Putting Novell's SuSE Purchase In Perspective

An anonymous reader writes " The editors over at NewsForge.com have combined their efforts to put today's big news about Novell's purchase of SUSE in perspective: what the news means in business terms and to the Linux community, today and in the future. A good read that includes quotes from industry insiders, IRC inhabitants, and NewsForge.com readers." Another reader writes "This is a good analysis piece about how Linux has become Novell's lifeline, especially since NetWare's been dying...and post-Ximian."

Comments

The real motivation

[faldore]

They acted like it was no big deal, but...

(from article) "Yes, it was admitted there might be some marketing opportunities caused by Red Hat's recent "end of life" declaration for some of its products."

My guess is that this has more to do with the decision to buy than they are admitting to.

Re:The real motivation

[rushfan]

I totally agree that it has to do with RedHat moving away from the home user market. I admit that I loved RedHat's personal Linux, and bought many copies of it (at the stores and from them directly), and never "wasted their time" with support from them. I bought it because I liked supporting them. I haven't looked at SuSE in a while, although I think I will now. I like the "ease of use/install/etc" that the packaged linux distros provided for my work machine (since I'd rather just install linux and have it all work, no need to rebuild a kernel or hack around on it). It was nice and easy. I'm sure fedora will be cool too, however I'm not so sure. I'm definately turned off by RedHat's move, I understand that they want to keep making money, however I feel as unimportant to them as a customer as I do using Windows (which is one of the reasons why I like Linux).

Anyway, Ximian rocks, and hopefully Novell doesn't loose interest in Linux like they did with so many former purchases.

Hoping for the best --

Rushfan

Re:The real motivation

[GerryGilmore]

To my mind, there can't be any doubt about it being related to Red Hat. Consider:

While the average user may not have known about RH's dropping of mainstream Linux (the "hobbyist" version in RH Marketing slides), those closer to the major players have known for many months that this was coming.

SuSE, not being dummies, must have spotted the tremendous opportunity that this would give them in the North American Linux market.

All SuSE has to do is to keep a mainstream version alive to keep the market fed for their higher-end versions - as RH *had* been doing, and they have the ability to clean RH's clock for them.

In case you haven't guessed, I consider RH's move to drop their mainstream versions to be a crucial blunder. But, it's their company......

Is anybody else worried...

[wrinkledshirt]

Is anybody else worried that this might turn into another Corel?

If Novell's got problems keeping up in terms of IT relevence as it is with its own core product, it could be really nasty if some of that starts to rub off on Suse and Ximian.

I don't mean to troll. I just liked it better when all these things were separated. I'd rather unification through proper standards (eg: LSB compliance) than through pocketbooks.

Re:Is anybody else worried...

[swordboy]

Is anybody else worried that this might turn into another Corel?

Corel died because Microsoft wanted them to.

Corel had a great plan but, ultimately, management was bought out by Billy.

People don't seem to be picking up on this. The same thing happened with Apple and OSX right after Steve Jobs dumped every last share in the company (aside from the single "symbolic" share that he did keep).

Microsoft owns each and every one of us. If they didn't, we'd have seen them split up a long time ago...

sigh...

The best decision that Novell could make

[micaiah]

About a year ago I was discussing with my friends this very scenario. It was a great decision on Novell's part, probably IMHO the only thing that could allow them to rebound back to the forefront. If they use Linux (open source) as their desktop rather than relying on Microsoft to be fair players they will be able to make a better product for the desktop.

I remember when people thought of networking they thought of Novell. I took a Win2k class not to long ago and the only people that knew about Netware was myself, one more person, and the instructor. Hopefully that will change with e-directory on the back end and Linux on the desktop. Although any company isn't 100% idealistic, Novell is far more open standard minded than Microsoft will ever be.

Disclaimer?

[Lshmael]

What happened to the standard "Newsforge and Slashdot are both part of OSDN" disclaimer that normally appears at the end of items that reference Newsforge articles?

Thoughts

[sethadam1]

- If Novell bought Ximian just for Mono, they should open source the Exchange Connector.

