Comments on: Novell Linux revenue soars as global server revenue plummets

It wasn't the best of quarters for Novell, but the company continues to find a way forward with Linux, which grew 25 percent in the most recent quarter.

[Mr. Dee]

Matt, why aren't you telling the truth? Actually, Windows Server is a hit in this quarter:

UNIX revenue - 3.7 billion
Windows Server - 3.3 billion
Linux - lame 1.4 billion

As far as I can see, Linux remains stagnant where revenue is concerned. You also need to get out of this mentality that Linux is competing against Windows Server. Linux is competing with itself, the market and UNIX. The server revenues that are plummeting are actually happen because of a couple reasons, consolidation through virtualization technologies such as Windows Server 2008 Hyper-V, Big Iron UNIX Servers in the $100,000 to $500,000 range are not being purchased right now which are actually running either UNIX or Windows Server, not the lame Linux. So please Matt, get facts straight before you start with another year of the Linux fiasco.

[Zer0Wolf]

Hmm... Good point Mr.Dee.

[pentest]

DeeDeeDee,

Down by 29% is not a 'hit'.

1.4 billion for something that is free is remarkable.

Apache beats Windows Server by a wide margin, and almost always runs on Linux.

[Matt Asay]

Those were IDC's numbers, Mr. Dee, not mine. You need to take up your complaint with Al Gillen - I just reported his data, not mine.

As for the competition, I think I blogged the "duopoly" idea yesterday. Maybe you read it? While we *are* starting to see Linux cut into Windows (see the Eclipse data), I do think that we're going to see Microsoft alongside a leading open source product in each market. I don't see Microsoft going away anytime soon.

[martin1212]

Dee - what are you talking about. If you compare year on year changes, Windows is down 28.9% and Linux is down 24.8%. How does that qualify as Windows being a hit and Linux remaining stagnant?

[queticomn]

uh, its ok to mention the name of Novell's Linux distro. Suse & openSUSE. I'm sure the ubuntu people will not mind.

[SIGHUP]

"Eclipse developers citing Linux as their preferred deployment platform" Duh, most developers that develop on windows use Visual Studios. That would be like saying visual studios developer prefer Windows deployment platform.
I am not surprise by these results. We had to replace all the windows 2008 server in our data center with either 2003 server or Linux. Good for Novell.

[odubtaig]

Eclipse is primarily Java. It's also available on Windows.

So, no, Java developers won't be using VS on Windows. It's either Eclipse or NetBeans.

[Seaspray0]

So Matt, do you think the partnership with microsoft may have influenced these numbers? Alot of linux supporters have been against the partnership. I'm just curious to know if it has affected Novell's business and how.

[jspaleta]

You'll have to look more closely at how Novell counts the vouchers it sold to MS as revenue.

They sort of covered this in the q2 conference call
http://seekingalpha.com/article/123039-novell-inc-f1q09-qtr-end-01-31-09-earnings-call-transcript

"Within open platform solutions, Linux platform products revenue in the quarter was 35 million, increasing 24% from the year ago quarter. Linux invoicing was 23 million, down 42%. As we have stated before, our Linux business is dependent on large deals which may result in some fluctuations of our quarterly invoicing. This quarter we did not sign any large deals, many of which have been historically fulfilled by Microsoft certificates. Today we have invoiced 199 million or 83% of our original 240 million agreement."

My interpretation of that was that no significant new voucher income was booked in Q2. But I don't know how voucher income is booked generally. They could spread it over multiple quarters, so most of the baseline revenue could be MS voucher related. This would make it sound like the increase in income over Q1 was non-MS voucher related. But its not completely clear.

However, you'll notice that they say there is still about 40 million in MS voucher income left to be invoiced. So if their linux business continues to grow at the same rate, that growth will have to come from non-voucher income, They've only got 40 million left in that tank. If they break the 40 million mark in q3 for linux revenue there wont be any question in q4..

-jef

[jspaleta]

sorry that was the q1 transcript

here is the q2: http://seekingalpha.com/article/140246-novell-inc-f2q09-qtr-end-04-30-09-earnings-call-transcript?source=bnet&page=2

Looking at the two transcripts together you get a better feel for what's going on.

q2: linux invoicing $40 million
q2: MS certificate income invoiced: $13 (leaving $27 million in the tank)

To my reading... in q2 that just ended, $13 out of $40 million of the linux revenue invoiced for the quarter were from the MS deal. So about 1/3 of their quarterly linux revenue is accounted for by the MS certs.

At that rate they can rely on the MS income for another 2 quarters or so.

Also worth noting in the transcript that their linux business is not yet profitable. That's something Matt should have noted.

-jef

Another note is that Novell has set the end of life on the Netware product. So, that product income has to end in a few years because they will not be selling or updating it.

Netware users will need to migrate to another NAS or OS product. Novell does have a Linux replacement for Netware. Netware is more like a powerful "NAS appliance", where as the Linux product is more, and adds "application server" and all the bells and whistles of Linux.

I think the Linux vs. Windows arguments as old news. Most businesses will have both Windows and Linux servers in there environment and can choose when to implement either.

In my case we have Linux appliances and Windows application servers, VMware servers, without any battles.

I think Novell?s work toward making ?Windows vs. Linux? battle more irrelevant a good thing. These systems should work together without a bother.