June 23, 2006 12:04 PM PDT

Rough road ahead for new Novell boss?

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Ron Hovsepian, the new chief executive at Novell, will have to improve the company's sales in the next six months or face the same fate as predecessor Jack Messman, according to some analysts.

"He doesn't have much time," said Laurent Lachal, a senior analyst at Ovum. "Novell needs good figures--if not next quarter, then the following one."

Hovsepian was named CEO on Thursday after Novell's board made a decision to replace Messman following disappointing financial results, particularly in the company's Linux business.

Novell is struggling to convert its investment in Suse Linux into a business that can replace the company's legacy NetWare network operating system revenue, which means the incoming chief executive will likely face the same internal conflicts as his predecessor. "I think there's been a fair amount of tension at Novell for a while now," said James Governor, principal analyst at RedMonk. "Some very different cultures were being integrated alongside very different technology."

Ron Hovsepian Ron Hovsepian, CEO, Novell

Last November, when Hovsepian became president during a major restructuring at the company, his contract terms indicated that he would likely succeed Messman.

"Everyone knew that Hovsepian was going to become CEO," said Ovum's Lachal. "If Novell was bolder, it would have made him CEO from day one. It is better late than never, but it is late."

Lachal said Hovsepian is more of a salesperson than former consultant Messman--and that's what Novell needs at the moment. "I went to (Novell's conference) Brainshare, and it was clear that Hovsepian was in charge, not Messman. By comparison, Messman was a poor performer in public. At the first day's press conference, Messman's performance was the worst I have ever seen in my entire life."

With Chief Financial Officer Joseph Tibbetts also exiting the company, Hovsepian will have room to maneuver, and his focus will be on making more sales for the company, the analysts said. This is a priority given the widening gap between Novell and Red Hat, the leader in business Linux.

Novell needs to get more information about the customer base and improve its handling of basic tasks such as following up subscription renewals, Lachal said. "That's the kind of low-level pragmatic execution Novell needs. It needs to know the customer base better. It is humdrum stuff, but you have to get it right," he said.

While pushing Linux, Hovsepian will also have to balance Novell to make the most of its strengths in ID management and resource management, Lachal said.

Novell's Linux offerings, including Open Enterprise Server (OES)--a hybrid product of Suse and its legacy Netware platform--are doing relatively well, but its software revenue is still too low, he said. Crucially, the OES growth is less than the decline in Netware, according to Lachal, so Novell is losing customers.

"Look at how much business Red Hat is doing and how quickly it grows, and ask yourself why isn't Novell doing the same?" Lachal said.

At Gartner's Midsized Enterprise Business Summit in Paris this week, Philip Dawson, research vice president at Gartner, said he was struck by how many worried NetWare users he had been approached by. During one of his sessions, Dawson asked delegates how many expected to be using NetWare in five years, and no one in the audience raised a hand.

"NetWare is a legacy product and is going nowhere. At the moment, Novell is losing more customers to other platforms than it is managing to move onto OES," he said.

RedMonk's Governor said he hasn't seen the kind of growth that might have been expected, given the new areas Novell is pushing into. "With all that going on, might Hovsepian just look at selling out to IBM or Oracle?" Governor asked.

But Novell could also act as an acquirer, which would be interesting given the number of small, interesting companies in the Linux field, Governor added.

"Novell has the potential to get on track," Lachal said. "Things can only get better--they are so bad at the moment."

David Meyer and Peter Judge of ZDNet UK reported from London.

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Jack Messman, Novell Inc., Novell NetWare, Novell Open Enterprise Server, Ovum

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"Look at how much business Red Hat is doing and how quickly it grows, and ask yourself why isn't Novell doing the same?"

Red Hat Linux has greater name recogition than either Novell or SUSE. Novell needs to build SUSE name recognition in decision-makers' minds. They need to push their strengths as a Linux company that can provide everything from the desktop to the directory. They also need to make the Novell/SUSE brand as recognizable as IBM to the average joe/jane, too. They need an iconographic ad as the Apple "1984" ad.

They also need to build a foundation of knowledgeable new Linux administrators, and not depend on current CNEs upgrading their skill sets (Those guys saw the writing on the wall a long time ago and got their MCSEs). They need to get more IT people trained to offer support for their product. Novell should be offering free training kits and promotions. Let's face it, if I was looking to train in Linux and I had to pay for training, economics and trends would push me towards market-leader Red Hat. Novell needs to take a long term view and build competance so that lack of trained support personnel is not an impediment to adoption of it's products.
Posted by jimanderson689 (6 comments )
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