- If Novell intends to still support KDE on SuSE, they should say so quickly.

- Novell should DEFINITELY keep the desktop distro free. This will be key in infiltration and getting techies involved and informed.

- Novell should rebrand everything "LinuxWare" in following their NetWare line.

- NDS on Linux should be a huge priority. A successful, non-piecemeal central authentication system for Linux would be fantastic (yes, I know about PAM + LDAP, etc)

- A Novell client for Linux (even for 5.x and 6.x) should get official support TODAY.

- They should learn from the past, and invest in the desktop. That's where they'll sell this to potential customers, as and end to end solution.

Re:Thoughts

[corebreech]

Novell sucks at client software, though.

On Windows perhaps, but I remember using their stuff on Mac and it was actually pretty sweet.

This is like a decade ago or so though.

Re:Thoughts

[bruthasj]

And smash YaST, up2date, APT and Yum with Novell ZENworks! Seriously, ZENworks has got to be the best patch pusher I've ever seen. Viruses? Bah! Sendmail holes? Bah! SSH problems? Bah!

With a click, 1000 computers get the patch and automatically apply it.

Re:Thoughts

[cpthowdy]

You don't even need a client now. NetWare ships with Native File Access. Does what it says, let's clients connect and access shares without the Novell client. *nix, Windows, Mac. I run client 4.9 on Windows 2000, and I haven't had a problem at all. Same goes for GW 6.5 client.

Re:Thoughts

[Nat Friedman]

Since Novell purchased us 3 months ago, we have increased our investment in all of our products, using Novell's resources. And we've been aggressive about driving open source and Linux throughout the company.

Here's a little evidence, all postdating the acquisition by Novell:

- My notes on our new desktop development center in Bangalore
- An article from the Times of India about our new developers there
- The freshly-published (today!) Mono Roadmap showing where we're going with the development platform
- The first entry in our new Evolution blog, describing the plans for Evolution 2.0, to be released early next year
- The announcement and wiki for the Brooklyn GNOME developer's summit we are sponsoring this month
- The announcement that our Exchange connector now supports Exchange 2003

And this is really just the beginning. As you can imagine, most of the super exciting stuff we are doing is behind the scenes.

From time to time since we were acquired three months ago I've heard people say things like "Novell bought Ximian just for XYZ," where XYZ has been either: Mono, our Exchange 2000 connector, GNOME, Evolution, Red Carpet, "the name," ...

I think it should be clear that this is ridiculous.

Yes, we will still support KDE on SuSE. However, we hope to use this opportunity to provide Linux developers and ISVs with a single stable platform for desktop application development.

Yes, we will keep the desktop distro free. We will even make things more free than they have been.

We're only just getting started. Stay tuned.

Re:Thoughts

[Karma Sucks]

We knew that.

Will the SuSE default desktop be changed?

Confused

[cca93014]

Can anyone explain to me how Novell make money? The last time I saw a Netware deployment was 1999 IIRC. I guess I am answering my own question, in as much as they just bought a Linux distro (and good luck making money with THAT! ;) ), but in the press release they mention that they are a billion dollar company; what are the shareholders valueing here?

Re:Confused

[pkesel]

Why don't you go to the Novell site and look at the SEC filings. You'll see exactly where there money comes from and where it goes. Just like any publicly held company, they gotta tell the public.

No sense speculating. Just do the research. From teh 2002 filing:

" We managed to maintain large network site-license revenue at $681 million, approximately flat to fiscal 2001"

"Novell's revenue, including the addition of revenue from recent acquisitions, was up eight percent to $1.13 billion, and cash flow from operations during the year was a positive $51 million. "

"Cash and short term investments on our balance sheet stood at $636 million at the end of fiscal 2002. Novell had no debt, and total assets were at $1.7 billion."

