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Novell: In front or also-ran?

Interview with Dr Carl Ledbetter, Novell CTO

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With Netware 6.0 about to hit the streets, IT-Analysis.com spoke to Dr Carl Ledbetter, Novell's CTO and senior VP, about the company's prospects. Ledbetter was bullish too, promising a return to former glory and hinting at further acquisitions on the horizon.

Can you tell me what sort of company Novell is nowadays?

Novell is a software and services company that operates within the middle tier, what you might call the business logic section, of the technology architecture. Our products are following a roadmap that will see Novell continue to push solutions into this area of the technology layer. In addition to this however, you must realise that this software is not the sort of thing that users will see, we aim to make this software entirely invisible, we want to provide a set of services and solutions that can be used from anywhere, we want total ubiquity.

So what about your product set?

We have a suite of products that are, essentially, based around the incredibly important directory. This is really the key piece. The directory underpins anything and everything. It is perhaps the most important technology around today. But they are getting to be very much commodities. We don't make revenues from our directory, we pretty much give it away.

Why doesn't everyone have one?

Everybody that knows technology knows that a directory is extremely useful but they won't necessarily buy a directory until they see that it can help them resolve a particular business problem, or that it will improve an aspect of the business. That's the right way to do it too. But what that means is directory sales are based on the ability to solve problems, they're not an off-the-shelf purchase, so you need to have a sales team in place top sell on this basis.

And have you got that?

We have indeed got that thanks primarily to Cambridge Technology which we acquired recently. Novell has just announced that the acquisition is now complete and the integration of the businesses is going very well. But more than that, Cambridge alters our proposition quite considerably. Whereas in the past Novell was considered very much a distributor through the reseller channel, now we supplement that with the consultant from Cambridge - and that gives us a great leg-up. Now we have an enormous team of consultants out there doing solutions sales for Novell and that's a very strong proposition indeed.

That sounds promising. Everybody knows that your products are good but, similarly, everyone knows that Novell can't do marketing. Do you have any plans to address that?

This is very true. I've had this criticism levelled at Novell for some time and we admit that marketing isn't our strong point. We make software that is second to none, we don't see ourselves as a Microsoft marketing machine. I heard the joke about Novell recently; it said if Novell had invented Sushi they wouldn't have sold it on the basis of its fine traditions, exquisite craftsmanship or the quality of the ingredients, they would have called it cold dead fish. I liked that. But joking aside, we are taking things a lot more seriously nowadays. We have started doing television advertising for the first time in Novell's history and we are looking to exploit lots of new angles. I think it's fair to say that you will see a difference. We'll never be Microsoft but we are definitely improving.

It's about time. Judging by the financials and the impending release of Netware 6.0 it looks like the next 12-18 months could make or break Novell?

This is the crucial 12-18 months for Novell. I would say that by the end of this time Novell will either be back at the front where it very much belongs, or it will be an also-ran. Naturally, I think we will be back at the front.

What makes you so confident?

Novell is a strong company. We've got the best products in the world, we have plenty of cash in the bank, we've got a huge team of consultants and an increasing band of resellers and we continue to lead the way in terms of technology. That's why we are confident.

Would you agree that you could do with someone like IBM flogging your products too?

I am inclined to agree that we would benefit from a big-brother relationship but you may find that something happens on that over the next 12 months. We continue to look at this and we have relationships with just about every vendor out there, so I think you can expect to hear good things from Novell. Anyway, you must also realise that we have a multitude of very strong relationships with Cap Gemini and Pricewaterhousecoopers, both of whom do exceptional work with Novell solutions. PWC in particular is doing some fascinating work in the health sector using our technologies - the health sector is the perfect place for a directory. Yahoo is using our directory to power a whole raft of services across its networks too so we are increasing our exposure quite considerably.

What has the acquisition of Cambridge Technology done for Novell, except gain you a new CEO?

We used to have some 30,000 resellers shifting Novell software into SME's and a direct sales team for the Fortune companies. But this was really a pretty small team. The Cambridge acquisition gives us thousands of consultants that will boost sales considerably. We anticipate almost one third of our revenues coming from the consultants once they are up to speed on everything. They're currently undergoing intensive training to understand the full technology offering but once that's completed Novell will really start moving again.

How critical is the directory?

The directory has to be there for sectors like Government; the e-government initiatives are a great opportunity for Novell. So are areas like education, especially universities. We've had a little project running at Novell for the past six months called 0-Day Start. The project came from the idea of managing someone's first day at work or college. When you go into a University, for instance, you have to register, you have to register for your accommodation, you have to register for the library, you have to register for the gym and, typically, all of this stuff happens across independent applications. Stick a directory in between all of this, however, and suddenly you have someone starting painlessly with no problems. You just register your details and they filter to every area that you are likely to encounter. That's a very powerful solution.

Where else can we expect to see more Novell solutions appearing?

The financial sector - by which I mean banks, insurance companies the whole range - will be a big one for us. Cambridge has a very strong financial practice which we will be looking to expedite over the coming months.

How come Novell lost its footing so badly?

We had a big upswing towards the end of 1999 which was actually all to do with the Y2K but I think we probably misread that situation. As a result we ended up with flat, and some declining, revenues through 2000. But we did actually spot this problem pretty quickly and have been tackling it for some time now. We would expect to see revenues kick-started again next year. We won't be sitting still waiting for that to happen though, we've got a good cash pot that we will be looking to spend on new technologies.

Does this mean we can expect some more acquisitions?

We are definitely looking at acquisitions. We want to become the ultimate choice for middleware software services and infrastructure so we will be looking to round out our offerings in this space. That could mean that we will acquire a company that has specific middleware technologies - things like EAI and e-provisioning - or that we may look for strong vertical players - those leading the financial markets perhaps or maybe the health sector.

Don't you think that Microsoft might be keen to keep Novell away from that area?

Of course. Some people say that Microsoft is a shark in the ocean, but I think that Microsoft is the ocean - it's everywhere and you can never take your eyes off it. Microsoft, with products like Passport and XP, is looking to capture this kind of space. But, and believe me you won't even find people in Redmond argue with this, our products are superior and Microsoft knows that only too well. Microsoft works very closely with us. We have a very good cooperative and competitive relationship with Microsoft.

Do you think Microsoft might start behaving itself since, and because of, the anti-trust cases?

I hope so. Microsoft could do so much to help further the cause of XML and I really hope that happens. But Microsoft has a lot to deal with right now so you never know what might happen. One thing is for certain though, if Microsoft does get broken up the various parts will be racing to get a partnership with us. Microsoft knows are solutions are absolutely key.

What about the rest of the competition?

There isn't just one competitor out there that we have to concentrate on, we have to watch a whole raft of players that are working to develop the middle tier. Companies like Cisco, Sun, AOL, they're all trying to muscle in. Microsoft did well to become the application server years ago, but the network operating system was very much our game. Now we are in the Internet era, where the web becomes the network, so we are very well positioned to capitalise on this. We understand how this stuff works better than anyone out there. We may not be the best at marketing but we know how to do technology.

But people have criticised Novell for its software releases, they say Netware can lead to service pack hell. Is this likely to happen with Netware 6.0?

No I don't think that it will happen with this release. We have heard our customers concern on this matter and this release has been the most rigorously tested release to date. That doesn't mean that it will be bug-free because that's simply not possible. But I do very much expect it to be a very strong and robust solution.

And what about the pricing, everyone seems to think it's about time you came into the 21st century and had per seat licensing.

The pricing for Netware 6.0 will be done on a per user basis. We are moving everything in this direction, all of our pricing will be on a per user basis soon.

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