Novell faces setbacks in open source strategy

Novell faces setbacks in open source strategy


My local newspaper, the San Francisco Chronicle, has a unique system for rating movies. Next to each review is a different version of the paper's trademark Little Man icon. For a sure-fire hit, he's leaping to his feet in uproarious applause. A lousy film has him slumped over and snoring. And for a real bomb, the only thing shown is an empty chair.

So who says enterprise IT can't be that kind of fun? Let's try a test. If I adopted the Chronicle's system as my own, how would I rate Novell?

When I profiled the company in July 2004, I was cautiously optimistic. Novell had de-emphasised its legacy NetWare OS, had bought Suse and Ximian, had ported its core proprietary software to Linux and had begun reinventing itself as a major player in the open source arena. More than a year later there's little that inspires me to a standing ovation. Of course, it doesn't help when the company's own investors are threatening to pull the empty-chair routine. In August, Novell reported a 5 per cent drop in third-quarter revenue from last year and a whopping 91 per cent drop in profits. Included in a Novell SEC filing in September were scorching letters from Blum Capital Partners that urged broad changes and criticised Novell's senior management for its lack of vision and sense of urgency.

Also in September, Credit Suisse First Boston analyst, Jason Maynard, lambasted Novell for its stagnant stock price and frustration within the shareholder base. Novell CEO, Jack Messman, initially rebuffed these complaints, insisting he had the situation well in hand. But as the weeks rolled on, he quietly began implementing many of the suggested changes.

His most dramatic move was to create some empty chairs of his own. Novell announced in early November that it would eliminate more than 10 per cent of its workforce - roughly 600 jobs - and that it would divest itself of its 400-employee Celerant consulting division.

Despite the layoffs, however, Novell's message to its shareholders and customers remains optimistic. In particular the server software vendor plans to redouble its efforts around Linux and open source. Too bad, then, that there's one more empty chair at Novell these days.

Suse Linux co-founder, Hubert Mantel, recently announced his resignation on a Suse mailing list, saying, "This is no longer the company I founded 13 years ago."

So what will the final cut look like in this ongoing movie they're calling the new Novell? Will it be a Novell that acquired some really interesting software or an open source company that acquired some really bad executive management? The Little Man's chair isn't empty yet, but if he isn't snoring then he's definitely looking at his watch.

Personally, I haven't given up on Novell yet. But its trials certainly aren't over.

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