From the 10G for 4/2003

NOVELL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
April 30, 2003 October 31, 2002
In thousands, except share and per share data (Unaudited)
Assets
Current assets:
Cash and short-term investments $ 626,397 $ 635,858
Receivables (less allowances of $32,677 - April 30,
2003 and $39,676 - October 31, 2002)
183,672
214,827
Prepaid expenses 32,293 24,077
Deferred income taxes 19,420 21,204
Other current assets 25,166 23,572
Total current assets 886,948 919,538
Property, plant and equipment, net 353,183 369,189
Goodwill 180,579 179,534
Intangible assets 30,092 36,351
Long-term investments 55,603 73,452
Deferred income taxes 83,791 74,323
Other assets 12,385 12,678
Total assets $ 1,602,581 $ 1,665,065
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 61,007 $ 57,241
Accrued compensation 78,498 87,778
Other accrued liabilities 124,337 134,850
Income taxes payable 28,764 36,294
Deferred revenue 267,546 275,344
Total current liabilities 560,152 591,507
Minority interests 7,841 8,016
Stockholders' equity:
Common stock, par value $.10 per share:
Authorized - 600,000,000 shares;
Issued -371,295,559 shares-April 30, 2003,
367,537,926 shares-October 31, 2002 37,130 36,753
Preferred stock, par value $.10 per share;
Authorized - 500,000 shares, Issued - 0 shares -- --
Additional paid-in capital 303,760 297,139
Retained earnings 698,164 738,663
Accumulated other comprehensive income 651 57
Other (5,117) (7,070)
Total stockholders' equity 1,034,588 1,065,542
Total liabilities and stockholders' equity $ 1,602,581 $ 1,665,065

Re:Confused

[GSloop]

Perhaps few people are still rolling out Netware installations, as such seems to be much of the public demand. But I must say, Netware is much more stable than Windows in vitually every situation I've deployed either in.

A small medical office I did an installation for had the Netware 3.12 box stay up, for around 1260 days. (Nearly *four* years without a single reboot.) It went down the time before that, only because of a four+ hour power outage that the UPS couldn't outlive. It has been up for like 500 days prior to that. So, total unrebooted uptime, was more than five years. Not a single unplanned outage caused by software failure, and no planned outages/crashes either.

Heck, in 1992-1993 I'd have killed for a Windows box that could file serve for that long without constant prodding and TLC - along with at least weekly reboots.

Novell's eDirectory is much more mature, IMHO than AD, and their ability to produce a product that simply works well is light years ahead.

Finally, Novell, perhaps to their harm always was the kind of company that left lots of space for others to develop products along side them. They made a core product, and let others fill in and provide apps around them. This kind of community is crucial IMHO, and the Novell culture, at least in the past, was good at allowing it.

I think this may be a great match.

Cheers,
Greg

More Thoughts

[corebreech]

They should also resurrect SuSE's previous efforts in supporting the Power architecture, which more and more appears to be what will be competing with AMD64 (or vice versa.)

And not only should they keep the desktop distro free, they should create a Live Distro on CD and print up a few hundred million of them and make sure that everybody and their cat has a copy, a la AOL.

Re:More Thoughts

[Amiga Trombone]

They should also resurrect SuSE's previous efforts in supporting the Power architecture, which more and more appears to be what will be competing with AMD64 (or vice versa.)

I don't think you'll have to worry about that. Remember, IBM helped subsidize part of the SuSE/Novell deal. You can be pretty sure they didn't put up $50 million just out of the kindness of their heart. I'd expect SuSE will be available all across IBM's product line.

There is still a lot of Novell out there....

[MadAnthony02]

There are still a lot of Novell users out there, especially among certain groups (education, government, healthcare, law offices). I recently attended a CNA class, and all of the attendees fell into one of those catagories.

Novell actually has some pretty cool products out there, such as iFolder (syncs data between computers and a server), NetStorage (lets you access network drives from any computer with a web browser), and iPrint (lets users install their own printers via a web browser). They might not have a lot of new users, but they have a lot of old users who have no plans on changing - and they are coming out with some products that are actually pretty good.

Plus it's nice that our GroupWise email system resists most of those fun Outlook-based viruses.

Re:QT finally does in KDE?

