NetWare at a crossroads

Every time Novell walks a few steps deeper into the Linux arena, someone suggests the company is running away from its NetWare base.

The dynamic was on display last week at LinuxWorld after Novell announced a series of initiatives, including the porting of its GroupWise collaboration product to Linux and the acquisition of desktop software vendor Ximian Inc. The ink wasn't dry on those press releases before Novell executives - who reportedly have had heated debates about NetWare's future - were busy denying news reports that the end of the operating system was imminent.

"NetWare is not going away, period," says CEO Jack Messman. "Novell is not dropping NetWare; we're adding Linux. As we stated in April and again at LinuxWorld, we will make Novell's services available both on a NetWare kernel and a Linux kernel going forward."

Novell next week is expected to begin shipping NetWare 6.5, and company officials insist development is underway on a subsequent version.

However, such statements are unlikely to end speculation about a product that has seen market share plummet in recent years along with Novell's overall fortunes. This turmoil only reinforces the notion that NetWare's still sizable installed base is at a crossroads. The options for customers are clear: Stay the course with an operating system that might not be supported far into the future; wait and see if the company's promises to move NetWare services to Linux pan out; or make the leap and migrate all their services to Windows.

Sources say Novell's management was sharply divided over the decision to keep developing on the NetWare kernel while migrating its services to Linux or to announce an end-of-life schedule for the once-dominant network operating system.

"Novell was almost ready to announce an end-of-life for NetWare and say it was serious about Linux by killing NetWare," says a former employee who took part in the discussions and asked that he not be named.

The parallel development approach won out.

However, some observers continue to doubt that Novell will release another version of its operating system after NetWare 6.5.

"When push comes to shove it's going to be all Linux because it's just too expensive to maintain two engineering, test and support groups," the source says.

Novell's focus was certainly on Linux last week with the Ximian acquisition and news that its GroupWise collaboration platform would be ported to Linux, with a beta test slated for next month.

Many Novell products already run on Linux, including eDirectory, ZENworks, iFolder and its Volera Excelerator caching software. The company recently said that Nterprise Linux Services - software that gives customers file, print, messaging, directory and management services and runs on Red Hat and SuSE Linux - will be available by year-end. NetWare 6.5 also includes support for the Apache Web server, MySQL open source database and PHP, the Web scripting language.

But Novell still relies on the sale of NetWare product licenses for about 30 percent of its revenue, and isn't sure that the potential for Linux revenue is comparable. Red Hat Inc., which dominates the Linux market, reports overall revenue is that only about one-quarter of the US$361 million Novell generated last year from NetWare alone.

NetWare customers generally express a mixture of contentment and caution when discussing the product.

"Yes, we're happy with Novell and have no plans to get rid of [our NetWare servers] for now," says Jim Mapes, a network administrator with Knape & Vogt, a specialty drawer manufacturer in Grand Rapids, Mich. "I wouldn't go so far though as to say we'll keep them as long as Novell is around."

Knape & Vogt uses NetWare for file and print, and Windows for e-mail, databases, Web and financial applications.

"At this point we are going to continue to use NetWare," says Scott Ficek, director of IT for Mesaba Airlines, a regional airline in Minneapolis. Ficek has 25 NetWare servers.

Most users say that if Novell were to end NetWare they would pay for a migration to Linux or Windows.

"We would be willing to pay for the [NetWare] services that would be ported to Linux, especially the NetWare kernel," says Jeff Johnson, systems software engineer for Georgia State University in Atlanta. Johnson has 92 NetWare 6 and 5.1 servers.

Otis Lamar, systems administrator for the Jefferson County government in Golden, Colo., says, "If Novell services will run on Linux, we will look at migrating to Linux in the future and would be willing to pay for it." He already is looking at Linux as an alternative to Windows.

"We do not expect Novell to give away the services for free, since we already pay for them on other platforms," Lamar says.

Another problem for Novell is that NetWare's dwindling market share hurts its ability to attract application developers. Linux is the fastest-growing operating system, according to IDC, having shown 41 percent growth from late 2001 to the fourth quarter of 2002. NetWare commanded almost 40 percent of the network operating system market during its heyday in the early '90s, but has only in the neighborhood of 10 percent today. While Novell counters such doom and gloom by noting that there are 4 million NetWare servers installed serving 90 million users, the perception persists that developers are indifferent.

"We are under increasing pressure to drop NetWare in favor of Windows servers due to an increasing trend among vendors to stop writing software for NetWare," says Jeff Durfee, IT manager for Milton J. Wood Co. in Jacksonville, Fla.

Novell's prospects for reversing that trend are cloudy, experts say.

"When I talk to the software and hardware community, support for NetWare is in line after Windows and Linux," says John Enck, research director for Gartner. "So when they write management agents and device drivers, NetWare support isn't off the spec, but it's pretty far down the list."

However, another industry observer sees hope in Novell's new strategies.

"I'm not completely sure Novell is going to remain irrelevant," says Al Gillen, research director for IDC. "The company's Nterprise Linux Services initiative raises some interesting possibilities for them. Most importantly, it gives them an application server platform."

"It also makes more sense to the hardware vendors because they are looking to sell more Linux as well," Enck says. "If you look at the deployment of Linux in the enterprise, it's still the early days, so there's still opportunity for Novell to make a play there. Novell has a shot at it, but it would have been better two years ago."

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