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Tuesday April 13 11:46 AM ET
NetTrends: Novell's Directory For E-Commerce, Privacy
By Dick Satran
SAN FRANCISCO (Reuters) - Without telephone directories, businesses would have a hard time getting started. In the virtual
world of the Internet, directories are even more important -- the very core of e-commerce.
Yet, the Internet hasn't produced a single fully integrated ''telephone book'' that could tell buyers and sellers they have the right
number.
Intel Corp. (Nasdaq:INTC - news) and Microsoft Corp. (Nasdaq:MSFT - news) have both offered plans to create unique
identifiers for e-commerce, but, as the biggest sellers of PC software and hardware, their plans were viewed with suspicion.
Privacy advocates and competitors blasted their proposals as too invasive, and both companies pulled back from putting out
comprehensive ID tags on users.
Smaller companies have tried to crack into the market with various kinds of e-commerce software -- but most have been
unable to attract the tens of millions of users required to make their systems work.
One company, Novell Inc. (Nasdaq:NOVL - news), has been quietly building an e-commerce business in the shadows of the
giants. Neither a household name nor a Web startup, Novell just might be the best positioned to create an e-commerce
directory that doesn't raise unanswerable privacy questions.
Novell has created a directory system for individual users called ''Digital Me'' which mirrors the network management software
it's sold to power users for many years.
It lets individuals act much like the network manager at a large company, setting parameters for what kinds of information they
want to disclose about themselves to Web sites. The preferences are generated by a form that can be filled out at Novell's Web
site (http://www.digitalme.com).
Privacy experts call this process a ''negotiated privacy'' system. Users can provide their credit card or other personal
information they wish to share, and list preferences: Will they accept cookies, the digital footprints that some Web sites put on
users' hard drives so they can track their visits to the site? Or how do you want to filter unwanted spam e-mails?
At the same time it gives protection against unwanted spam or cookies, it gives users a digital identity. Novell, in effect, is selling
privacy as a byproduct of its directories. The software offers privacy protection, while letting users disclose enough about
themselves to do business. ''Looking forward, whether it's consumers or business-to-business, e-commerce is not going to
work long-term without a very strong directory service underneath it,'' said analyst Bob Sakakeeny, of the consulting firm
Aberdeen Group.
Novell is already casting itself as ''the world's leading provider of directory-enabled software'' and using the Internet as the
focus for a turnaround after faltering badly in recent years.
One of the creators of corporate network technology, Novell has 50 million users worldwide. But like many other Silicon
Valley giants, it was slow to catch on to the importance of the chaotic network growing outside the corporate firewalls.
Eric Schmidt, who took over as chief executive in 1997, has made the Internet Novell's central focus, a fact not lost by
Web-crazed investors who've tripled the value of its stock over the past year. Schmidt has continued to repeat the message
that whoever controls the directory of the Internet will be able to harness e-commerce. ''Novell views directory and identity as
two sides of the same coin,'' says Schmidt.
''Identifying your consumer is pivotal to setting up a business relationship,'' said Samm DiStasio, director of Novell Directory
Services.
The Internet itself is doing just fine, says DiStasio, with scores of companies building faster and faster point-to-point wires that
make the Internet more robust all the time. ''But that's just creating the connections, the way it's being carried forward is with
the directory,'' he says.
The directories need to be two-way, interactive systems which can verify users on both sides of transactions. Yahoo! Inc. and
others have created voluminous directories of Web sites, but that's just the starting point, he says.
''The thing that sets us apart is that other directories are just yellow pages. In our view, the directory has to be more of a
relationship manager, capable of dealing with multiple systems and databases,'' said DiStasio. ''It has to be much more than just
a lookup system. It has to infer things about me and make it work for me.''
If a Melissa-type virus threatens a computer network, the directory could be adjusted to entangle the virus before it does any
damage. A corporate systems manager could handle Melissa across thousands of computers with a single set of commands.
Likewise, an Internet service provider could make similar adjustments via ''the directory,'' DiStasio says.
But if network administrators already know Novell as the most widely used software systems for setting up corporate LANs,
or local area networks, it's a relative unknown to the general public, something it needs to change. ''They need mindshare,''
said Aberdeen analyst Sakakeeny.
That may be the biggest problem it faces when competing head-on with IBM, which increasingly is promoting itself to the world
as the Internet-friendly giant who cares about privacy and consumer rights. Another familiar company, AT&T, is also aiming
products at the space.
Whoever wins will have to compete with products acceptable to both consumers and businesses.
For privacy advocates, Digital Me is a step in the right direction, but not the holy grail. Jason Catlett, president of the advocacy
group Junkbusters, says the Digital Me system doesn't do enough to protect privacy. ''I'm not intrinsically opposed -- but I
think with this technology people still have to be careful that they're not letting in a wolf in sheep's clothing.''
He prefers anonymous surfing technology like anonymizer (http://www.anonymizer.com), which lets Web users cloak
themselves completely on the Internet. But that technology has a serious drawback, since it's difficult, if not impossible, for
users to buy things over the Internet. Novell says its solution makes that possible and also protects privacy.
''We are not on a mission to invade people's privacy and create a master database of identities,'' said DiStasio. ''That is not
our goal. We're trying to facilitate e-commerce and let users define the level of privacy they want.''
(The NetTrends column moves weekly. If you have any comments or questions, you can e-mail Dick Satran at
dick.satran(at)reuters.com)
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