[Anonymous Coward]

Perhaps.. but look at it all in scope. Novell bought Ximian before they bought SuSE.. why? Because they were cheaper. Much much cheaper. SuSE initially scoffed at a reported $140 million bid for itself. Keep in mind that this deal was offered BEFORE the Novell buyout of Ximian.

If Novell had indeed been successful in buying SuSE before they bought Ximian, we might be sitting here discussing why GNOME is doomed.

In reality, neither one is.

Mmmmm, Novelinux flavor tastes good

[iamatlas]

Imagine, a largely free (or cheap) linux distro complete with Novel tools. ::drool::

I wonder if this is just the beginning of corporate owned and backed linux distros. Perhaps all major companies will soon want to have their own official linux distro. Novel Gets SuSE, Microsoft Gets SCO(um), Apple has to be all Apple-ish and get a Unix distro, and to top it all off, THE linux company, Redhat, shoots self in foot, outsources healing of foot to opensource community...

Strange and interesting days for the OS industry.

Certification == Money

[�nertia]

Just a thought, but now that Novell is offically in the game as a linux Vendor, won't people be scrambling over themselves for their certification products.
<p>
I know I considered getting Novell certified a few years ago, even tho I knew netware was dying, I sorta figured it was the best option available which would build on my Linux skills. Now Novell has an investmment in building Linux certification, I think this will be a major money pull for the company. It also benefit's the community as finally we get somthing which already is recognised (yes i know RHC and LCP) but novell is already embeeded in the heads of many an IT manager and is sought after.
<p>
Just a thought.

where's my /usr/bin/SALVAGE.EXE?

[Clover_Kicker]

One of the nicest things about the NetWare file system was the built-in undelete functionality. When a file was deleted, it wasn't overwritten immediately, and you could use SALVAGE to get it back.

If you had a lot of spare disk space, you could still SALVAGE files weeks or months later.

All I want for Xmas is for the Novell filesystem guys to sit down with Linus or Reiser or somebody and shoehorn this into Linux.

Re:The real perspective.....

[HuguesT]

Yes RedHat has really dropped Free Linux.

Fedora is not just a change of name, it comes with no company-backed guarantees whatsoever (just community support), it's just a showcase and a beta distribution to get the enterprise packages tested in the community. Before the free RH had a small, but sufficient guarantee of support. Fedora doesn't even have the name.

For tech-savvy individuals it does not matter too much although they might fear the constant upgrade treadmill and the potential unstability, but these guys are a minority. For the real tech-savvy individual there is no shortage of choice and Fedora is just one of them anyway.

For not-super-rich corporations and institutions such as colleges, it is a disaster. They cannot afford the unfriendly per-seat licensing scheme of the RH enterprise products (even the cheaper ones), they loathe the EULA (it makes them auditable), and they've just lost the PHB-friendly support from RH.

Note this: it does not matter that Fedora provides updates of the highest quality. The PHBs will see this as an amateurish effort at best, easily hijacked at worst and will simply forbid this to run in their enterprise. Note that you cannot buy a small number of RHEL licenses and install it everywhere, the licensing agreement forbids it.

In other words this is the end of RedHat everywhere. People will be better off running stable Debian or *BSD because they have a track record of reliability whereas Fedora has nothing.

Soon the Enterprise solutions will follow them in the dump because no one will bother learning RH anymore. Current RHCEs are pissed off and will be angry at RH for devaluating their effort.

There is a high degree of probability that RH is throwing the baby with the bathwater and will be finding itself in the same league as the proprietary Unix vendors such as BSDI and SCO.

Myself I plan to evaluate Fedora when it come out, at home, but I won't touch my work RH9 installations until shortly before EOL. Then I'll probably move to something else, SUSE being a strong candidate, unless I am proved wrong with Fedora.

Fedora has a *very* short time to prove itself worthy.

what Nat forgot :)

[luge]

It's even better than what Nat says ;)

- for the first time ever, we've been able to open up our Ximian Desktop development process. You can get basically every patch we write on desktop built and applied to GNOME 2.4/2.5 via the xd-unstable channel.

