New Novell CEO stresses execution

It's do or die time for Novell. Again.

The company changed CEOs last month and will shortly release its latest Linux-based server and desktop software, which will share a common code base and be aimed at making NetWare server rooms into Linux shops while enticing corporate desktop buyers to try the open source technology. All of these efforts are behind the goal of new CEO Ronald Hovsepian -- just two weeks on the job -- to focus Novell on Linux and open source technologies.

In an interview with Network World editors, Hovsepian and Novell CTO Jeffrey Jaffe laid out their plans to grow Linux sales, spur NetWare customer migration to Linux and push Linux to corporate desktops.

Hovsepian made clear that Linux and open source will be the company's leading technologies going forward, and he outlined plans to accelerate the speed and urgency behind the company's transition to Linux.

"Our focus is to make Linux the centerpiece of what this company is capable of doing," he says. "One of the great things of what Linux brings to us is the opportunity to do things differently."

But with Linux accounting for only 4 percent of Novell's total revenue in the most recent quarter, and overall revenue dropping 5 percent from a year ago, Hovsepian faces myriad challenges. Among those challenges are chief competitors such as Red Hat gaining strength, and others such as Oracle -- a huge Linux service supporter -- talking about releasing their own Linux distributions. Cost-cutting efforts have helped Novell turn a profit recently but more will likely be necessary, experts say.

Part of the solution to these problems will be simplification of how Novell sells and prices Linux through its channel partners, as well as how it packages and supports the technology.

"We just have to drive a level of simplification into our business processes and our business model," Hovsepian says. "We have room to improve there dramatically in the way we work with our partners and the way we run the business for our customers."

How he will do that remains unknown at this point, but Wall Street and industry analysts who previously called for a shakeup at Novell pointed to Hovsepian as the person with the right mix of sales experience and ability to execute, with 17 years at IBM before joining Novell three years ago.

OK now, it's go time

One focus for Novell in the server market has been to accelerate the transition from NetWare to Linux. This transition began last year with the release of Open Enterprise Server (OES), which blends technology from Linux and NetWare, and gives users a choice of running either kernel as the core technology on a server.

"Our current version of OES is basically NetWare and Linux side by side in a single package," Jaffe says. Novell's widely publicized road map is to make Linux the company's core operating system. In the next version of Open Enterprise Server, Novell says NetWare will run as a virtualized service on top of Linux, which Novell hopes will spur migrations to Linux overall.

Hovsepian says the key to this change in Novell's customer base goes beyond the virtualization technology -- which he says Novell has nailed down -- to the execution, which is the CEO's strong suit.

A starting point, he says, is the fact that around 80 percent of Novell's customer base already uses OES, which has the combined Linux/NetWare technology.

"That's nice to hear, and it's a good indicator," he says. "So now what we have to do is walk through these migrations with our customer."

With eight out of 10 Novell customers already having the Linux software to make the NetWare/Linux jump, the potential for Linux migrations is good, Hovsepian says. The support infrastructure for this jump is there already, with more than 900 Novell support engineers trained to implement and support Linux, Hovsepian adds, which is more than 80 percent of the total support force at the company.

Partner up

A better relationship with the channel partners selling and supporting Linux for NetWare users will coincide with a ramped-up push to draw new customers into the OES fold, Hovsepian says.

"We're focusing a higher percentage of our dollars on acquiring new customers while maintaining our old customers with continuous communications," he says. A shift in spending "to the tune of roughly 70/30" will take place in the coming quarters, he says. This means Novell will focus a majority of its spending on marketing, sales and technical personnel in the field on promoting Linux over NetWare.

One area that gets the new CEO and Novell's top technologist revved is the desktop opportunity.

CTO Jaffe says the next six months will be "a very important time for the industry" in terms of desktop technology as Microsoft leads up to its release of Windows Vista next year.

"2007 is when large enterprise customers will have to make their Vista decision," he says. "What we're telling folks . . . is that if you're going to make such an important decision, you should have an in-depth knowledge of the fact that for the first time there really is a choice. There really is an alternative."

SuSE Linux Enterprise 10, due out this quarter, should take care of the needs of most corporate knowledge workers, with interoperability with Microsoft and IBM messaging back ends, interoperability with Office formats and an interface designed to make the transition to Windows as simple as possible.

While excited about the opportunity on the desktop, Jaffe says the company's approach to enterprise desktops will be more pragmatic and opportunistic than starry-eyed.

"It's important to be realistic about the rollout of the desktop," he says. "We don't actually expect all enterprises will become Linux-based in the next 12 months."

Novell is off to a good start - more than 94 percent of Novell employees are using Linux desktops, Hovsepian says, adding that large enterprise customers also are looking into pilots with the technology.

"The interest is definitely there . . . and from my vantage point that's a good proxy for the future," he says. "We have to make sure that we are successful with these pilots. . . . Other customers are going to wait to hear from other customers to say, 'hey, that was pretty good.'"

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