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How Novell (finally) got it right with NDS

Our Graham charts Eric Schmidt's attempt to revive the NetWare company

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Analysis For a company with deep Mormon roots, codenaming a future product '6-Pack' is an indication of just how far CEO Eric Schmidt has managed to change the culture at Novell. While Microsoft, the ultimate competitor, has been in vapour for a true directory service for NT, Novell all but squandered the window of opportunity that Microsoft presented by its inability to produce anything approaching NDS, or Novell Directory Service as it is now known (it was NetWare DS). The smart move Novell made was to break NDS away from NetWare, and establish it while Microsoft was crying 'Wait for us, we're the leader' and, in the absence of a product, showing slideware entitled 'Active Directory'. NDS 8, aka Scalable Directory Services (SCADS), has overcome the scalability design limitation of the previous version, although Novell still managed to sell 50 million licences of the previous version. Only Netscape's Directory Server offered any competition. NDS 8 will natively support LDAP 3. Novell is positioning it as a way for ISPs to manage user access and billing with a single directory, and will also be offering ISPs NIMS (Novell Internet Messaging System). NDS for NT 2.0 required a NetWare server for repair and IP services, but version 3.0 will not require NetWare. In the partnering arena, Novell has recently done a deal with Compaq for 6-Pack, and plans to demonstrate it later this month at Novell's Brainshare developers' conference in Salt Lake City on a Compaq eight-way server and possibly a billion directory entires, although the design was for half a million entries. The plan is to release it in beta in April. Novell is also working with Compaq on caching applications. Modesto is a 64-bit Novell server operating system product in development, and which awaits Intel's Merced release in mid-2000. Novell expects to be the first vendor to demonstrate an application on a 64-bit server OS. Novell has always had the problem of explaining to users the importance and convenience of a directory service, but increasingly Microsoft-only shops have seemed content not to have centralised control of the network in one directory. Some ineffective Novell marketing did not help. It now seems that Novell has put its finger on one marketing problem: many of its platinum VARs really wanted to use their Novell status to sell only Microsoft software. Novell made a fairly bold decision to sort out the men from the boys by charging an annual fee, first proposed at $10,000 per office, but quickly reduced to $3000 in the face of stiff opposition. The fee will cover training, software and support. Relations with Microsoft have been cool but stable, with Schmidt keeping Novell out of contentious situations as much as possible. Novell's recovery is at Microsoft's expense, according to a Barron's cover story. Of course Microsoft will be commissioning surveys from any organisation willing to work to rule, so to speak, to show that Active Directory numbers far exceed NDS numbers -- but any comparison is meaningless because the products are so very different in capability. Schmidt said in a recent interview that Novell had changed from being NetWare-centric to having a spectrum of networking products. He sees caching as the new business driver. He admitted to being somewhat shell-shocked at the depth of Novell's problems, but the turning point had been the release of NetWare 5. Last month, Novell produced a fiscal Q1 profit of $29 million on sales of $286 million, consolidating the recovery. The market liked what it saw, and Novell shares have now doubled in the past year. ®

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