- if you poke through gnome CVS, we've got skeletal code for a groupwise connector there. Again, something the old novell would never have done- release not only free code, but basically defacto API docs by way of code as well.

- up until the suse purchase this morning, we actually had a link to gnome.org on the front page of novell.com. Look around for a link to gnome.org on sun's site- it's not on the front page, and it's not in the Java Desktop main page, either.

So, like I said... it's even better than Nat says it is. :) Of course, I'd be lying if I told you that I can guarantee it'll be perfect going forward- but so far all the signs are very positive for that.

The Bigger Picture

[parboy]

Except for MS, all the bigger and better players in the OS markets are in the process of forming Unix-ish software standards, trying out different business coalitions and combinations, and generally creating a "community" of software products and tools that work together fairly harmoniously and openly.

This is a natural counter movement to the deeply flawed and virus-infested Microsoft monoculture. Free association, not forced assimilation, is what cooperative and self-reliant people desire. And in the end, our operating systems, and the computers they run on, are community-building tools par excellence.

So we're all just building a better neighborhood, and trying to help all our relatives "leave the plantation" as it were. It's a big job and it won't be finished in our lifetimes.

There's a fundamental bit of truth expressed by all the Star Wars and Star Trek imagery used so often here. Liberty and freedom of choice in all good things are precious, worth working and fighting for. Hard and long.

Messman calculates, he does not innovate

[LokiOfRagnar]

Mr. Messman, Novell's boss, is completely financially motivated. His longlasting background in Oil made him, in the eyes of a 14% stakeholder in Cambridge Technology Partners (CATP) an excellent new CEO for the company. Cambridge now longer exists but is now part of Novell. My big beef with mr. Messman is that his management style of Cambridge was similar to the management style of a large oil company. Which is to say: Strict cost control on a heavily asset based company. But assets are not the same as technology, inventions and this kind of IP related business does not compare with the OS services that SuSe provides.

My question is: "What makes a beancounter from the oil industry a good fit for an international IT services company?" especially if you take into account his trackrecord with Cambridge Technology Partners?

Great MS move

[12357bd]

I think MS is the real winner from those 'decissions'.
1 RH is not going to promote his desktop line.
2 Suse is going to try to use Mono as the underlying glue for the desktop.
3 MS gains access to Linux desktops.
4 EEE
Bad new for linux sirs, bad news.

Sigs ?? Mods ?? Karmas ??

It's a good move all around

[msobkow]

Novell now has some solid pieces in place:

• UI/Desktop skillsets from Ximian. A very nice, clean programming interface equivalent to KDE or Apple's APIs, and far, far cleaner than Win32 GUI APIs.
• Software distribution via Ximian's Red Carpet. It may not be perfect, but it works and is a pretty decent user interface compared to SuSE 8.0/8.1 YaST update management. Unlike Microsoft's updates, you can also add software with Red Carpet. (Of course seeing as Microsoft doesn't have a few dozen free modules, there wouldn't be much point to an "Install" option via Windows Update.)
• Core system via SuSE. Conveniently enough, the Linux reputation acquired via SuSE also makes it easy to address SuSE's weak update interface. The rest of SuSE is already solid.
• Directory services via NDS. Sure you could get an NDS appliance before, but now you can get it with a pretty GUI in case you can't afford a real support team.
• File and print services. Novell's old bread and butter is still a solid alternative to Microsoft server packages and CALs. Or you could stick with Samba -- but I won't be surprised if Novell's engineers deliver better performance. They've got a couple decades experience with networked resources.
• Solid business reputation. Novell is not a newcomer, they're not a startup, and they're not led by a flashy headline-chasing CEO.

My guess is a consulting firm or two are up next to handle support and enhancements.

Novell will then have every piece in place it needs to pimp-slap Microsoft from the small business market: reputation, technology, and experience.

I'm also expecting to see some partnerships between Novell, IBM, and Sun to ensure that Mainframe, Power, and SPARC processors get tier 1 status alongside AMD64, x86, and Itanium.