FYI,
Investor's Business Daily has an online (free) web site at
www.investors.com Sign up if you can't get the paper. Novell just moved up from a D ranking to a bullish B in their accumulation/distribution ranking. Took them a few days to change it, as we already knew it was under accumulation. Here's a very interesting and important article in today's IBD computer section on Novell and Microsoft. Very interesting, huh Joe?? The pot continues to simmer.
Regards,
Quad-K
New Novell System Shows
Gates Is Alone Vs. Justice
Date: 2/5/98
Author: Lisa Wirthman
Bill Gates says Microsoft Corp. is fighting the
government to assure that all software companies
can innovate.
But new software from rival Novell Inc. makes
clear the fight is really just about Gates' company.
Novell seems to be able to tie products together
the way Microsoft has without triggering any
government action. The inference: The only
software maker that need fear the Justice
Department is Microsoft itself.
That's not what you'll hear from Gates. In a letter
to employees and shareholders this week, the
Microsoft CEO said a ''vital principle'' is at stake
in his battle with the Justice Department. The
issue, he said, is ''whether Microsoft and
thousands of other American software companies
will continue to be free to create software that
benefits consumers.''
But witness Novell. The Orem, Utah, company
last week unveiled a new test version of its
NetWare 5.0 operating system for computer
networks. The final product, due out midyear,
will compete with Microsoft's Windows NT.
NetWare 5.0 will include Internet browser and
Web server software from Netscape
Communications Corp., says John Slitz, Novell's
senior vice president of marketing. When users
buy NetWare 5.0, they're also buying that
browser and server software. They have no
choice.
The government is fighting Microsoft on much the
same point. Microsoft is forcing users to get the
Microsoft Internet Explorer browser when they
buy the Windows 95 operating system. Microsoft
requires computer makers that license Windows
95 to include its browser in their machines.
The Justice Department says that violates antitrust
laws. It sued Microsoft in October.
But Novell's customers are in the same boat as
Microsoft's customers. Netscape's Navigator
browser and FastTrack Web server will be part
and parcel of NetWare 5.0, not just add-ons, Slitz
says.
One of the biggest differences is this: In the case
of Windows 95, the issue involves two Microsoft
products. In the other case, it's a Novell program
and a Netscape product. That may be key in
interpreting antitrust laws.
Then again, Novell isn't just another Netscape
licensee. Novell and Netscape set up a company,
called Novonyx, to create versions of Netscape
software just to run on NetWare.
Last week, Novell said Novonyx no longer will
be a separate company. It will be absorbed into
Novell's development group. This commits
Novell to Netscape products. Users won't be able
to buy NetWare without getting the Netscape
software.
For all the similarities with the Microsoft situation,
Novell hasn't heard a word from Justice. Novell's
''freedom to innovate'' is intact.
Meanwhile, the Justice Department continues to
probe Microsoft's Windows 95. And this week
the attorneys general of 11 states issued
subpoenas for information about Microsoft's next
operating system, Windows 98.
Microsoft did win a victory this week. An appeals
court put the work of an independent investigator
on hold. In December, a federal judge gave Larry
Lessig until June to make his recommendation on
whether he believes Microsoft is breaking antitrust
laws.
Microsoft fought against having a layman review
the dispute. It also accused Lessig of bias. But the
judge refused to remove him from the case.
This week, though, the appeals court halted
Lessig's investigation until it hears further
arguments, slated for April 21.
So why does Novell get to spend its time
developing Internet software while Microsoft
spends its time in court? Because Novell doesn't
dominate the software market, as Microsoft does.
Novell, with 79 million NetWare users, once
ruled the market for network operating systems.
Today, its market share is just 27%, compared
with 40% for Microsoft's Windows NT, says
International Data Corp. in Framingham, Mass.
Novell isn't alone in including a browser in its
software.
''IBM and Sun also now offer browsing as a
standard feature of their operating systems,'' said
Gates in his letter to customers and shareholders.
Microsoft must be able to do the same thing to
compete, he says.
But there's no other player quite like Microsoft.
Novell, IBM and Sun have operating systems that
run on servers. Microsoft's Windows 95 runs on
desktop PCs. And in the market for desktop
operating systems, Microsoft has no viable
competitors.
Microsoft's dominance sets it apart, says Ken
Wasch, president of the Software Publishers
Association in Washington, D.C.
The software industry group took its own steps
this week to make clear that Microsoft's problems
are just Microsoft's. The SPA released eight
guidelines for competing in the software industry.
Among them: ''Operating systems should not be
used to unfairly favor (a company's) own
products and services (or its favored partners)
over those of competing vendors.''
Does that include Novell's NetWare?
''No,'' said Wasch, ''It only applies to dominant
operating systems.'' Things that are legal for
Novell ''would not be permissible with market
power,'' he said.
Wasch says the SPA opposes having Microsoft
regulated or broken up by the government. But the
group didn't want to take any chances that
backlash from Microsoft's problems could affect
other software makers.
''Our industry is an unregulated industry and we
want to remain so,'' he said.
The software industry is being investigated by
antitrust authorities worldwide, says Wasch.
''Those authorities have the potential to be loose
cannons, and we don't want them acting out of
pique or anger,'' he said. ''They should be acting
in a thoughtful and deliberate manner, and these
principles are an attempt to guide them in doing
just that.''
While the SPA opposes industry regulation, it
favors enforcement of antitrust rules.
''Regulation means, before you do something,
check with us first,'' Wasch said. ''Enforcement
means acting like a referee. And if you high-stick,
you're going to go to the penalty box.''
(C) Copyright 1998 Investors Business Daily,
Inc.
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