With NetWare usage continuing to decline, Novell is making Linux and "identity-driven computing" the focal points at this year's annual BrainShare user conference. CEO Jack Messman talked about his company's strategy, its efforts to court Windows users and recent shake-ups in Novell's executive ranks.
Q: It's been about 14 months since Novell acquired SUSE Linux. In what ways has the acquisition helped the most?
A:It allowed us to change the strategy of the company to focus on Linux and identity. We had the identity products in the house. But we weren't being very successful knocking on doors and trying to talk about identity. And now with Linux, we get in the door to talk about Linux, and then we tell 'em about our identity products and they say, "Oh, I didn't know you did that."
So that's been a very, very big help. A lot of people had sort of written Novell off because they didn't know where the NetWare product-line migration was going to take us. And now that we showed that we've put that on a different trajectory by getting NetWare services on top of the Linux trajectory, they see that we have relevancy again.
Q: You've had the identity products before, but they didn't catch on. Why is it going to be different this time?
A: We had a different and maybe you could even say it was the wrong approach. We were developing products when, in fact, the market needed a solution. We had 166 products when I joined the company, and we had a history of being able to develop great products that had no market. Back in '95, as an example, when we created the directory, people said, "So what. We don't know what a directory is good for."
But then when we got into the Internet Age, where you had many people having to talk to one and one to many, they saw that having a directory to organise all this was an important thing. And that's when we started developing a solution. We knew that in order to sell it as a solution, you had to have consultants, because the products couldn't sell themselves.
So we bought Cambridge Technology Partners to provide us with the consulting side, the solution side. And we bought SilverStream, which provided us with some components of identity that we didn't have in terms of the services-oriented architecture and the business process management, the provisioning of things of that nature. So I think that a combination of making it into a solution, getting the consulting organisation to sell it and getting some of the missing components made it a viable strategy for us.
Q: Novell has just released Open Enterprise Server, which combines the NetWare and Linux operating systems. How's the battle going to offset the decline in NetWare revenue?
A: Our revenue's been flat, and that is a combination of the NetWare revenues going down and the other products growing. We've been able to offset the decline caused by the NetWare decline. But with the OES product, if we can get that decline to zero or starting to grow, then we'll see a significant upside in our revenue growth rates.
Q: Many NetWare users migrated their file and print workloads to Windows. Do you think that you can get any of those customers back?
A: Yeah. The market went through a period where they wanted best of breed, and they knew that if they bought a best-of-breed product, they had to integrate it themselves. Then they got to the point where good enough was OK. And of course, many of the Microsoft things were good enough.
Novell was a small company with a narrower focus than Microsoft, and therefore, if they wanted to progress beyond the areas where Novell was focused, Novell couldn't compete there. So, many people switched to Microsoft. People knew who Microsoft was. It was easy. It was like buying IBM back in the '70s when, you know, you never lost your job making a decision to buy IBM.
I think that this Linux thing is going to catch on. There's going to be a backlash against Microsoft. I think people are tired of the high prices, the licensing arrangements, the heavy-handedness. And they want choice. I mean, choice is a very valuable commodity. How much do you pay for that? And we're bringing that to the marketplace. In many cases today, we're finding that we are being used -- we being Linux, not just Novell -- by customers to get Microsoft to the bargaining table to talk about price.
Q: But you need to get them to convert, too.
A: That's true, ultimately, but some of them will convert. Many people say, "Well I don't want to switch from Windows to Linux. That's a migration. I don't want to do a migration." What they don't understand is down the road, they're going to have to migrate from Windows to Longhorn, and that might be a bigger migration -- we think it is -- than going from Windows to Linux.
Q: Are you focusing on specific sets of Windows customers, such as those still on NT Server or those on Windows 2000 Server?
A: Absolutely. We have various market plays. We have a promotion focused around Windows NT. We have one focused around Exchange [products] they've decided to drop support for. So those are opportunities. We have a half-dozen of those that are targeted against Microsoft.
Q: Which workloads are you focusing on?
A: We're focused on data centre, workgroup and desktop. We think that we have a common code base that can attack all of those workloads. And they're different. At the desktop or at the workgroup, it's, of course, like NetWare. But the data centre workloads are the ones that are growing and we think have the greatest potential, and that's where we're spending a lot of time.
Q: Your play there is getting users off Unix.
A: Right. That's a Unix migration story.
Q: How do you expect to get users who've invested the time and expense to go to Microsoft's Active Directory to switch? Novell demonstrated its migration tools here, but it must be tough.
A: It's a matter of how much they want to pay for that. It's still very expensive to be on Microsoft. And if you really want to save costs in the workgroups, it's easy to switch. It's tougher to switch if it's a data centre.
Q: Looking at your Linux desktop strategy, you said Novell isn't aiming to compete against Microsoft, because you feel the open-source products aren't fully functional yet. But one customer told me its IT staff and software vendors have to port 200 Windows-based applications to Linux. What do you offer users in that situation?
A: The Novell Linux desktop is focused on high-transaction-processing applications, call centres, financial applications, point of service. Those are the ones they're winning. Thin-client. If you're a knowledge worker, you need the functionality in Windows today -- maybe not need it, but you want it. Ultimately, the Novell Linux desktop will have that kind of functionality, because the community will put it in there. It's not there today.
But in terms of all the applications, we probably have 1,600 applications that have been migrated over to Linux. And if a customer came to us and said, "I've got 660 applications that need to be migrated before I can consider switching," we'd get to work on making sure we got those migrated.
Now, many of those are going to be internal applications and we can't do that migration for them. If they are [independent software vendors] who've developed those applications, most of them have already come to us and are in some stage of converting because they see the opportunity. They don't want to be left out of the Linux business. If you can envision a future where there are two operating systems -- Windows and Linux -- you certainly don't want to be left out of one side of that. So many of them are taking it on themselves to start doing the migrations.
Q: When do you expect to have a thick-client play?
A: I think it's a two-year play. It's going to take a couple years.
Q: You announced an expanded partnership with JBoss which distributes an open-source application server. What does that do to your relationship with IBM and BEA Systems, the two leading application server vendors?
A: That's co-opetition. That product will compete with BEA and with IBM. IBM is supporting Linux, so they understand that over time JBoss and the stuff that we're contributing will make it a real competitor to both of those. People who would consider a shift to save money want to make sure that JBoss is robust enough first and is well supported.
Q: Any chance Novell will acquire JBoss?
A: There's always a chance. But we don't comment on acquisitions.
Q: What about the rumours that have resurfaced about Novell being an acquisition target?
A: If somebody wants to make our shareholders a bid, then they have the right to do that. But we're not out actively looking to sell the company, not at this point. I mean, look at what we've got. We've got two good strategies going here.
Q: Novell's No. 2 executive, Chris Stone, left in November, and now Chief Technology Officer Alan Nugent is departing. What happened there?
A: It would be unfair to me to comment on a personal matter with Chris Stone or Alan. I think when Alan's new role gets disclosed, you'll understand why he left. I like both those guys, but for whatever reasons, we had to part.
Q: Are there plans to replace Stone?
A: It's tough to tell. We just hired Bill Hewitt from PeopleSoft. So we're always looking at hiring the best people.
Q: Will Nugent be replaced?
A: Well, we need a CTO. A CTO is an outward-looking job, and it calls on customers primarily rather than working on the technology internally, so we need that role. We have many people in our company who are acting as CTOs. We have various levels of CTOs, so to speak. So whether we replace them at that level or some lower level, we haven't decided yet.
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