Novell kicks off BrainShare

SALT LAKE CITY--After a year under new leadership, executives from network software maker Novell (NOVL) stressed the company's progress in refocusing the business, its strategy, and its products on the opening day of its annual user conference.

Buoyed by the slightest of profits in its past two operating quarters, the firm perceives itself as perfectly positioned to take advantage of an increasingly network-centric world in which expertise will be a strategic advantage. But critics suggest that Novell can only hope to mine its huge installed base for future profits and will increasingly feel the pinch of Microsoft.

The software powerhouse shipped 1.3 million copies of the Windows NT server in 1996 to capture the No. 1 position in the market, compared with 900,000 for Novell, according to preliminary figures for 1997 compiled by International Data Corporation. But Novell believes it has found a lucrative position as a provider of network software services that enable applications to run more effectively, serving as a strong neighbor to NT's application servers.

"What we've realized over the past 12 months is that everywhere we look, networks matter," said Eric Schmidt, Novell's chairman and CEO, who took the helm a little more than a year ago after years at Sun Microsystems.

"The other guys build general purpose solutions and they're fine for that, but they aren't network-centric," he continued, speaking to a packed hall of Novell devotees.

As part of the company's annual BrainShare user event, Novell announced plans to release a third beta version of the NetWare operating system, the flagship product at the firm that boasts an installed base on nearly 4 million server machines. The final test version of the software will be released next month, with the company on schedule to deliver it by midyear 1998.

That release is a significant event for Novell, but Schmidt and his recently hired cohorts stressed the overall difference at the firm, highlighted by the fact that Novell will ship more new products this year than any other in its history, according to the CEO.

News of a charged executive team at Novell is a long time coming. "It's a culture change, it's driven by passion," according to Christopher Stone, senior vice president of corporate strategy and development for the company. "It's not an issue of viability, it's an issue of delivering."

Observers have noticed the change in management's posture, but don't believe Novell is out of the woods yet.

"Their message just has more credibility than it has had in a while," said Jamie Lewis, president of the Burton Group consultancy. "They've been executing this internally, but I want to make it clear, they still have their problems.

Some believe Novell's evolving posture as complementary to NT-based systems could be more fruitful than going head-to-head with the Redmondians.

"There's been a big battle in the departments [of corporations] between NetWare and NT in 1996 and 1997," said Jean Bozman, an analyst with IDC. "They think they have found a way to cope with that by telling users to manage NT with Novell."

Added Lewis: "The secret is not to force an either/or choice."

Novell is attempting to appease those migrating to NT by supporting NT desktops and servers in its software management and administration tools. "The imperative is to hold onto the base, keep them interested, and keep new functions coming," Bozman said. "The one year has really made a difference. The important thing is continuing a strong presence."

Novell executives couldn't resist a few jabs at its primary foe, however. "Think about it: You reboot [Windows] NT once or twice a day and you reboot NetWare once or twice a year," Schmidt said to an applauding crowd.

As part of this year's BrainShare, which organizers say is the largest ever, the company also announced other developments, including the free bundling of a five-user version of Oracle's Oracle8 database with every copy of NetWare, due out in conjunction with the release of NetWare 5.0.

As part of the OS release, Novell also announced the Java-based ConsoleOne, a centralized management interface previously code-named Houston, that will be used for centralized management of Novell systems.

The company also announced new data that shows that the Java Virtual Machine (JVM) runs the fastest on NetWare, more than twice as fast as the performance of the JVM on NT, according to tests run by Key Labs.

The BrainShare conference continues through the rest of the week.