Tarantella looks to the future

Caldera' s acquisition of The Santa Cruz Operation (SCO) in May 2001 allowed the operating system vendor's Tarantella division to...

Caldera' s acquisition of The Santa Cruz Operation (SCO) in May 2001 allowed the operating system vendor's Tarantella division to go it alone.

But as SCO devotees prepare to flock to Santa Cruz for the inaugural Caldera Forum, many delegates will be pondering Tarantella's future as a separate company.

Tarantella was created as an SCO product just over four years ago and is currently finding its feet as a company in its own right. The company has kept a low profile since the acquisition but has been busy expanding its operations and customer base, leading it to believe that it can grow to be larger than SCO.

While SCO targeted the small and medium-sized enterprise (SME) market, Tarantella pitched at the enterprise sector. Under the Tarantella brand, the company provides Web enabling and management software for Unix and Linux installations. The software acts as intelligent middleware designed to connect end-user terminals, thin clients and PCs to back-end servers for the enterprise space.

With 200 staff, Tarantella has some way to go to mirror the size of its former parent's 1,000-strong workforce. SCO was at its financial peak in 1999, when it returned financial figures showing revenue of $223.6m (£155m), although Tarantella does not expect to return profits for the next 18 months.

Geoff Seabrook, Tarantella's senior vice-president of corporate development, said: "I think this is going to be a company at least as big as SCO, maybe bigger. We have the cash, so we are investing our own money in building the infrastructure to enable us to reach those sorts of levels. We're going for high growth."

Giving an indication of the lofty ambitions for Tarantella, Seabrook said he was not satisfied with the company's current 100% year-on-year growth rate. "We're going to continue growing, but I expect it to be at a much higher rate than 100%," he said.

In order to realise the plans, however, the company will first have to overcome competition from more established players in the sector. Cisco and Microsoft both offer similar solutions, but Seabrook points out that these offerings are pitched at the NT and Windows 2000 markets, while Tarantella is targeting the high-end enterprise arena.

While Tarantella has money in the bank as a result of the acquisition, the fact that it is unlikely to make a profit for the foreseeable future does not worry Seabrook, who is confident that sufficient funds are available to keep the company solvent until profitability is reached.

As with all IT companies in the present economic climate, Tarantella has been adversely affected by customer cutbacks. While the company is still growing, its share price is at an all-time low of around 75 cents.

Growing numbers
With its focus on large enterprise customers, Tarantella has seen a definite tightening of belts, in spite of a customer list that is fast approaching 1,000.

Seabrook argues that the important element when examining Tarantella's customer base is the type of customer that the company attracts. It has managed to successfully carve a niche in the financial services and telecom markets, with customers including Bank America, Prudential, Deutsche Bank, Deutsche Telecom and Telefonica.

Andy Hall, Tarantella's director of product marketing, said the company had targeted 500 companies to add to its customer base. Of those, he said between 50 and 100 were currently evaluating the latest version of the company's most recent offering, Tarantella Enterprise 3, version 3.11.

Into the channel
When Caldera and SCO announced their marriage last year, there was much speculation as to why Tarantella was left behind. According to Seabrook and Hall, however, there was only one reason. "We were two companies in terms of what we did," said Seabrook. "One was channel-based, focused on SMEs or departmental, and the other was a full enterprise software company. We knew as a management team that we couldn't do both."

The majority of contacts today are secured by Tarantella's direct sales force, which is responsible for generating approximately 80% of the company's revenues, with the channel responsible for the remaining 20%.

"When you have a new product, a new concept, you have to go out and sell it yourself," Seabrook explained. "Over the next year I'd like to see that figure shift to 60/40, or even 50/50. Eventually I'd like it to be 20 direct, 80 channel."

The split from SCO has certainly proved beneficial for Tarantella in the partner stakes, with former rival Sun Microsystems operating as one of its most significant partners.

"Our best partner is Sun," Seabrook said. "A high percentage of Tarantella is now going out on Solaris on Sparc. That's a relationship that's really blossomed since the transition has happened, because Sun was always considered a SCO competitor."

Looking ahead
With its 200 head-count, Tarantella has a way to go before it is regarded as a serious enterprise player. The focus over the next six months will be on growth and the signing of new customers. Towards the end of the year the company will introduce a new version of its product, which will contain a Web server authentication component.

Hall says the company wants to be seen as an essential component of the enterprise portal. Hopefully it will have more success than the ASP version of Tarantella which was muted for release this year. According to Hall, it was scrapped due to lack of interest.

So, aside from the occasional round of golf and mutual product support, Tarantella has little to do with Caldera. The odd Tarantella executive may be found mingling at the innagural Caldera Forum in California next week, but it's likely to be viewed as an opportunity to catch up with some old friends, rather than a business-building exercise.

Read more on IT for small and medium-sized enterprises (SME)