Top Line: October 8, 2001

Memo from Novell to Microsoft: The hatchet is no longer buried.

Novell Launches Full-Court Press

Memo from Novell to Microsoft: The hatchet is no longer buried.

In the mid-1990s, former Novell CEO Robert Frankenberg and his successor, Eric Schmidt, worked overtime to bolster relations with Microsoft. But with new CEO Jack Messman now running Novell, the polite rhetoric from Utah is ending.

Instead of turning the other cheek to Microsofts product and marketing claims, Novell has filed suit against the software giant, alleging that Microsoft has made misleading statements about Novell NetWare.

Microsoft stirred Novells rage when the software giant allegedly sent false and misleading marketing materials to Novells customers.

The materials allegedly informed Novell customers that the vendor is poised to abandon NetWare in favor of a services push.

Now, Novell wants Microsoft to pick up the tab for corrective advertising. The networking vendor also is seeking unspecified financial damages.

"Microsoft has tried to create ... fear and uncertainty within Novells customer base and to discourage future customers from doing business with Novell," says Stewart Nelson, Novells executive VP and COO.

As of press time, Microsoft declined to comment about the lawsuit.

Merger Talk Turns Ugly Microsoft and Novell have a history of bad blood. The feud began in the early 1990s, after former Novell CEO Ray Noorda and Bill Gates met at least once to discuss a potential merger.

When the discussions broke down, Noorda alleged that Gates was merely pumping him for information about Novells networking strategy and future plans for DR-DOS development.

Soon after, Noorda tried—and failed—to stop Microsoft from bundling networking code with Windows 3.x.

Noorda also worked behind the scenes to build portions of the antitrust case against Microsoft.

Dance with the Elephant Noordas successors—first Frankenberg, then Schmidt—tried to smooth relations with Microsoft in the mid-to-late 1990s. But, their respective efforts occasionally backfired.

In the late 1990s, Microsoft briefly refused to support customers that deployed Novells NDS for Windows NT.

Microsoft alleged that the Novell directory service made changes to NTs code and may cause NT to malfunction.

Irate customers and critical press coverage ultimately forced Micro- soft to reverse its position on the Novell directory.

Novell never made much money from NDS for NT, and NetWare sales have slowed dramatically in recent years. But to Messmans credit, Novell is back on the offensive.

CRM Taken To Task

Let the backlash begin. After receiving mounds of favorable press, CRM vendors face a new foe: market research that suggests many customers arent satisfied with their CRM software deployments.

In one new study, involving 2,200 users, CRM software scored 63.13 on a Customer Satisfaction Index. That score is anywhere from 5 percent to 20 percent lower than the average score for a typical software solution.

The study was sponsored by Dick Lee, principal of High-Yield Marketing; and Bob Thompson, president of Front Line Solutions and founder of

To see how survey respondents ranked individual CRM software vendors, visit www.crmguru. com/crmstudy.

Nortel Cries Uncle

The rumors were true. As Smart Partner anticipated, Nortel Networks has sold its Clarify business for pennies on the dollar and effectively abandoned the CRM software market (SP, Sept. 10, p. 11, www.

Nortel had hoped to sell Clarify for $400 million, but ultimately unloaded the company for $200 million in cash to Amdocs, a small software provider.

Nortel acquired Clarify in 1999 for $2.1 billion in stock. The networking giant had hoped to leapfrog Siebel Systems and PeopleSoft in the CRM market, but those grand plans collapsed when the networking market imploded.

Compaq, HP Press Onward

After issuing a major Q3 earnings warning on Oct. 1, Compaq Computer says it remains committed to its proposed merger with Hewlett-Packard.

Compaq CEO Michael Capellas says Q3 sales could be as much as $1 billion below expectations. The company also expects to report a $100 million loss for the period, excluding a $500 million charge related to bad investments (most notably, CMGI).

Compaq blamed the sales shortfall on the Sept. 11 terrorist attacks and weakening worldwide demand for PCs.

Meanwhile, several media reports say most World Trade Center tenants turned to Dell Computer for emergency PC and server shipments because of Dells strong reputation as a build-to-order manufacturer. Still, most analysts expect Dell to report soft Q3 results on Nov. 15.

Suns Partner Universe

Sun Microsystems has launched a new partner initiative, known as the Channel to Developer Access Program.

Sun says the new partner program allows Sun iForce System Providers to more easily partner with commercial software developers.

