"We have been talking with several local Linux software companies for possible co-operation, including acquisition," said Sen Ming Chang, Novell's vice-president worldwide and managing director for its East Asia operation.

He declined to give further details.

Novell is now the world's second-largest distributor of Linux, an operating system distributed over the Internet that is becoming an increasingly popular alternative to Microsoft's Windows.

"Although we have no timetable for acquisition," said Chang, "it's clear that we have to establish closer co-operation with local Linux companies to grow faster in the market."

The US-based company has been stepping up efforts to tap the fast-growing Asia-Pacific market, especially China. In 2005, it reached an agreement with the China Standard Software Company, a local Linux developer, to develop both Linux servers and Linux desktop offerings for the Chinese market.

Novell, now the leading player in China's Linux market, hopes to notch up 30 per cent growth this year in China, according to Chang.

The company has made headway in 2006 with its alliances with equipment suppliers such as US-based IBM and Dell.

The company is now working with IBM in Japan to implement its largest Linux projects.

In China, It is also talking with several Chinese computer makers to install its SUSE Linux operating system in the computer makers' factories.

This November, Novell and Microsoft reached a deal to develop technologies to make it easier for users to run both SUSE Linux and Microsoft Windows on their computers, which is expected to greatly help Novell outpace its competitors.

US-based Red Hat is currently the largest distributor of Linux and Silicon Valley-based Oracle also launched its own programme for Linux this October.

"The general user reaction is very positive," said Maarten Koster, Novell's newly appointed president of Asia-Pacific operations. "It gives customers a clear signal that they can move to a Linux environment with confidence."

Besides its alliances strategy, Novell is also focusing on growth markets such as China and India to grow faster than the marketplace.

"I expect the Asia-Pacific region to be a very strong growth engine in the coming years," said Koster, a former IBM veteran.

The company is considering moving its Asia-Pacific headquarters from Australia to Singapore to be closer to the market.

It will also shift some major R&D projects to China to lower costs and better satisfy market demand.

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