Turbolinux and Linuxcare in merger talks

Linux-based systems supplier Turbolinux is in talks to acquire services company Linuxcare and an announcement is expected within the next two weeks.

A spokesman for Linuxcare confirmed that the two companies have been locked in discussions for about a month and are preparing a letter of intent.

He said: "Turbolinux is a product company with a strong focus on the high end Linux market and Linuxcare is a services company that supports multiple distributors. It's a good match with little overlaps in business."

Turbolinux, which recently signed a deal with IBM to resell Big Blue's software, distributes the open source operating system with its clustering tools and is mostly active in Asia Pacific. Linuxcare provides services and technical support for different versions of Linux on a wide range of hardware platforms. Linux versions supported include those from Turbolinux, Red Hat, SuSE and Caldera.

Although a merger would give Turbolinux a services arm, some analysts question the value of the move because neither vendors provide enough unique strengths in the Linux market that would make the combined force a stronger competitor.

Stacey Quandt, an analyst at Giga Information Group, said: "It is hard to see the real value of a combination of the two companies. Turbolinux does not have the technical expertise of SuSE or Red Hat, and OEMs [original equipment manufacturers] are not rushing to support Turbolinux's clustering product."

Also, Linuxcare is still trying to prove that customers should pay for technical support as opposed to obtaining service and support from Linux-based hardware platform suppliers or Linux distributions, she added.

Separately, embedded Linux developer, Lineo has scrapped plans to launch an initial public offering in the US citing the depressed market conditions for company flotations.