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To Market, To Market

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One of my ongoing concerns about Linux and open source is figuring out how to get it to the people who can benefit the most from it.

There's some disagreement in the community on just who that target audience is. The big commercial vendors like to hit the "low-hanging fruit": the few but massive enterprise players in the world who stand to gain from Linux use and--let's face it--generate the most revenue dollars. On the other end of the spectrum, there's the call for the ubiquitous "Desktop"--the be-all, end-all interface that everyone, including our grandmothers, can use instead of the hated Windows products.

Somehow, one would think, there should be a compromise between these two extremes.
For a long time, my position on the best target market for Linux and Open Source growth has been somewhere in that middle-place. Small to medium-sized businesses (SMBs), I believe, stand to gain the most from a solid Linux-based stack of apps. Unlike enterprises, IT costs for licenses are a big part of their budgets, so they could use a break on the expense. And, unlike consumer users, they don't need every gimmick and gimcrack application to support every single device or esoteric need.

SMBs need something streamlined, fast, powerful, and inexpensive to get the job done. Sounds like open source software to me.

While this stance is nothing new, nor is the one big obstacle facing those who want to market and deliver to the SMB space: there's a whole lot of SMBs out there, and no really clear sales channel to them. Microsoft, and vendor who write Windows-compatible software, don't have this problem. Their customers have been buying pre-loaded Windows PC for years, and base all their software purchasing decisions based on one big requirement: does it run on Windows? That channel is a gold mine for the proprietary vendors, and until more OEMs start pre-loading Linux, it's a lock for the Windows team.

I have lamented about this before, and fretted openly how any open source provider would be able to get their wares to the sheer number of SMBs in the world.

I should not have worried.

On Friday, Open-Xchange, the Tarrytown NY-based mail and collaboration server company that once upon a time was spun off from SuSE Linux GmbH, announced an integrated solution between Open-Xchange Hosting Edition (OXHE) and the Parallels Automation Tools to create a virtual version of OXHE than can be managed by the Parallels toolset.

At first, this just sounds like another virtual appliance announcement, Which is, on the one hand, kind of cool, but on the other hand, sort of old hat. But I had a chance to speak with Jürgen Geck, Open-Xchange's Chief Technology Officer, and I learned that this new collaboration is a big step towards accessing Open-Xchange's sweet spot: the aforementioned SMB market.

Geck explained that a virtualized OXHE makes it much easier for internet hosting providers to set up hundreds, if not thousands, of separate instances of OXHE, which could give a hosting provider the ability to manage hundreds of thousands up to millions of virtual domains. These domains are perfect for the provider's customers, like SMBs, to use as mail and collaboration services for their company.

Of course, this is something Google already does with Gmail, so what's the big draw for SMBs? Geck told me that using Google is easy to do, but ultimately it comes down to where a customer's data is being stored. Use Gmail, and your mail data is at Google. Use OXHE, and your data is held at the host provider--with one important difference. If the customer ever decides to switch providers to another host that uses OXHE, they can, easily. If they want to handle the data themselves, they can get a local Open-Xchange Server running and pull their data back inside.

Geck believes that such locally-hosted mail/collaboration services will soon become the rule rather than the exception. Big, massive installs of groupware (Groupwise, Domino, or Exchange) tend to run counter to what businesses need, in his opinion. Smaller, more modular instances of groupware, hosted or local, can provide department level support and control and help keep data current.

Strengthening the Hosting Edition with this virtualized toolset makes it a lot easier for an Open-Xchange customer, such as hosting provider 1&1, get a lot more power and efficiency for customers using their underutilized data center processors. Going hosted also gives Open-Xchange a clear shot to the big and diverse SMB market.

How big? Geck related a recent search of German business figures for an investor presentation he had to do. He discovered that there are about 3.9 million registered businesses in Germany. Of those, 3.3 million are categorized as SMBs. All potential secondary customers for Open-Xchange.

And, as if to prove this point, I just read over the wire another Open-Xchange announcement:

Open-Xchange, Inc... and Network Solutions, LLC... have partnered to deliver a hosted email service to small and medium sized businesses. In the near future, Network Solutions will offer Open-Xchange's advanced web-based personal information management client as an option to their customers. Based on Open-Xchange's award-winning Smart Collaboration technology, the agreement will provide Network Solutions’ customers with highly integrated and feature-rich email, calendaring, contact and task management, through an easy to use interface

So, the push for more host providers has begun, and we should look to see a lot more of this hosted/Software as a Service-type solution being delivered to customers in the foreseeable future. After all, if you can get to market directly, let someone else with the market ties make the sale for you.

Makes sense to me.

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