"It's an interesting situation ... digitalme has now walked me into some *huge* accounts and opportunities, however I have not been able to gain the attention or listening of any of the executives of Novell. So we (a couple of us) are spending part-time efforts to take the site forward. We are making great progress, but without official resources and support do not hold your breath. We have some very simple, straight-forward intentions ... but little sponsorship for our work. I have approached the CTO office ... and so we'll see what occurs!"
Not Well at Novell
By Andrew Binstock
May 15, 2001 — In my Jan. 15
column (“Special Achievement
Awards”), I presented my
version of high-tech’s Dubious
Achievement Awards. At the
time, I presented the Wish I Had
a Vision Award to Novell’s then-CEO, Eric
Schmidt. In the write-up, I acknowledged
the sad irony that the previous winner was
Schmidt’s predecessor at Novell, Bob
Frankenberg.
Not surprisingly, both men cut similar profiles. They are
both engineers and heavily technology oriented. Neither
had serious business experience before becoming CEO.
Both came over after long careers with Silicon Valley
powerhouses (Frankenberg from Hewlett-Packard,
Schmidt from Sun). Neither one articulated a vision for
Novell when they were brought onboard, although both
acknowledged that their company was in dire straits.
To this list, we can now add: Both left the company in
worse shape than they found it. Perhaps more
accurately, neither one did anything important to bolster
the company. In both cases, the lost time hurt Novell
badly—thereby worsening its market position.
Interestingly, Schmidt has not completely left Novell. He
remains chairman of the board. This is not a good thing.
For if the last two Novell CEOs can win the same award
for lack of vision, isn’t the real culprit here the Novell
board of directors? What it failed to grasp was Novell did
not need an engineer at the helm; it needed a
businessman. But, with Schmidt heading up the board,
it’s unclear whether board members will suddenly see
the red light they missed the last two times through the
intersection. And will a new CEO receive the support
from a board headed by the less-than-successful former
CEO?
You may not have noted that earlier this year, Novell
agreed to acquire Cambridge Technology Partners
(CATP) for $250 million. The motivation behind the move
was Novell’s concern that major corporations wouldn’t
buy its good technology because IT consultants (read:
the Big Five consulting firms) were all recommending
Microsoft or Unix products. Obviously, by buying its own
consulting firm, Novell would have legions of brainy
hirelings who could spread the Provo gospel.
In a roundabout way, this is an admission that Novell has
done a poor job marketing its own technology. Certainly
we would expect that if the same quarter-of-a-billion
dollars had been spent on marketing, these past few
years would have produced far better results than those
we can extrapolate for the CATP acquisition.
Consider that CATP was relatively inexpensive because
its stock had recently tanked to less than $3 per share.
This valuation is attributable to the company’s first yearly
loss since its founding in 1991. The loss should not be
attributed to the crash of the e-conomy during 2000:
CATP was showing signs of distress before the collapse.
Its 1999 net profit of $2.1 million was its lowest since its
founding—down from the previous year’s net of $58
million. At the time, the downdraft was attributed to the
costs of moving into e-services consulting. Predictably,
the 2000 loss was attributed to the costs of getting out of
the same.
None of this inspires confidence and, to my eye, finds no
parallel in Hewlett-Packard’s sensibly aborted acquisition
of PricewaterhouseCoopers’ consulting practice. CATP
was a company in distress bought by a company in
distress. So, where is the synergy? Don’t ask me; I don’t
see any.
The story doesn’t improve if you look at the move from
the customer side. CATP is unlikely to attract customers
on the basis of its Novell affiliation. Well, it might attract
existing Novell shops, but this will be at the cost of other
customers who don’t want a bunch of consultants who
will parrot the Novell company line.
This plan does not show how the new company can
attract customers outside of the two existing customer
pools. This is the critical question and the one that
Novell has yet to answer. Schmidt won’t have to do this,
because CATP’s CEO, Jack Messman, will now serve
as the CEO of Novell. Should this inspire confidence?
On the one hand, Messman has an MBA and is a
businessman by profession. This is the good news.
However, he was brought in to CATP in July 1999 to turn
the company around. Instead the decline accelerated.
Moreover, Messman’s roots at the old Novell are long
and deep. He was the CEO from 1982 to 1983, before
the company really took off under Ray Noorda. Moreover,
he has been on Novell’s board since his tenure as CEO,
meaning he figured in the choices of Frankenberg and
Schmidt and did nothing when Novell’s ship repeatedly
ran aground. Could these failures have sobered him?
Nah.
When asked by The Industry Standard, “Who is the
most powerful behind-the-scenes person in the Internet
industry today?” Messman answered, “Eric Schmidt,
CEO of Novell.”
From which I conclude, we should not expect things to
improve. |
