Linux Growth Doesn't Offset NetWare Decline

steveit_is writes to tell us CommentWire is reporting that the decline in NetWare and Open Enterprise sales is plummeting at a much faster rate than their SUSE Linux sales are growing. It seems that the transition is proving to be every bit as difficult as Novell execs originally suspected. From the article: "When Novell last week announced its financial results for the fiscal first quarter ended January 31, the said that growth in its SUSE Linux and related products was decent, but that sales of its NetWare and Open Enterprise Server--a variant of NetWare that uses Linux as the operating system kernel that was announced last year--declined by 11%."

Comments

Why make the comparison

[Penguinoflight]

Someone has to state the obvious. Past users of Novell aren't going to just switch directly to another Novell product that is completely unlike the other one. Whatever growth of SuSE will be because of the sucess of SuSE to provide a good linux distribution, and not because of Novell's name. We saw this before with Corel; They made a unique linux distribution, and some liked it. Nobody decided to move their department to Corel Linux just because they had been using WP.

Re:Why make the comparison

[unladen swallow]

I have to agree.

I got started with networks with Novell Netware 2.12.

From there I moved to 3.12, 4.11.

3.12 was rock solid, the only problem was that it was not an application server, it only did file and print (and did it very well). Having PC's/Solaris/MAC/OS2/Mainframes able to access the same files/print jobs was huge.

During the 2.12 and 3.12 days Microsoft (Win 3.11) was making major inroads with applications which IMO killed Novell. Since Novell did not have a App server to counter it (no one was supporting apps at least on Novell). Novell was left with file and print jobs.

Installing shared apps on a Novell server could be a major nightmare.

When NDS came out it was too little too late.

I see no real reason to migrate to SUSE/Novell at this time

I have bought the 9.2/9.3 version of SUSE (need to buy 10) just to help support Novell.

Don't kill the cow 'til the calf is grown

[swalker42]

Novell has declared it's cash cow dead (Netware) long before the new cash cow (Linux) has replaced it. Now Novell has never explicitly said Netware is dead, just that the direction it will be taking is Linux. That's a lesson it learned from WordPerfect. Announce the end of the only product making money long before the new product has replaced the revenue. Ah well, at least Novell was able to use something from one of the many companies it bought. Too bad it was rotten business sense.

Re:Novell History, for those that forgot.

[Anonymous Coward]

Wrong.

Novell was not involved in mainframes.

It started out at the dawn of the 80s making microcomputer trinkets, and eventually became successful selling Netware - which it survives on to this day.

Re:The real problem

[Anonymous Coward]

*Troll snagged* I am an OES admin in a 1500+ user environment, and I can tell you that eDirectory on OES Linux is anything but half-baked. It is very, very feature rich and secure. We are having some great successes with the product. Myself (Linux admin background) and my partner in crime (Netware admin background) are very happy with the very low admin overhead we have in a pretty complex environment. Our favorite part about OES is all the services that come bundled with the OS that is included in our MLA. Half the time when we come up with a great idea or our users request some kind of feature we are finding that we already own the software that can make it happen. We are rolling out iFolder 3 and eGuide currently and they are working great. We have moved one of our Groupwise Post Offices to OES Linux and it is running rock solid. I will put my Netware/OES shop up against any M$ or Redhat shop any day of the week as far as labor costs and software costs and downtime. It kills me when I read comments like "Half-Baked" blah blah...But unfortunately as we all know, the better technology does not always win. I have told my PHB that when they are ready to pull the trigger on AD I will be happy to go get my MCSE...hey for me, M$ means double or triple our staff and job security...

Apples and Oranges....

[soren42]

Novell is no doubt more than aware that comparing NetWare to Linux is an unfair comparison, just as comparing earnings from this point last year is. Let's take a quick rundown of some differences:

NetWare vs. Linux:

• NetWare is typically licensed per-user, Linux per-server - this is a HUGE difference! For a large enterprise for, let's say 100,000 NetWare users, Novell was licensing annually on a per-user basis. This could come out to millions of dollars if they even charged $10-$20/user (approximately the list price based on 50-100 user bundles). SUSE Linux, on the other hand, is no doubt licensed per-server. That same enterprise can probably support those same users with far fewer servers - let's use an estimate of 2000. Even at the list price of $899 for up to 16 CPUs, that is still a huge shortfall. So, it a significantly different pricing model.
• NetWare was entirely developed in-house - alright, so it was based on DOS, but for all intensive purposes, Novell had a captive developer community, entirely controlled product direction, cost, support, and other factors. With Linux, Novell has managed to trade some of the cost of development for total control of the product - but they still must support and maintain all those users still running NetWare 3(good heavens!), 4, 5, and 6. So, they need almost twice the support staff, and we already discussed the falling revenue. Plus, they still support and patch some versions of NetWare 6, so they are some developers still committed to NetWare.
• The dynamics of their community has changed - in the 90's, the certification to have was the CNE. It meant something. Novell had a huge community of resellers, developers, support engineers, and other partners - essentially under their thumb. Now, they have to compete as just another Linux vendor. Why be just a Novell partner when I can partner with Red Hat, IBM, HP, and everyone else? Why get a Novell CLP9 or CLE9 certification, when I can get the more recognized LPI certification - or (worse, from their perspective) an RHCE certification?
• Their customers' path away has not been Linux - it's been Windows - Novell has been steadily losing file and print customers for years to Microsoft. No offense, people, but face it: most former NetWare admins moved on to WinNT and Win2K years ago. Very few moved on to UNIX or Linux - there are certainly some, but most people that identified themselves as CNE's moved on to be MSCE's, not RHCE's. The problem is, customers are still moving en masse to Windows, and the Linux strategy from Novell has not prevented that.

Okay - I've beat up the Linux/NetWare differences enough, but what about the business differences, and their impact on earnings?

• One year ago, the Microsoft settlement boosted earnings - if you don't get this one, RTFA. The MS settlement was a nice temporary earnings boost, but Novell knew that. Why the market glossed over it still amazes me, but then, it's the sort of thing tech investors tend to do.
• Novell has matured in the past year - I know there's been a lot of negative press about the leadership changes and departures at Novell - especially here at Slashdot, but let me tell you - this is what a company undergoing a major merger integration needs. Especially one changing it's fundamental vision and product focus. Some of the losses were unfortunate - Chris Stone, for example. Some just underscored the growing pains of a company merging several cultures at once - open source and proprietary, US and Germany, GNOME and KDE - too many for all the chiefs to stay and agree. However, IMHO, the current leadership and vision at Novell is remarkable. Novell has done a superb job of selecting the best and brightest from their talent pool to lead the company, and their corporate vision and strategy demonstrate that.
• Novell has strived to maintain product continuity - even at the expense of earnings. Doesn'