from Linux Platform Products. That’s not much money within the overall IT industry, and it speaks to a broader industry problem: Open source companies are still struggling to monetize their code.

3.  Identity and Security Management: Here, Novell says revenue was $37 million, of which Identity and Access Management was $35 million, up 11% compared to the same period last year.

The VAR Guy’s Spin: This is the area where Novell and The VAR Guy don’t really see eye to eye. Novell has articulated how it wants to offer customers the most secure, reliable platforms from desktops to data centers.

But within that rhetoric, it’s still difficult to see how Novell’s SUSE Linux and security offerings fit together, enhance one another, or drive up-selling opportunities between each other.

When was the last time you heard about a SUSE Linux solution provider that also thrived with Novell’s indentity and security management solutions? The VAR Guy would like to see — and hear — far more about customers that are using SUSE Linux and Novell’s identity/security management offerings as a complete enterprise solution.

4. Partner Strategy: Novell in recent months has announced a new channel chief and also evangelized its growing ISV (independent software vendor) program. But the company’s financial release only mentioned “expanding partnerships” in passing.

The VAR Guy’s Spin: It’s still a bit too early for Novell to disclose how its new channel chief is performing. But over the next 2 quarters, it will be critical for Novell to describe ISV and channel partner progress in financial results.

The Bottom Line: The business that matters most to Novell’s future — SUSE Linux — continues to grow. And the Microsoft relationship, however controvercial in the open source community, has restored Novell’s credibility with quite a few CIOs, The VAR Guy believes.

In recent months, Novell has successfully articulated its strong relationships with SAP and Microsoft. But the company needs to build — and evangelize — similarly strong relationships with open source application leaders like MySQL, SugarCRM, and so on. Sure, Novell works with a range of open source ISVs. But that work needs to accelerate.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

Consider the following scenario.

Small Business CEO: “Our network is down.”

Small Business Manager’s response:

A) “I’ll call our network guy”
B) “I’ll call [insert VAR name]”
C) “I’ll call The VAR Guy”
D) “I’ll call our Trusted Advisor”

Answers A or B win. Answer C is illegal because The VAR Guy is now trademarked by Nine Lives Media Inc. (Sweet!) And answer D is laughable.

Fact is, The VAR Guy can’t think of a single small business owner who thinks of their VAR as a “trusted advisor.” Unfortunately, many resellers don’t even know that the term comes from the best selling book “Trusted Advisor” — which describes how you can build deep, lasting relationships with customers.

But in recent months, the book got lost in the shuffle. And the Trusted Advisor term has lost its meaning. The IT media hijacked the term to  make resellers feel more valuable.

Alas, everybody has jumped on the Trusted Advisor bandwagon, even the low-margin resellers who consider four-port consumer switches to be profit opportunities.

Other than this blog entry, you won’t catch The VAR Guy throwing around the term Trusted Advisor. Oh, unless he’s referring to the fantastic book on the topic.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

Nordwall previously helped to build SugarCRM into the leading open source applications provider. Now at Pentaho as senior VP of worldwide business development, Nordwall’s team is:

“responsible for working with strategic ISVs that embed Pentaho’s commercial open source technology within their application offerings, developing strategic technology partnerships, working with resellers, and further enabling Pentaho’s growing global network of Pentaho Certified Systems Integrators.”

Pentaho is among a growing number of open source companies leaping beyond development communities to recruit business-oriented VARs and solutions partners. The VAR Guy noted in July 2008 that the open source channel was learning how to walk.

Since that time, dozens of open source companies have participated in The VAR Guy’s Open Source 50 survey — which will ultimately identify the world’s top open source companies in the IT channel. (Shameless plug: Deadline for participation in the survey is Dec. 18.)

Ironically, many traditional closed-source BI software companies have largely ignored the IT channel. Generally speaking, the BI companies either sell direct or work with big integrators and Global 2000 consulting firms — largely overlooking VARs that service small and midsize companies. One exception is SAS Institute, which is now promoting partner programs and BI solutions for mid-market customers.

Job One At Pentaho

Meanwhile, Nordwall’s marching orders at Pentaho are crystal clear: He joined the company to build a network of BI channel partners.

