Leading Chinese Linux software maker RedFlag Software Co Ltd expects to achieve a 50 percent growth in sales revenues this year, pinning hopes on Asianux 2.0, a new product to be jointly launched in July with Japanese and Korean partners.

"We expect our sales revenues to increase by 50 percent," said Bai Ke, RedFlag's marketing supervisor. "Asianux 2.0 will be a great impetus."

The company's board has not approved this year's sales target, "but they will probably raise that figure," he added.

According to Bai, the company made a profit last year for the first time since its founding in 2000. The firm's sales revenue last year is believed will hit US$4 million.

RedFlag is a partner of Japanese developer Miracle Linux and major South Korean software company HannSoft.

The alliance aims to grab a market share of Asia's rapidly-growing Linux market, competing with world-leading developers including RedHat Linux and Novell.

Bai confirmed reports that the three companies will jointly launch Asianux 2.0 in July, two months ahead of schedule.

"Each company will sell the product in their own brand, and within their own country," said Bai. "So far we (the three companies) have no plans to tap other Asian markets."

Bai said the alliance is striving to build a renowned Linux brand, and possibly a Linux standard in Asia, which is yet to be dominated by a single software maker.

Currently RedHat and Novell dominant Linux brands in the North American and European markets, and have become the de-facto standards in their own regions.

"Asianux 2.0 will put pressure on the non-Asian players," he said.

As a local vendor, RedFlag can provide better services, which is vital to Linux developers, as they share similar technology behind the software, said Bai.

RedFlag commands about 40 percent of China's Linux market, and the remaining stake is almost all shared by domestic firms, he added.

However, RedFlag's foreign competitors do not feel threatened by the new product.

"The Asian companies' alliance is unlikely to grow into a third powerful force in Linux," said Lolley Luo, marketing and channel director of Novell China.

Novell is the world's No 1 Linux developer, thanks to its acquisitions of two Linux solution providers - Ximian Inc in August 2003 and SuSE Linux in January 2004.

Indeed, the absence of a major player makes the emergence of a regional brand possible, but "the alliance won't work well," he said.

Unless one of the companies plays a dominant role in the alliance, the three members will face direct competition when they expand into markets outside their own, although this is unlikely to happen soon, Luo said.

"And this is proven by the failure of UnitedLinux," he added.

UnitedLinux, formed in 2002 by four Linux vendors - Caldera, Conectiva, SuSE Linux and Turbo Linux - and committed to building a single, worldwide Linux standard, disbanded "as a result of such internal conflicts,"Luo said.

Moreover, world-leading IT product vendors do not often certify many Linux brands.

"But a single company brings a monopoly. Therefore two is enough, and now the consumers have Novell and RedHat," he said.

However, a number of IT hardware providers including IBM, Dell, Hewlett-Packard, Sun Microsystems and NEC have showed their support for Asianux and have agreed to certify the product.

Novell signed an agreement last Wednesday with leading Chinese IT solutions provider Neusoft Group on promoting Novell's professional Linux training programmes in China.

"Despite the fast-growing demand for Linux talent in China, employers still find it hard to find qualified Linux engineers," said Greg Embleton, vice-president of professional services and solutions at Novell Asia-Pacific.

"In 2005, we will continue to invest heavily in the Chinese market and remove enterprise barriers on Linux's deployment," he said.

Novell entered China last March. To date, it has set up a Chinese subsidiary, headquartered in Beijing, and an office in Shenzhen.

Meanwhile, Chen Shi, general manager of RedHat's Greater China Region, said: "we are glad to have counterparts in East Asia; they are not rivals."

The Linux industry is still in its infancy in China and RedHat has been stressing co-operation among developers to expand the market, he said.

RedHat set up a Chinese subsidiary last November to help tap the country's booming Linux market.

Commenting on RedHat, Luo said: "the company seems to have achieved little so far... but we have made breakthroughs in the government, banking and telecoms sectors."

Novell last year secured deals with leading Chinese telecoms equipment vendor Huawei Technologies on Linux solutions. RedHat and RedFlag were among its competitors.

Yet according to Cao Kaibin, an analyst at leading research firm CCW Research, RedHat is much more popular among Chinese Linux users.

"But that contributes little to their revenues since most Chinese download versions of Linux free from the Internet."

(China Daily January 19, 2005)