Novells Balancing Act

 
 
By Peter Galli  |  Posted 2006-03-27
 
 
 

As Novell prepares to release a slew of new products this summer, the company faces a number of challenges, particularly how to win customers of the Windows platform while also persuading its legacy NetWare users to migrate to Linux.

But there are also some bright spots in the Waltham, Mass., companys future—such as the release this summer of its SUSE Linux Enterprise 10 platform, the single code base on which the next versions of its SUSE Linux server and desktop are based.

In its ongoing battle with Microsoft, Novell plans to use those releases to convince businesses that switching to its products will be less difficult and expensive compared with the upgrades required for Microsofts Windows Vista, Office 2007 and Longhorn Server.

Jack Messman, Novells CEO and chairman, remains upbeat about the companys decision to try to migrate NetWare users to Linux and Novells OES (Open Enterprise Server) product, despite the fact that in the quarter to Jan. 31, 2006, compared with the same quarter in 2005, revenue from NetWare declined approximately 11 percent.

"This was a strategy to maintain our relationship with NetWare customers, and I still absolutely believe it was the right thing to do. Customers are moving across and will continue to do so over time. Even if our NetWare revenue continues to fall by 10 percent a year—and I am not expecting that to happen—it is still a very profitable part of our business and provides financing for the rest of the company," Messman told eWEEK in an interview at the annual BrainShare conference here.

Novell has committed to supporting NetWare 6.5 until at least 2015, Messman said. The company also has aggressively moved to show customers its commitment to OES, detailing plans for the next two versions of the product. Jason Williams, the product manager for OES, told eWEEK that the "Cypress" release is due out in the first half of 2007. Cypress will bring server virtualization—allowing customers to run NetWare in a virtualized environment on top of SUSE Linux Enterprise 10 and the latest hardware—as well as better integration with Active Directory and Novell eDirectory using Kerberos.

"Ponderosa," the release set to follow Cypress, will address a number of bigger-picture technologies, such as the file system and how people access data, as well as collaboration services. "This is Novell putting its stake in the ground and telling customers that we will be there for them," Williams said.

One such customer is Robert McInerney, the IS infrastructure manager at TRW Automotive in Livonia, Mich., which plans to move all its existing NetWare servers to OES on Linux over time. "Moving to Linux is the right thing to do. The most important thing for me is the services I can provide to my customers on top of that," he told eWEEK.

Novell also has seen demand for OES from an unexpected source: Windows NT users migrating to Linux. Holger Dyroff, Novells vice president of product management and marketing, said that when the company announced the OES product, officials thought only NetWare customers would use it when they migrated. "But, to our surprise, we have seen demand for [OES] from a lot of Windows NT users, who are employing it on Linux," Dyroff said.

"The good news for us is that Microsoft is forcing a conversion on its customers, telling them that they face a costly and disruptive rearchitecture when they upgrade to the next wave of its products. We will be aggressively comparing our product offering and value proposition against theirs, and ours will be most compelling," said Ron Hovsepian, Novells president and chief operating officer.

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Messman points to the new Open Workgroup Suite, which Novell announced at BrainShare. It is targeted at the SMB (small and midsize business) market and will be sold through the channel. The suite includes server and desktop components, e-mail, and collaboration and open-source desktop productivity applications. It is priced at $110 per device per user for a perpetual license and at $75 annually for software maintenance, and current NetWare, GroupWise and ZENworks customers can get the suite as an upgrade bundle for $150 per user per device, Messman said.

But Roger Levy, a Novell vice president and general manager for open platform solutions, said he does not expect non-Linux enterprises to commit to Novells Linux desktop overnight. "We expect them to first do pilots and then, over time, start moving across. But we are already seeing a lot of interest from local and foreign governments and some vertical sectors," Levy said.

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