That’s great for Pentaho, and it’s a solid endorsement of channel-centric open source efforts. But The VAR Guy wonders why Nordwall left SugarCRM, which is widely expected to be among the first open source companies to launch an IPO once the financial markets stabilize.

Our resident blogger has sent an email to Nordwall seeking more info about his career move. As soon as The VAR Guy hears from Nordwall, our resident blogger will post additional insights.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

The meetings:

• One-Thousand MSPs: A trusted source within Trend Micro says the company now has roughly 1,000 VARs offering Trend’s managed security services. Instead of going into hibernation mode during the recession, Trend Micro is gearing up for a 2009 partner summit in Florida. Surely, some events are worth canceling. But the decision by Trend Micro and Cisco Systems to move forward with their respective 2009 partner summits shows how vital the IT channel remains to technology sales.
• Fully Funded, And In Launch Mode: The VAR Guy met with a former Netscape executive who has launched a cloud-focused company. Sorry, but our resident blogger signed a non-disclosure agreement so he can’t offer specific details about the company. But he can say this: The start-up’s CEO is in hiring mode, seeking marketing experts who can promote the company’s cloud service, which will launch around spring of 2009.
• Nimsoft Still Growing: Nimsoft CEO Gary Read described how the company continues to attract managed service providers and corporate IT customers by disrupting the traditional network management (HP OpenView, CA Unicenter, IBM Tivoli, BMC) market. In fact, Nimsoft now offers a free Macintosh to the company’s top saleperson during designated sales periods. Where does The VAR Guy sign up for that gig?

Oops. Got to run. It’s time for another full day of meetings in Silicon Valley. Stay upbeat. Stay focused. And ignore all those doom-and-gloom folks who say you can’t build a business during a recession.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

As you may have heard, we avoid sales pitches and death by PowerPoint during our Webcasts. Instead, we make sure we’re covering your key questions. You’ll interact with two of North America’s most successful MSPs during the December 11 Webcast:

• Doug Ford, President, The I.T. Pros
• Al Gossett,  President and CEO, Digital-DNS, Inc.

You’ll learn how Ford and Gossett built their respective managed services practices. Business, marketing, sales and technical questions are welcome during the event. We’ll also explore why Ford and Gossett aligned with Dell Managed Services.

Full disclosure: The December 11 event is sponsored by Dell. Peter Klanian, senior manager, Channel Sales, Dell, has agreed to answer your questions about Dell Managed Services as well as the company’s partner strategy.

Register now to attend MSPmentor Live: CEO Exchange, scheduled for Dec. 11 at 2:00 p.m. eastern.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

First, the nitty-gritty details:

• The Cisco “Think Inside the Box” Developer Contest invites developers to write applications for the Cisco Application Extension Platform (AXP) platform on the Cisco Integrated Services Router (ISR). Cisco will award a first prize (US$50,000), second prize (US$30,000) and third prize (US$20,000) to the person or team of innovators for the most creative and compelling entries. You can find terms and conditions at www.cisco.com/go/thinkinside.
• The first phase involving proposal submission ends on Jan. 12, 2009, after which up to 10 finalists will be chosen to enter the second phase to develop applications on the Application Extension Platform. Winners will be announced in May 2009.

Sounds sweet. But what’s this really all about? Of course, The VAR Guy thinks he knows:

• Shifting the market from Windows to Network Applications: Cisco CEO John Chambers has clearly stated that he expects to compete far more fiercely with Microsoft and Google in the years ahead. The networking battles — between Cisco and Nortel, for instance — are old news. By recruiting Linux application developers to back AXP, Cisco hopes to disrupt the old Windows ISV market. The ultimate goal is to beat Microsoft in the Unified Communications market.
• Empowering VARs with Managed Application Services: Think of Cisco Integrated Service Routers (ISRs) as millions of dumb terminals. What if — with a little bit of magic — you could transform millions of dumb terminals into full-functioned PCs that run rich applications. Even better, what if those full-functioned PCs could be managed remotely? Sounds pretty compelling, right?

