Enterprise Software

Pondering Novell ... a decade makes all the difference

Novell appears to be on the verge of another round of layoffs and a major shakeup. Watching Novell try to re-invent itself again — or at least reshuffle the deck to see if it can find new leadership to execute on its Linux strategy — makes me think about how much things have changed in the server market during the past decade.

A decade ago, in 1995, Novell shipped over 700,000 licenses of NetWare during the fiscal year, which was then the best-selling year in NetWare's history. That was almost twice as many as all other server operating systems shipped combined and four times as many licenses as Microsoft shipped of Windows NT. In terms of market share for the installed base of server operating systems, Novell had a 52.2% share while the combination of Windows NT and Windows for Workgroups had just 6.3% share. The rest of the installed base was made up by Banyan Vines, IBM OS/2 LAN Server, and various versions of UNIX. NetWare was at the peak of its strength. Its new version, NetWare 4.1, made up 40% of new shipments in FY95 and was rapidly becoming the defacto NetWare OS.

However, even though NetWare revenue grew to a record $1.033 billion during FY95, there were also danger signs at Novell. On Monday, October 9, 1995, The Motley Fool wrote, "Is there something rotten in Orem, Utah? Investors have been wary of network giant Novell Inc. for a while now. Ever since Novell's buyout of WordPerfect was criticized as a bail-out of their Utah neighbors rather than the acquisition of a quality product, most avowed technophiles have avoided shares of the software company... In the wake of disappointing third-quarter earnings, Novell shares had been buoyed by a rumored takeover coming from IBM. Why IBM would ever want Novell was never really settled, as it would have just acquired another roster of products under fire from industry giant Microsoft. Although many have argued that Microsoft's products do not cut in on Novell's lower-end networking market, the reality of the situation has been Windows NT increasing market share at NetWare's expense. The fact that Novell's most recent upgrade, Netware 4.1, has universally been dismissed as lame has not helped matters either."

We all know how the story went from there. During the next five years, corporations large and small across the world began ripping out their Novell boxes and replacing them with Windows NT Server 4.0 or, eventually, with Windows 2000 Server. And, in terms of new deployments, very few companies were choosing NetWare to run their networks. By the year 2000, Novell's NetWare had essentially lost the server operating system war to Windows NT/2000. Since then, Novell has tried to reinvent itself multiple times, its latest move being an attempt to become a Linux company since its acquisition of SUSE Linux in January 2004. Novell CEO Jack Messman said it would take two years to turn the company around with this new strategy. His time is almost up and Novell still isn't a major player again. That's why there's all this chatter about a Novell shakeup.

Oh what a difference a decade can make.

About Jason Hiner

Jason Hiner is Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He's co-author of the book, Follow the Geeks.

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