Sun hopes that the program will spur sales of its servers, particularly the Sun Blade 1000, Sun Fire 280R and Cobalt products.

The program offers hardware and software discounts, technical support and co-marketing funds to Suns development partners.

For more information, see

Buy, Sell Or Fold?

Two solutions providers, Motient Corp. and Rare Medium, have scrapped plans to merge.

Motient recently cut 25 percent of its staff and hopes to achieve "break-even operating cash flow by mid-2002," which is another way of saying that net income will remain in the red for quite some time.

Meanwhile, job cuts continue elsewhere. American Management Systems (see "Contract Watch," p. 20), eXcelon (see "Quick Fix," p. 24), iXL and SBI all are trimming staff and/or closing regional offices.

Even security consulting firms are under pressure. Fiderus, which launched in May 2000, recently decided to transfer the entire company—a total of 27 employees—to EDS Corp.

Fiderus founders now run EDS Global Security and Privacy Services business. They previously held similar positions at IBM Global Services.

Blue X-Mas?

A spokesman confirms that IBM Global Services has cut about 1,000 positions this year, but he dismisses reports that the figure is closer to 10,000 positions.

Still, the spokesman hints that IBM is taking a close look at staffing requirements through the end of the year.

IBM Global Services has roughly 150,000 employees.

Kiss and Make Up

Microsoft and the Department of Justice have until Oct. 12 to reach a negotiated settlement in the antitrust case, otherwise U.S. District Judge Colleen Kollar-Kotelly will appoint an external mediator to assist the negotiations.

The judge ordered the parties to engage in settlement talks 24 hours a day, seven days a week.

In the past, Microsoft and the government have indicated they would not want a mediator appointed.


Toss in a Metro Card

Epana Networks Inc. has launched a Business Partner Program, headed by John Lepore.

Epanas networking service ties legacy T1 and T3 lines to metro-area Ethernet loops.

Epanas goal is to enable the delivery of next-generation services, such as Voice-over-IP communications.

The company currently offers service in New York, and plans to push into nine more metropolitan areas by 2002.

Lepore, Epanas new business partner manager, previously served as director of sales for Winstars Business Partner Channel Program.

For more information about the Epana partner program, send e-mail to [email protected]

Symbols Grand Plan

Symbol Technologies is planning a major partner event, to be held at the Las Vegas MGM Grand Hotel in early January.

The event will showcase Symbols line of mobile, wireless and bar-code scanning solutions.

Only official Symbol partners—including integrators, vertical-market software developers and distributors—are expected to attend the conference.

Separately, Symbol is rolling out a new portal to better serve its sales team and channel partners.

EDS will design and deploy the Web site.

Symbol says the new portal will give channel partners "self-service" connectivity to Symbol.

Falling for Tumbleweed?

Tumbleweed Communications is a small security vendor with big plans.

The Redwood City, Calif., company has unveiled a new product line, known as Secure Guardian, and is seeking partners that serve specific vertical markets like financial services, health care, legal and government.

Secure Guardian includes a policy gateway that evaluates content as it attempts to move between servers and across extranets. The software allows organizations to disseminate content securely, and confirms the identity of the contents sender and receiver.

Tumbleweed has roughly 20 partners, including Kraft Kennedy and Lesser (KKL), an integrator that targets the legal market. KKL was ranked No. 92 in our most recent Smart 100 Companies issue.

"Less than 20 percent of our revenue comes from partners today," concedes Geoff Galat, Tumbleweeds VP of corporate marketing. "Our goal is to generate 40 or 50 percent of our revenue through partners."


Dont Bid Farewell and eBay are locked in a legal battle over a key employee.

Amazon last month filed a complaint in the U.S. District Court to prevent company veteran Christopher Zyda from joining eBay.

The online auction firm says Zyda has accepted a position as its VP in charge of financial planning and analysis and investor relations.

Amazon claims that Zyda is "uniquely familiar" with the companys confidential financial data and business strategy.

Zyda could not be reached for comment. Amazon did not return calls for comment.

U.S. District Court Judge Barbara Rothstein has issued a temporary restraining order that prevents Zyda from working for eBay until the suit is discussed at an Oct. 9 hearing.

—Interactive Week

Center of Attention

J.D. Edwards and Sun Microsystems have opened a Competency Center in Denver to help customers and partners test supply chain applications and related technologies.

The center also will serve as a test bed for systems integrators.