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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Matthew Leo who wrote (10439)3/29/1997 8:23:00 PM
From: BP Ritchie   of 42771
 
Re: Kiss your Browser goodbye! ... and PUSH implications.

Well, I read it Matthew ... and I think that the message from the authour is basically correct ... but too limited in perspective. This view is something like the famous 'blind men's descriptions of an elephant' ... it is only one 'blind man's perception'.

I think ...

Browsers are going to disappear, not because they are no longer needed but because they threaten to change the paradigm of a computer user interface. In order to preserve it's hold on the desktop computer marketplace, MicroSoft MUST extend it's Windows product line to incorporate ALL current Browers functions ... and add substantial extenstions as well. (MS strategy of 'embrace & extend' ... or as some have said 'engulf & destroy'). It is probably going to be MicroSoft that 'destroys' the Browser ... because a non MS Browser can break the Windows stranglehold on the User Interface as it evolves and develops new functions to deal with the type of content that this article describes.

The descriptions of HTTP & HTML are essentially correct, as is the characterization of the Web as an 'archive' ... what seems to be missed in the authour's perception is the notion that the 'Web' is actually only a relatively 'minor' Network application that runs on a very big Network called the 'InterNet'. I don't believe that the 'Web' will shrink or be diminished in any way ... it will grow substantially and become a 'publishing medium' in it's own right, with the use of ORBs as a model it will probably also provide direct revenue to a much larger community of authours ... the publications will grow to encompass new works that take advantage of digital electronic devices on the Web ... possibly leading to extensions of HTML, or maybe a replacement for HTML that can deal effectively with archived (anything information that can be digitized) and reference information for example 'MPEG documents'.

Not specifically mentioned but also very important:

New applications that can only run on Networks are already starting to emerge ... and all of the tracking data demands an effective Relational DataBase Application program if it is to be used for any business purpose (this is just scratching the surface right now). The most significant barrier to pervasive use of the InterNet for Business, and to replace/supplement 'Broadcast' media content is starting to crumble now ... and will collapse with Telecom reform ... the last piece that is needed is what is usally referred to as 'the last mile connection' which until now has been acting as a choke point for digital communications.

What we need to understand from these points are that the marketplace opportunity for SERVERS is about to expand by several orders of magnitude ... and a new opportunity to provide 'services' like information and data management for each individual user in a vast public network is starting to become obvious (Novell calls these Border Services for now). A misconception that I have seen repeated over and over again is the thought that some new use of computers is going to essentially replace a current use of computers ... for example early 'business case' logic to justify investment in Client Server application development was centered on 'off loading' of expensive central IT resources ... including 'user development' (programming using office functions like SpreadSheets & Wordprocessor Macros) ... what really happened was little or no offloading, and massive increases in 'query' demand on existing systems ... most successful C/S implementations actually drove out very big increases in MainFrame investments as well. I think I'm seeing that same faulty logic again in this article ... I don't agree with the replacement scenario, I think we will see massive increases in demand upon Servers of all kinds, limited only by the bandwidth available to end users.

What this all means to us is very important ... and in my opinion has NOT been managed properly at Novell yet, I think this is probably changing now. Novell has spent it's entire life selling to 'propeller heads' that really do understand Networking ... these people are no longer controlling the majority of purchase decisions, and the number of people that will be making Server Purchase decisions in the next few years is growing exponentially ... they are mostly ignorant of the selection criteria that the 'propeller heads' are familiar with. Novell's engineers & many of the 'propeller heads' know the following:
Novell's Servers throughput is about 8X NT and NetWare has RAS characteristics that virtually eliminate NT from consideration in any well thought out comparison. NW is the most logical choice for any Intel chip based server right now. There are now and will be many other Servers (and increasing) as well ... MainFrames make ideal Data Servers, far better than Intel based computers ... Servers to play movies, Servers to feed consumers news tailored to their profiles, Servers that actually 'upload' (like automated backup) from consumers, Servers that provide subscriptions, Servers used by family doctors & dentists, ... SO MANY Servers that it will become a management nightmare for those providers that try to use a proprietary Domain system to organize themselves (like current NT).

Unfortunately for NOVL Shareholders, MS Windows users 'know' the following:

MicroSoft is the safest bet for all of their software needs. MS may not have the best product when it starts out, but will eventually catch and pass all other competitors. Buying MS can guarantee that all of their current applications and information that they depend on will be carried forward ... switching to non MS vendors is the same as inviting the risk of incompatible SW in the future.

I suspect that the vast majority of people making decisions about which Server to buy (in the next year or 2) are more like the bulk of 'MS Windows users'. Novell has managed to miss this 'sea change' because their core customer base (propeller heads) is actually still growing ... and they have been too well insulated from the real world. Some good Marketing from Novell will probably get many these people to make the same type of decisions as the 'propeller heads' ... a demonstation of Novell's ability to stay ahead of MSFT in Networking that becomes 'common knowledge' will probably sway the bulk of them. Instead of an 'assertive marketing position' that I think is required ... I see Novell attempting to befriend MicroSoft and 'make up' for Mr Noorda's attempt to confront them a few years ago. The confrontation strategy didn't work ... neither does the current 'friends with MSFT approach' ... the next few weeks of decisions and positions from our new CEO will probably provide the clues we need to see if we should push for a buyout ... or renew our faith.

I'll be watching closely.

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