Novell Inc.s management team is focusing on driving the companys future direction in three primary areas: expanding its solutions focus, adopting open standards across all of its solutions, and adding value to any infrastructure.
“What differentiates us from our competitors is that we offer customers a real choice,” CEO Jack Messman told eWEEK in an interview on Monday. “Weve always been interoperable and have offered them a number of choices as to where the services we have can run. We are now also adding Linux to those.
“While Microsofts products are often described as just good enough, while we have the best operating system we have fallen short on the marketing front. We are now changing this by focusing on the customer, listening to what they have to say and working backwards from there,” Messman said.
But this transformation will not be easy and comes at a significant financial cost to the company at a time when customers are scaling back on their use of consultants and their buying needs.
Over the past 18 to 24 months, Novells consultancy business has fallen between 50 percent and 60 percent as billing rates nosedived.
“Services … have been hurt the most as many IT departments have decided this is something they can postpone. But, ultimately, this will come back as customers need this type of help,” Messman said.
While Novell is financially strong and has a solid balance sheet, it could have cut its expenses by not investing in initiatives like its new Linux strategy, first reported by eWEEK last October, which is impacting its income statement. But these are investments in the companys future and will meet the needs of its customers, he said.
Messman would not rule out the prospect of further cost cuts and potential layoffs down the line. “Business is down, and you always have to be optimizing your variable costs, which in this case is largely employees, with the level of backlog and business youre seeing,” he said.
“Everybody has been holding off making cuts as the predictions were there would be a business upturn in six months, but that is continually being pushed out. Were continually looking at staffing to see whether or not we have the right balance.”
Novell saw a good third and fourth quarter last year, which gave the company a “false impression” of how the first half of this year was going to turn out. “We had a weak first quarter with regard to product sales and are a little gun shy at this point and have stopped making forecasts,” Messman said.
Those sentiments were echoed by Joseph Tibbetts, Novells chief financial officer, who told eWEEK on Monday that the company must be careful about costs and so is looking at areas where money is being made and areas that are soft.
Expenses and staffing levels will have to be re-examined because “how long can you keep capacity around when the demand is not there?” he asked.
Among the better performing parts of Novells business are the secure identity management and secure Web services components, which have grown some 51 percent over the past year compared with the year before. It has generated some $90 million, or 10 percent of Novells business, Tibbetts said.
But, under Messmans stewardship, the Provo, Utah, firm is also taking active steps to become more visible and to better promote its products and services among customers, developers and the open-source community.
At its annual BrainShare customer conference in Salt Lake City, Novell on Monday unveiled a slew of product announcements, many of them around Linux and open source.
These included news that its GroupWise client will be made available for Linux and Macintosh, initially just on the desktop but ultimately on the server as well. This will give customers additional choices for taking advantage of that secure messaging platform, Messman said.
The Java-based GroupWise client for Linux and Macintosh is based on technology Novell acquired from N-iX, a division of Newcomp Computer Systems, and will be available to customers later this year.
Senior Vice President of Engineering Carl Ledbetter said the next version of Novells networking operating system, NetWare 7, will enable customers to run on top of the Linux kernel all of the services that now sit on top of the NetWare kernel. “This will give our customers even greater choice and allow them to migrate to Linux without having to move away from NetWare,” he said.
The code for NetWare 6.5 is currently in beta, with the product expected to ship midyear. Novell releases upgrades to its major products every 18 months or so, so NetWare 7 will likely ship in late 2004, Ledbetter said.
But Messman cautioned that Novell is not going to contribute the entire NetWare kernel to the open-source community, just those pieces that need to make the movement viable. “We believe were bringing credibility to Linux. We know how to support an operating system—some of the people in that business today are far less experienced than we are,” he said.
“We can bring some of the enterprisewide qualities of NetWare to bear on Linux, and were prepared to contribute some of those to the open-source community. Weve always been focused on interoperability and open standards. But we are now going to devote more time and resources to the open-source community and increase our visibility in that way,” Messman said.
One such move was the announcement Monday that the company has released the source code for its Novell Nsure UDDI Server, which makes Web services registries more secure and easier to manage by adding identity management capabilities to the UDDI standard.
Novell also launched a new initiative to engage more deeply with the open-source community and on Monday launched the Novell Forge Web site, a developer resource that it hopes will draw developers into the Novell product fold.
Through the Novell Forge site, developers will be able to download, modify, exchange and update open source code released by Novell; share projects and ideas with the broader Novell development community; and participate in vertical market and technology communities.
The site will host Novells existing open-source projects, like its DSML support for eDirectory and the UDDI Server. Other open-source additions to the site will be announced later this year, Kris Magnusson, who chairs Novells open-source review board, told eWEEK.
Messman added that Novell is also now strongly targeting the developer community. While the company has not had a strong developer program until now, largely because it wasnt calling on the application development side of IT departments, that has changed as a result of the Web services application development tool set and application server it got through its acquisition of Silverstream.
In other product news, Messman said that Novells secure identity management solution is getting some good traction and the company is winning some big deals like the one with the StarAlliance of 16 airlines, which calls for Novell to put their passenger identity management programs under one umbrella.
In addition to these product initiatives, Novell has introduced a new marketing campaign as well as an initiative to develop closer relationships with its customers to ensure the products it develops are on target, Messman said.
The company has also moved to a “named” account strategy where the number of accounts held by each salesperson has been reduced so they can spend more time servicing those accounts. In addition, Novell has turned some of its smaller accounts over to the channel.
“We have also re-engaged the channel, which is very important to us as we built the company on the back of the channel many years ago. This will also raise our visibility in many ways,” he said.
Getting the message out to its customers, making them aware of its product capabilities and giving them a migration path that includes both NetWare and Linux are the greatest challenges Novell faces over the next year, Messman said, adding that revenue growth will be the ultimate test of the success of its strategies.