Piloting Novell to the Upper Reaches of E-biz

SAN MATEO (03/27/2000) - E-business, like all business models before it, is about building and maintaining relationships. The Internet has made it much easier to do this, but at the same time the number of partners that companies need to keep track of is exploding. A key technology that should help bring some order to the chaos of e-business is the directory.

In an interview with Infoworld Editor in Chief Michael Vizard and Executive Producer/New Media Katherine Bull, Novell Inc. CEO and Chairman Dr. Eric Schmidt outlines plans to reinvent Novell in the age of e-business.

Infoworld: From your perspective, what's the one compelling proposition that Novell brings to the e-business equation?

Schmidt: The basic pitch we're talking about today is "one Net." The problem today is that everybody built up all these complicated networking structures where they have firewalls, intranets, and the Internet. We think that all the networks are going to merge into a single network. And the reason this is going to happen is because e-commerce is going to need that to happen. To do that, you need a directory, especially because people are not going to let random people into your network without knowing who they are. So it's show time for directories.

Infoworld: Much of the future of e-business is dependent on digital exchanges that are now being built in virtually every major industry segment. How will these exchanges be integrated?

Schmidt: Most people don't want to just buy from one exchange. They want to have some kind of an account that they can use to buy from multiple exchanges.

For those reasons, you need a strong notion of identity and security. What directories do is let you know who it is coming to see you again. The way people are solving this problem today is they're using databases and cookies.

The problem with that approach is it just doesn't scale.

Infoworld: Novell has been talking about the value of directories for years.

What makes the technology any more compelling today than it was two years ago?

Schmidt: Although we've been talking about directories for a long time, we hadn't actually shipped a cross-platform directory until December. In fact, the e-directory on Solaris is being evaluated by lots of dot-com customers right now. It's not a perfect product yet, it's a 1.0, so there's other stuff they've got to do. The initial reports are favorable, but we're just beginning.

Infoworld: If the basic goal is to get as many people as possible using the Novell directory, why not just give it away for free?

Schmidt: We've been able to charge a moderate fee for our cross-platform directory, and we think that helps pay for the investment that we need to make.

And so far we haven't felt that we needed to lower the price further. We made a couple of price reductions over the last two years on that, but we don't really have any effective competition in this space, and the prices are so low relative to the value that it hasn't been an issue. Having said that, the real money will be made in the applications. We have to prove that those applications really add significant value.

Infoworld: What is Novell's applications focus?

Schmidt: In general, what we're doing is building a horizontal directory applications infrastructure that handles certificates, policies, and communities. What we want is for partners to use our techniques to do new neat things with the directory. For example, we want them to build sophisticated network management solutions, [or] software-leasing solutions. We're always going to do the least complicated, lowest-priced, highest-unit-volume solution, because that's how our model works.

Infoworld: Novell has been dependent on channel partners. How has the channel evolved?

Schmidt: The channel is incredibly important. The channel is a key way in which we get new customers. Almost all of the direct business that we're doing now came from customers who had been in the channel initially. So it's the important part of [the] value chain. The other thing is that the channel is remaking itself. The old days of channel-fulfillment only are no longer around, because the channel doesn't have to do that anymore. But there's an enormous amount of consulting and integration that's required, and we think the channel is moving in that direction. For instance, we think there's a lot of opportunity for the channel in the application service provider [ASP] space.

Infoworld: Are application service providers emerging as a new channel for Novell?

Schmidt: We actually have a project we're not ready to announce yet that attempts to build out a directory that shares services. We're going to be showing some of the technology for that at BrainShare. We have the beta of our federated directory, which is internally known as Tao. What we're describing is essentially a meeting point on the Net. What we want to do is provide a secure place in which ... programs can meet programs, people can meet businesses, and so forth. ASPs need that; otherwise, how can they find their activity?

Infoworld: How does that relate to XML?

Schmidt: We believe the primary way in which people will use our directory is via XML. The reason we believe this is that all of the interesting new apps appear to have an XML binding. We're about to ship a product called DirXML, which is a replica of our directory that allows you to talk XML out the other end directly so you can plug your application directly in to the directory. The reason that we think this is going to be the next great applications opportunity is because people are developing in that style anyway, and they need these services. We think we've finally broken the code for how to actually build these applications.

Infoworld: How does this affect Novell's relationship with Microsoft, which is pushing a DCOM (Distributed Component Object Model) architecture?

Schmidt: DCOM is the proprietary architecture for Microsoft, and they have built XML/DCOM bridges. We also support DCOM services, where we federate between Active Directory and NDS. So far, people aren't using Active Directory because it only runs on Windows 2000. But if they use Active Directory services, then using our technology they can simply integrate with NDS and that all works seamlessly now.

Infoworld: What's the state of the relationship between Novell and Microsoft?

Schmidt: Well, it's certainly a lot better. I'm not suggesting that the two companies will ever be best friends, but as you know, Windows 2000 includes the NetWare client as part of a deal we did with them a while ago. Microsoft will be present at BrainShare and is invited to talk at BrainShare about their products and technologies, and they have extended the same courtesy to us at their developers conference. Furthermore, we have fairly sophisticated projects now between the two companies to make sure that we deal with common customer problems and avoid finger-pointing.

Infoworld: What is Novell's approach to the increasing popularity of Linux, and what are the implications?

Schmidt: We're clearly bullish on Linux. The customers that I've talked with are busy evaluating Linux, and it's fairly popular among ISPs. It has not yet penetrated a lot of the enterprise market, but we believe it will become a reasonably significant player and we want to make sure that our technology runs on it.

Infoworld: Are there elements of Novell's technology that you might move to an open-source model?

Schmidt: We felt for a long time that a lot of our client stuff should be open sourced, because our clients are basically given away anyway. But at the moment, we don't intend to make the server or services open sourced because we don't see a need to. But you will see more and more of our client stuff being made available.

Infoworld: What is your primary message to customers about what kind of a company Novell is now and hopes to be in the future?

Schmidt: Novell is about building one network that spans the intranet and the Internet and building a set of services that enables your use of that.

This is a world where all the networks work together as one Net that simplifies the complexities of e-business and provides the power and flexibility needed to succeed in the Net economy.

This sounds like a relatively simple message, but in fact, it's very hard to actually do in practice.

Executive close-up

Dr. Eric Schmidt - Novell

Age: 45

Title: Chairman and CEO

Biggest challenge: Taking Novell to the next level as a leading provider of Net services softwareBiggest success: Restoring integrity to the Novell brand and helping to rebuild Novell as an Internet leaderPersonal note: Schmidt's hobby is flying airplanes.

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