I agree with this paragraph. I am not sure Schmidt brought any value to the table, as Microsoft was winning away their army of resellers looking for a more profitable software to sell. They tried punishing their small resellers, but lost, as their smaller resellers found a safe harbor and a more profitable partner. The small reseller was given respect and repaid Microsoft’s generosity tenfold. So I think Schmidt just rode it down and then out, like any good overpaid Chief Executive would. Too bad he didn’t understand what made Novell succeed in their early days. They created the channel and then told the small resellers to go sell something else, as they were not valued like their large resellers.

Unless they change the way they do business, nothing will turn for the better, in my opinion.

Hedge fund offers $1.8 billion for Novell
by Erica Ogg
Font sizePrintE-mailShare2 comments .Share Elliott Associates has offered to acquire software maker Novell, according to The Wall Street Journal.

The acquisition offer, delivered in a letter to Novell’s board of directors, is valued at $1.8 billion, or $5.75 per share. Elliott Associates already owns 8.5 percent of Novell’s shares, which it began buying up in January.

According to the Journal, Elliott Associates told Novell’s board that the stock has “meaningfully underperformed” and called recent acquisitions and changes in strategies “unsuccessful.” The hedge fund says its experience in restructuring and acquisitions will “deliver maximum value to shareholders.”

Representatives of Novell did not immediately respond to a request for comment. Shares of its stock jumped 26 percent, to $6, in after-hours trading on the news.

Novell is certainly a long way from its heyday. At one time, its Netware operating system was widely used on corporate servers. It also had ambitions to rival Microsoft, acquiring the WordPerfect suite of desktop applications, a tough competitor to Microsoft’s Office suite. But Novell, perhaps as much as any company, learned what it’s like to compete with Microsoft and lose. When Windows NT hit the market in the 1990s, Novell began a slow decline. Several CEOs came and went, including Google CEO Eric Schmidt.

In fact, Schmidt saw early success at Novell’s helm, even briefly moving the company’s executive offices from Utah to San Jose, Calif. Schmidt pushed the company to release Netware 5.0 well ahead of Microsoft’s Windows 2000. But once Windows 2000 debuted, Schmidt and the rest of Novell didn’t have a good response, and the company’s decline continued.

After Schmidt left, the company returned to its Utah roots and enthusiastically embraced open-source software. Again, it was outmaneuvered by other software companies, most notably Linux distributor Red Hat.

CNET’s Jim Kerstetter contributed to this report.

Business will pick up once they’ve finished restructuring around their Linux products.

It is a catch 22. Software manufacturer: ‘You can get higher margins if you sell more.’ SMB Reseller: ‘I can’t sell more due to the low margins.’

But this is OK, because I have my longstanding customers and solutions that still sell at high margins. In other words, this is not a criticism, but an observation, as I no longer have a stake in it, but always looking for opportunity.

I’ll go so far as to say Novell would not have bought SUSE if it was the Novell of old.

With that said, Novell enterprise products are… well… enterprise products. Which means, they install weirdly and can be hard to set up and use. If Novell is more interested in people using their pricier tools, they need to make these VERY available for FREE. Not that they’ll work forever in the free state, but they have to be able to deliver easily obtained software for trial use WITHOUT the end user having to go through a myriad of hoops.

Novell needs to learn that it’s important to put your software into everyone’s hands. The customer purchases will follow without coercion… if your installs/functions/etc. work well.

Thanks again for posting your balanced comments on Novell.

Today all of Novell’s networking, management, collaboration and identity services run on SUSE and Windows. NetWare can still run some of them but most of the newer versions are not being written for NetWare.

The release of OES2 SP2 in Q4 this year on SLES10 SP3 will complete the transplanting of Novell’s services from NetWare to SUSE. OES3 is already in the development phase.

In a depressed economy it isn’t surprising that some aspects of Novell’s business might actually show declining revenues quarter over quarter or year or year. It is going to take years to come out of the current economic depression. Even Microsoft reported some of the worse financials in its entire history.

Based on the depth of the current economic depression, I would not read too much into the ability of Novell to manage all its product portfolios in order to show a profit. There are product divisions at Microsoft that have never shown a profit too.

What concerns me more is the lack of Novell product and service offerings that are tailored to the cloud computing environment, which is the future of IT. So far I think their response has been a bit underwhelming and this concerns me more than whether their identity portfolio is losing or making money.