Formerly a typical blue-collar region, the Franconia area around Nuremberg is trying hard to transform itself into a hi-tech centre. Some 90,000 people now work in the approximately 2,000 IT companies located there. In addition to the presence of Novell, Lucent Technologies runs the largest Bell laboratory outside the United States in Franconia. The region is also home to the Fraunhofer Institute for Integrated Circuits (IIS), among the most successful institutions of its kind in Germany. The Fraunhofer IIS was the main developer of MP3, an advanced audio coding scheme used by music fans around the world.

The Linux computer operating system, which SuSE uses, is the best- known example of open-source software. Its kernel (the core of the system) is free, so programmers worldwide are able to improve on it and create additional software and system tools. Linus Torwald, a Finn, began working on what came to be known as Linux in the early 1990s. Since then thousands of programmers have helped develop it further.

Companies such as Novell and US-based IBM have seen lucrative business opportunities in open-source software, and sell numerous Linux-compatible products and services. By publishing the source codes, they hope for faster and more flexible expansion of their products.

SuSE's founders were three students and a programmer who wanted to get out of the «body-leasing business» - they were working as programmers for temporary employment agencies - and become their own bosses. «Back then, Linus was a marketing tool to make the company better known and help us get programming jobs,» says Holger Dyroff, now SuSE's vice-president in charge of product management. His brother was a SuSE cofounder, while he was «the first employee,» Dyroff says. «We've done nothing else since we started.» They distributed the computer operating system on diskettes at first; a single version required as many as 60 diskettes.

Management of the company became more hands-on in 1997, Dyroff says. SuSE subsequently accepted venture capital from Intel Capital, among others, but there has never been any discussion of seeking a listing on the stock exchange. «Our customers and the next product development were always more important to us than plans like this, which would have tied up a lot of resources,» he says.

Dyroff is pleased with how things have gone since Novell's 2004 takeover of SuSE. «With Novell, a whole range of opportunities have opened up for SuSE. We're now the market leader in servers in China. That wouldn't have been possible without Novell.» After buying SuSE, Novell did not relegate it to a mere national distributor - quite the contrary. «We've got two headquarters in Europe: London and Nuremberg,» Novell CEO Jack Messman says. As part of Novell's Open Source Business Unit, SuSE now carries out research and development not only in Nuremberg, but also in Bangalore in India, in China, in the Czech Republic and in the United States.

So far, Linux-based software platforms are used mainly on large company servers. They can also be increasing found in government offices, partly for cost reasons. SuSE plans to conquer the PC next, making Linux a real alternative to Microsoft's market-dominating Windows operating system. «Cost savings there are even greater than on servers,» Dyroff says. «Ninety per cent can be saved in licensing costs alone, without factoring in the costs of Windows security problems.»

Michael Nordschild, managing director of the Nuremberg Association for the ICT Sector, says: «Linux has long ceased to be a playground for tinkerers; it's a serious alternative on the commercial market.» Today the chief topic is «embedded Linux» - versions of Linux that manufacturers pre-install in devices like MP3 players and digital videocassette recorders.

According to Nordschild, Nuremberg was already a centre of industrial solutions in which embedded systems set the tone, primarily owing to Siemens' industrial, logistics and medical technology divisions. «Now another focal point of know-how is developing in Nuremberg's Linux Valley,» he says, adding that the next step in the process was the establishment of Nuremberg's Linux Business Campus. The facility, and its attractive surroundings, is meant to draw young companies and open-source specialists - as SuSE did Novell.

© dpa - German Press Agency

Click for the Finfacts Germany 2006 Page