Well, The VAR Guy is eating a healthy serving of crow today. He’s been negative on Novell for a few years, and he frequently questioned the company’s open source software strategy. But according to a new piece of financial news, the Linux provider is performing better than Wall Street expected. Here’s the scoop, which surprised our resident blogger.
Novell raised its fiscal 2008 sales outlook Thursday, citing its purchase of Toronto-based PlateSpin Ltd. and fiscal first-quarter results, according to the Associated Press. The company now expects annual revenue of $940 million to $970 million, compared with an earlier estimate of $920 million to $945 million, AP reports.
The news comes at a particularly embarrassing time for The VAR Guy. A few weeks ago, he slammed Novell for failing to have a clear open source application strategy amid Sun’s buyout of MySQL. Novell Chief Marketing Officer John Dragoon responded by outlining the company’s broader middleware and security strategy, and its relation to SuSE Linux. A few days later, Novell Channel Chief Pat Bernard outlined her four-point plan for rebuilding Novell’s channel.
Now comes word that Novell’s current-year revenue will likely be higher than originally anticipated.
Does that mean Novell is a powerhouse again? Let’s not get ahead of ourself. The problem with the media (including The VAR Guy, sometimes) is that we like to put companies into clear categories: Winners and Losers. Look at the current situation over at Yahoo! Sure, Google is a far brighter star than Yahoo! these days, so the media paints Yahoo! as a loser and a has-been. The VAR Guy wishes he could build a loser company that attracts a $40 billion takeover offer.
Now back to Novell. The VAR Guy still is generally down on the company. Red Hat and Ubuntu remain the much hotter plays in the Linux market, he believes. But if you believe Novell’s latest financial forecast, it’s pretty clear that the market has embraced Novell SuSE Linux as well.
Even without the Microsoft partnership, Dragoon has pointed out, SuSE Linux sales are growing as fast as the market — or potentially slightly faster, he estimates.
This isn’t the Novell powerhouse of the early 1990s. But based on today’s financial news, perhaps it’s time for The VAR Guy to keep an more open mind on Novell’s business prospects.
Novell still has some tricks up its sleeve. Remember, the Linux community (in general) wants NO Microsoft at all. An while that is a good long term goal, today’s business still needs a Linux player than isn’t afraid to integrate with a Microsoft environment. Look for Novell to continue to make some key strategic acquisitions… ones that make the best sense for them (not necessarily the “ooh baby” popularity acquisitions… e.g. MySQL).
Both Ubuntu and Red Hat are “pure” Linux plays and do well inside of businesses that are prepared to remove all of their Windows platforms. The problem with this strategy is that not everyone is ready to obliterate Windows in its entirety. I have worked with many Red Hat shops and I’m disappointed by Red Hat support and statements made by their engineering and support teams. Does Red Hat understand technology?.. I would say yes, definitely. Does Red Hat understand business? No way.
Also, Novell recognizes that virtualization is going to even a bigger part of corporate planning over the next 5 years than in the past year. Will it be Xen? Not sure. But virtualization certainly and Novell wants to be a key player (regardless of the underlying hypervisor chosen).
Along with that, the complexities of managing a large distributed datacenter with multiple machines, blades and virtual machines is something Novell realizes all people need. While I’m not too keen on the idea of one centralized patching platform (as long as Microsoft is involved there, it’s doomed to failure), the ideas of identity management, machine configuration management and dynamic allocation of machine resources are some of the current strengths of Novell’s current direction.
One must ask, what are Canonical and Red Hat doing in the enterprise space? Well… JBoss could be interesting, but I think the world is not as enamored with Java application servers anymore… not saying there isn’t some room for growth, but most of that will be in “take away”… which lines up fine with the general Linux community thinking of what Linux based products should be doing. Ubuntu just isn’t ready at all for the enterprise yet… make take a few years in fact.
Novell on the other hand seem more interested on where things are going and expanding into new markets rather than stealing away from existing markets (obviously some of that will happen too). And while Novell certainly has to do some repair work on its integrator partnerships (Novell needs to do some house cleaning on those that messed that up… hint), they are really the only enterprise Linux player that has the personnel world wide to drive post billion dollar sales (possibly even multi-billion). Red Hat is attempting to figure all of that out… but having been there, the success rate is similar to starting a brand new company… very few achieve it.
