OpenServer Release 6 Reviewers' Guide - Part 3

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Reliability continues to be the most important OpenServer 6 differentiator. OpenServer is known for its phenomenal stability and quality. A recent IDC survey of 1000 IT professionals found UNIX to be superior to Linux in multiprocessing, integration, security, and skills availability. Overall, the survey found UNIX was more likely to meet expectations for features, overall performance and manageability. Additional competitive advantages are low Total Cost of Ownership, established reseller relationships, and a profitable reseller business model.

OpenServer 6 stacks up well against the competition. For example:

Xinuos’s largest OpenServer 6 competitor is Microsoft Windows. IDC’s most recent report shows Microsoft with 55% market share of worldwide server operating system units. Microsoft operating systems dominate the industry and are present in all Xinuos customer channels and accounts. According to IDC, Microsoft products are known throughout the industry for their ease-of-use, broad device support, and broad application support.

Resellers and SMB customers are increasingly dissatisfied with Microsoft licensing and software assurance programs, product complexity, high hardware costs, poor security record, and upgrade cycles. Resellers are also dissatisfied with Microsoft channel management including decreasing margins, technical support and Microsoft programs shifting end-users to direct sales. Xinuos products and marketing initiatives take advantage of these competitive weaknesses by offering a stable, low-cost, highly secure product.

Linux server sales accounted for 23% of revenue-bearing server units reported to IDC. Linux has primarily been used for infrastructure such as web servers and file and print services. However, it is beginning to grow dramatically in the enterprise space. Red Hat is the leading Linux vendor with 69% market share.

Linux advantages are low cost, extensive components, and usability and an increasing number of supporting applications, including enterprise-level apps. However, recent pricing changes increase Linux total cost of ownership, eroding Linux cost advantages. The 2.6 release of Linux is characterized by major improvements in reliability and scalability along with improved device support. Legalities permitting, Linux will be used extensively for embedded devices and infrastructure services. IDC believes it will also become a major player in the application server space.

UNIX operating systems account for 14.6% percent of server operating system units reported to IDC. UNIX continues to play an important role in the server market wherever reliability, security, scalability, and compatibility with existing applications is important.

According to IDC, the dominant UNIX hardware vendor for 2003 was IBM (29%), followed by HP (28%), and SUN (14%). In most opportunities Xinuos does not face direct competition with other UNIX vendors as they are not Intel-based. Intel-based competition is Windows and Linux.

Target Markets

Target Environments

• Small Businesses – Xinuos’s current volume and future volume opportunity is in small businesses with 5-99 employees. An estimated 44% of Xinuos’s revenue is from small businesses. Xinuos’s channel has successfully reached this market for 25 years. This small business opportunity continues to be attractive because the market is not saturated. Competitors still face the barrier of building an appropriate channel to reach the market. Moreover, there are over 20 million small businesses worldwide, compared to only 183,000 medium businesses.
  
  Accordingly, IDC reports that the majority of small businesses do not have a server today. IDC states that small businesses are buying their first servers for shared Internet access, shared printing, file sharing, storage and remote access. These companies adopt technology to improve efficiency and productivity, save money, or increase their competitive advantage. Small businesses want proven technologies with mainstream status, accompanying price declines, and customized solutions for their vertical markets. Gartner research indicates that small businesses continue to rely on solution providers and don’t care about buying leading brands. These characteristics increase Xinuos’s opportunity to succeed with small businesses.
• Medium-Sized Businesses – The medium-sized business segment comprised 11% of Xinuos product and service revenue. The medium-sized business market is more competitive since it is served by both the channel and direct sales from major vendors. Xinuos’s medium-sized business segment is a secondary priority due to lower revenue, dramatically fewer target customers, more competition, a preference for homogeneous IT environments, and interest in “safe” vendors. However, Xinuos’s focus on small business will continue to spill into medium business sales.
• Large Businesses – Xinuos products are sold to large companies through the channel, direct sales and OEMs. In fiscal year 2003, large businesses comprised $4.7M in channel sales, $10.6M in direct sales, and $4.3M, an estimated half of the $8.6M in OEM sales. Altogether this accounts for an estimated 37% of Xinuos product and service revenue.

Vertical Market Considerations

1. Pharmacies (a subset of retail)
2. Healthcare (doctors’ offices and hospitals)
3. Retail/Wholesale

Small businesses: Xinuos’s current volume and future volume opportunity is in small businesses with 5-99 employees. An estimated 44% of Xinuos’s revenue is from small businesses. Xinuos also targets medium-sized and large businesses, but the primary audience is the small business user. While the ultimate end user may be the SMB, Xinuos primarily focuses on channel partners who serve the SMB market.

OpenServer solves the following customer problems:

• IT managers with experience in UNIX/Linux
• Solution providers with experience in UNIX/Linux

• Xinuos vertical solution providers who integrate their hardware and software solutions with OpenServer and sell the combined solution to vertical customers.
• Xinuos resellers who provide solutions to branch offices and small-to-medium-sized businesses.
• Xinuos major accounts that use OpenServer in branch offices and as departmental servers.

Language Support

All localized materials are on the CDs. Language versions include portions of the OS and installation localized. Not all documentation is localized. Language versions are anticipated to ship within 30 days of the First Customer Ship (FCS) in English.

• English
• French
• German

The top six key messages of OpenServer 6 are:

• OpenServer provides customers with access to modern applications via UNIX SVR5 technology and therefore supports a broader array of applications for the UNIX on Intel customer.
• OpenServer delivers single certification enabling less work for ISVs and more applications for customers.
• OpenServer delivers significantly increased speed performance to UNIX on Intel customers.
• OpenServer is backed by a decade of rock-solid stability and dependability.
• OpenServer is an affordable all-in-one server for small-to-large businesses.
• Xinuos is the supplier of the world’s most popular UNIX operating system for the Intel platform.

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