Newsmaker: Novell's Linux makeover

(continued from previous page)

worldwide service, we've got a consulting organization, a software stack with file and print and messaging and directory, we offer indemnity that Red Hat can't offer, because we used to own Unix. And we have a patent portfolio they don't have.

We've been gaining every month. The progress hasn't been as good as I liked. Pricing has come down, so we don't see the growth that we would have. We've signed some (computer maker) partners, and it takes a while for them to get to speed. The number of software partners increased significantly from 46 in 2003 to 531 in 2004. We have 1,100 applications certified on SuSE Linux.

Red Hat had a seven- or eight-year lead. I don't think people switch that quickly in the infrastructure market. I think the differences we have are just starting to show up in the marketplace.

With our sales force, we've reorganized how we go to market. We were focused on maintaining the revenue stream from NetWare. Now we're focused on selling new stuff like Linux and identity management. We're in the middle of a two-year transition in our sales force. And the channel (sales partners) is really interested in Linux. They made a lot of money switching NetWare customers to Windows customers. Now they're interested in switching Windows customers to Linux customers.

You don't seem eager to enter the embedded Linux market (for computing devices such as cell phones or slot machines).
We've got so many opportunities. Do we want to take on another one? I'm not disparaging of the market.

Are you thinking of acquiring an embedded Linux company?
We looked at several companies who had products or tools in that area. Rather than decide yes or no, we decided it wasn't on our priority list.

Did you look at MontaVista?
They and Wind River and a number of others develop Linux for embedded applications. At this point, I'm neutral on it. The only thing that's a repeatable revenue stream (in embedded Linux) is selling the tools that allow (customers) to create the next embedded device.

What happened with the departure of Chris Stone (Novell's former vice chairman and top Linux executive) last year?
If you listen to the press, this was the guy who did everything at Novell and nobody else did anything. We had a difference of opinion about how the strategy would be executed. So it was better that we make a change. I think our organization is very happy with the change.

What was the difference of opinion?
To be fair to Chris--very talented guy, and I like him a lot. His style of operating didn't fit with the company at the time.

Are you looking for a chief operating officer or a replacement for yourself?
No. They're going to have to drag me out with my boots on. I love working for Novell. I helped create it more than 20 years ago. I hope the board will support me.

There are always going to be succession issues. We are always looking. We have some executive capabilities we need; some skills we lack. Novell has never been strong in the marketing area. We saw that and added Bill Hewitt.

We want to remain profitable, so we're not going to go adding helter-skelter new people or expenses. I'm not going to deny we're looking for executives, but I would be lying to say we have a specific thing we're looking to do.  

More Newsmakers

[iqula]

The path ahead for Novell

I feel Novell is moving very nicly along with their Linux stratigy and proberbly even better than they like to admit.

The main things to focus on is their software stack and marketing, a good ploy would be to support projects like <a class="jive-link-external" href="http://www.cosmopod.com" target="_newWindow">http://www.cosmopod.com</a> that are perhaps a bit before their time in taking network computing and Linux a step ahead but will shoe their stripes.

Another thing to remember is that although Novell and RedHat compete they both still win by pushing linux further into the market place with every install and review it gains market share, publicity and credibility so they actually want the other to do not just well but very well!

Equity performance

Novell's stock price peaked at 14 in January 2004 and is now trading at 5. That suggests to me skepticism of the company's ability to generate a profitable Linux business model. Personally, I believe that repositioning of the company won't really show results until late 2005 or 2006, but as a stockholder, my confidence is shaken by the lousy price performance over the past year.

Will Novell's Linux strategy pay off?