That’s exactly Cisco’s strategy in the router market. The Cisco ISR routers are like Trojan Horses scattered across the Web and corporate enterprises. Five million of those ISR routers are already deployed. If Cisco has its way, AXP technology will transform those routers into networked application platforms. Suddenly, routers — rather than servers and desktops — could become the most intelligent devices on the network.

Will Cisco succeed? Too soon to say. But The VAR Guy is watching.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

Matt Asay, over at The Open Road, offers a blow-by-blow account of the GroundWork vs. HP feud. It’s a fun read — and it highlights why Hewlett-Packard’s network management software team needs to rethink their entire business and channel strategy.

Whether it’s HP OpenView, Operations Manager or Network Node Manager, the company is under attack from simpler, lower-cost solutions.

GroundWork and Nimsoft both have scored multiple software victories over HP in recent months. And some HP OpenView partners have made the leap to GroundWork. Even worse, HP has completely overlooked opportunities in the managed services market — where Dell recently won a $20 million SaaS (software as a service) contract with the State of Georgia.

Of course, there’s no need to press the panic button at HP. Wall Street remains impressed with HP’s management. And HP continues to deliver generally solid results during a brutal economy.

Still, HP needs a clearer, far stronger response to open source and managed services platforms. Instead of complaining about GroundWork publishing HP price lists, HP should solve its pricing problem.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

Well-known in BI circles, SAS Institute says small and midsize businesses account for more than 20 percent of the company’s customer base. The VAR Guy tracked SAS Institute quite a bit in 2007 when Miles Mahoney was building and leading the company’s channel progream.

But when Mahoney left SAS, our resident blogger wondered if the company was really committed to small and midsize customers — and the channel partners who serve them.

Coming Into Focus

The VAR Guy went digging for answers, and found a rather reassuring fact: According to SAS’s searchable partner database, the company has more than 560 channel and technology partners.

Moreover, SAS Institute’s product portfolio includes SAS BI for Midsize Business — which targets companies with 500 or fewer employees or $500 million or less in revenue. SAS’s current SMB customers include ImpactRX, Catalina Marketing, Oxford Global Resources and International Planning and Research.

At Catalina Marketing, for instance, BI software allows the company to plan supermarket checkout coupon campaigns.

Still skeptical about BI in small business? This article highlights five things smaller businesses don’t know about BI.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

First, the good news for Novell: The company says more than 2,500 software applications are now certified on the latest versions of SUSE Linux Enterprise. The VAR Guy is impressed.

Also worth noting: Novell says an average of 140 new applications are certified on SUSE Linux every month. Again, our resident blogger is impressed. Backed by those ISV (independent software vendor) relationships, Novell intends to accelerate SUSE Linux’s momentum on corporate servers and even desktops. Yes, desktops. We’ll see how that effort is going when Novell announces quarterly financial results on December 4.

Take A Closer Look

Now, for the reality check. Novell’s carefully worded press release says:

“Based on publicly available information, SUSE Linux Enterprise 9 and 10 have the most certified software applications when compared to the latest releases of all other commercial Linux* distributions.”

Hmmm. Let’s dissect that sentence for a moment. Basically, Novell focusing the conversation on SUSE Linux Enterprise 9 and 10 vs. Red Hat’s latest release — Enterprise Linux 5.

Red Hat released Enterprise Linux 5 in March 2007. Sometime that same year, Red Hat surpassed 3,000 certified applications. At the time, Red Hat stated:

“The growth rate of applications in our catalog has been astonishingly rapid, from just a 100 or so applications in late 2002, we crossed the 1,000 barrier in 2004, and the 2,000 barrier in early 2006.”

So, how can Novell claim to be “leading” the ISV market with 2,500 certified applications when Red Hat Enterprise Linux had 3,000 certified applications in 2007? Perhaps Novell thinks many of Red Hat’s ISVs are certified for older Red Hat releases.

Quite A Battle

Regardless, The VAR Guy is enjoying Novell’s latest attempt to get under Red Hat’s skin. Novell attacked Red Hat in mid-November, with a new offer to help partners migrate customers from Red Hat Enterprise Linux to SUSE Linux.

Ultimately, partners and customers are the big winners in this apparent showdown between Novell and Red Hat. Competition will surely drive innovation and cost-effective solutions.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.