Will Novell succeed? Who knows? We live in a strange world where litigation is preferred to innovation. We can only hope that Novell (who is tied up in some litigation) has the foresight to innovate and depend solely on building on existing markets and forging new markets for their revenue moving forward.
I wouldn’t count Novell out just yet. Let’s put it this way, if Novell’s strategy fails, I can almost guarantee you that Canonical and Red Hat will fail as well… in fact it is more likely that Novell would be the last one standing.
Give it some thought. You are the “VAR” guy after all. Put on your business hat and examine the strategies yourself.
Oh.. btw, Novell wasn’t exactly a powerhouse in the early 90’s, they were a company in self destruct mode. Anyone who couldn’t see it coming just wasn’t looking very far ahead. The were acting very similar to what I see AMD doing over the past 2 years. And well… look how well that has worked out for AMD.
By 1994, Novell was a company in (euphoric) chaos…. and then… KABOOM! The good news is that today’s Novell isn’t the old Novell.. which is weird because I keep hearing people who want the OLD Novell back… what?!!?! Just goes to show you that people just look at short term ($$$$$$) rather than the long term.
I’m not saying Novell is perfect… as mentioned, they still have significant house cleaning to do. And yes, there will be some that get quite upset about it… but Novell needs to be looking 5-10 years down the road (typical investors hate that… unless you are NOT the typical speculative investor…i.e. your are a true investor).
I know we’ll probably differ on what I’ve said here… and that’s fine. However, if Novell does succeed, and I become a millionaire again, I’ll gladly treat you to lunch!!
[...] a new piece of financial news, the Linux provider is performing better than Wall Street expected. Here?s the scoop, which surprised our resident blogger. February 29, 2008 · Linux, News, Open Source [...]
What a thoughful piece by the VAR Guy and a thoughtful post by Chris Cox. My thanks to both of you.
VAR Guy, perhaps there is hope for me. I have used Suse since v8.2. After the Novell/Microsoft deal I wanted to move away. I tried on my own and the DT’s were just too much. I ended up in therapy and rehab, then a support group. But no matter, I relapsed. I have been using daily for a while now. My drug of choice is SLED 10 sp1. Although I can’t afford to purchase Novell support at this time, the Smart Package Manager has been a blessed potentiator. I am still flirting with other distros, but so far they just don’t provide the kick and the euphoria.
Finally, although I work in a Microsoft centric environment, my SLED connects to the Active Directory and domains better than the Microsoft machines in my small lab. I would have to venture that the problem is not the issue. I am stuck using some Windows so I have Win2k running in the VMWare Server. But I am doing it inside of SLED and that provides some comfort (as well as a bit of smug bliss).
I will always be evaluating the other options (including the BSD’s, OpenSolaris, etc) and I will no doubt use some for specific purposes. For now I will use SLED.
I do appreciate what you write. You always appear to be open (open enough to admit when you err and open enough to change your direction when the evidence warrants. Saint Bill and Bishop Ballmer at the Church of Microsoft just don’t have the integrity (who knows, if I had that much money it might be like having the ring in the Lord of the Rings, serious side effects). I don’t think Saint Bill will get that far away from Windows and Office; he will always be an ambassador for the church.
Keep up the good work. Pray for us who are seriously addicted.
Apologies, regarding SLED connecting to the Active Directory the one sentence should read:
I would have to venture that the HARDWARE is not the issue.
Sheesh!
I respect someone who’s willing to write a whole article about how they’re wrong. This is VERY unusual in a slap-dash get-the-story-out-the-door media culture, which buries its retractions in hidden places, if it ever makes them at all. So much “news” today is merely infotainment. And tech news is so often written by people who clearly know very little about the technology they’re covering. This of course, is why blogs have risen to such prominence.
I’m glad to see an exception.
[...] for sure. Red Hat remains firmly entrenched on enterprise servers and Novell has shown reasonable momentum on the server as well. And let’s not forget about Microsoft, which is making its big Windows [...]
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