Novell: The Industry Cat With Nine Lives
Stuart Glascock & Lee Copeland
Provo, Utah -- A semi-new chairman, a savvy management team, new products delivered on time, capped by interest in a redesigned network operating system are contributing to the resurrection a company that seems to have nine lives.
Under the stewardship of Eric Schmidt, chairman since March of 1997, Novell Inc. is gaining back channel confidence with the release of NetWare 5 and sales of new products such as ZENworks and ManageWise.
As a result, ASAP Software Express Inc., Buffalo Grove, Ill., said it is experiencing its best Novell sales ever for this and the previous quarter. "Novell is rebounding," said ASAP Vice President Rick Gunther, who attributes the strong sales to NetWare 5.
And at Corporate Software & Technology, Norwood, Mass., Novell sales have "taken a huge jump" and improved "big time" since NetWare 5 shipped, said Howard Diamond, chief executive of CS&T. While Novell is CS&T's third-best-selling vendor, the company's sales have increased at a rapid clip over the past three months, said Diamond.
"There are three issues: One, it's here. Two, it's better than the status quo. And three, at a time when every [chief information officer] in the world is reading a million column inches that the devil is in Redmond, [Wash., NetWare 5] is not from Microsoft [Corp.]," Diamond said.
In addition to NetWare 5, "there's strong interest in add-on products, like the new version of BorderManager and GroupWise," said Gail Okin, senior software product manager at Comark Inc., Bloomingdale, Ill.
Schmidt and Novell's executive staff have been credited for turning around perception about the company. Schmidt credits the September release of NetWare 5 to an overall strong sales quarter last month.
"Our strategy is working," Schmidt said during the company's financial conference call with analysts a few weeks ago. "Initial customer response to NetWare 5 and new Novell partnerships demonstrate that the market increasingly recognizes that directory is vital to managing information resources in an Internet world," he said.
Novell's fiscal 1998 revenue was $1.1 billion, and net income reached $102 million. Earnings were 29 cents per share for the fiscal year.
Yet despite that good news, NetWare is not showing up in the numbers in any big way yet. Revenue from NetWare, as a percentage of Novell's total sales was actually down in fiscal 1998, compared with fiscal 1997. In fact, NetWare 4 and 5 sales accounted for 51 percent of Novell's total sales this year, compared with 64 percent in fiscal 1997.
And according to the CRN monthly reseller software poll, Novell may be doing a little better in the fourth quarter than in the third quarter, but the third-quarter results for Novell was the worst quarterly figure ever recorded since the poll began in 1996. On a year-over-year basis, Novell has lost ground to Microsoft, CRN research shows.
In November, 74 percent of resellers polled said Microsoft was their best-selling operating-system vendor, compared with 20 percent of respondents citing Novell.
Indeed, Novell faces daunting competition, despite Microsoft being months behind schedule with Windows 2000, formerly known as NT 5.0, which is expected to ship next year.
But with one solid quarter of selling, Novell already has realized about a 5 percent increase in sales with NetWare 5, said Todd Chipman, analyst at Giga Information Group, Santa Clara, Calif. By the year 2000, NetWare 5 will capture about 18 percent of the network operating system space, he said, adding that he expects Windows will hold 49 percent and Unix will claim 16 percent. "There is room for optimism for NetWare 5," Chipman said. "It finally is a product [with a cost that] would justify an upgrade-something NetWare 4 didn't do for the 18 to 24 million NetWare 3 users out there. NetWare 5 is going to be a winner."
Copyright ® 1998 CMP Media Inc.
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