STILL AT WAR WITH MICROSOFT
Hovsepian, the latest in a long line of CEOs at Novell, replaces Jack Messman Messman and chief financial officer Joseph Tibbetts were fired late last month after they failed to deliver on a promised growth strategy for Linux and other open-source software.
Novell was once king of network operating systems. In the late 1980s and early 1990s, its NetWare product dominated the market for software that connects networks of PCs, printers and storage. But that changed by the mid 1990s as Microsoft fought back with Windows and gained critical mass, not only on the desktop but also on the servers that power corporate networks. Novell has been casting about for a winning strategy ever since.
Several bad acquisitions almost sank the Utah-based company:
In 1991, it bought DR-DOS from Digital Research to compete with Microsoft’s MS-DOS on the desktop. DR-DOS was later sold to Caldera Systems
In 1993, it took over Unix System Laboratories from AT&T in an effort to undermine Microsoft’s entry into the server operating system market that year with Windows NT. The technology Novell acquired was later assigned to the Santa Cruz Operation
In 1994, it acquired WordPerfect, a then-popular word processor, and Quattro Pro, a spreadsheet, from Borland The idea was to compete head-on with Microsoft Office but, within two years, the products were sold to Canada’s Corel, a maker of a popular drawing application. Microsoft has since gone on to control more than 90% of this market.
Not long after the WordPerfect deal, Ray Noorda, who had been CEO of the company for more than a decade, was given his marching orders. A long line of CEOs followed. One of them was Eric Schmidt, who has since gone on to become chairman and CEO of Google.
Hovsepian, the new boss, has been tasked with accelerating a strategy adopted by Messman — building an enterprise software business using free and open-source software. Messman was responsible for Novell’s acquisition of SuSE, a popular distribution (version) of Linux. IBM helped the company pay for the deal. Novell also acquired Ximian, a maker of Linux applications.
Novell still develops proprietary software — it still has a relatively small but loyal user base for its NetWare product, for example — but the focus now, Hovsepian says, is on growing the open source software business.
Hovsepian, a long-time IBMer — he worked at Big Blue for 17 years before joining Novell in June 2003 — told the FM in an interview last week that Linux would form the centrepiece of Novell’s strategy. It will do this by building a “set of services supported and enabled by the Linux distribution”.
Novell’s revenue is split two-thirds software and one-third services and Hovsepian wants to strengthen the focus on software. The question, though, is whether there’s money to made in selling open-source software. After all, much of it can be downloaded free from the Internet.
Hovsepian says Novell’s desktop Linux development team consists of 50 programmers. Microsoft, he says, employs between 1000 and 1500 developers. “We can compete by leveraging the open-source community.”
Hovsepian is referring to the thousands of programmers around the world who contribute their time and effort in developing software. Linux, for example, was largely a community effort.
He believes that Windows has peaked on the desktop and says Novell is investing resources to ensure that Linux offers users an “equivalent” experience, while taking the software forward.
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