SUSE Linux is growth engine for Novell

Linux is alive and well at Novell Inc.

In its year-end fiscal report yesterday, the Waltham, Mass.-based company reported that open source products, primarily Linux, rose $34.8 million or 37% to $128.8 million in 2008. Fourth-quarter open source revenues rose just a whisker less or 36.1% to $35.7 million.

The increases far outstripped Novell’s other three product divisions, which are identity and security management, systems and resource management, and its workgroup division.

For the 2008 fiscal year, Novell’s total revenues were $957 million, compared with $932 million in 2007, and its net annual loss was $9 million in 2008, compared with a net loss of $44 million the previous year.

Thanks to aggressive pricing and key partnerships with companies such as Microsoft and SAP, the company’s Linux growth rates far exceeded the 22% increase in the overall Linux market, said Novell CEO Ron Hovsepian. SUSE Linux Enterprise, which grew its market share an additional 3% in 2007, added 3,000 new Linux customers this year, including many large enterprises, he said.

Hovsepian added that Microsoft has sold $195 million of the $240 million in SUSE Linux certificates it bought as part of the 2006 pact between the two companies and has purchased an additional $25 million so far this year, Hovsepian said. In 2008, Novell also has increased its independent software vendor agreements significantly, he added.

Discussing the company as a whole, Hovsepian said Novell has made great progress over the past two years, achieved all its milestones for 2008 and, in turn, stabilized and strengthened the company. While acknowledging that the current uncertain economic climate doesn’t lend to detailed forecasts, Hovsepian said Novell will continue to strive for operational improvement and long-term profitability.