How will you grow your share of the Linux market, and boost Novell's Linux revenue, which only accounted for 4 percent of the company's revenue last quarter?
Hovsepian: What's exciting is that we've been growing at 20 percent over the past quarter in our Linux numbers. Our identity services business grew in totality at 20 percent, while the market is growing at 11 percent. With Linux, we have to grow even faster, from my point of view. Twenty percent is not aggressive enough for us.
We want to really emphasize our story. Our story is not an edge server [story], where our competitor plays. For customers that are really going to make [Novell Linux] part of the core of their businesses, either in pieces of the network or the data center, the question is: Who are you going to rely on for [service and support]? Part of the reason we've won so many key accounts is our worldwide support. I've got 900 people [80 percent of the support group] trained on Linux around the globe. I can parachute these people into [customers'] data centers right now to help them run their businesses.
[What we also] need to do is ramp up our relationships with our partners in the channels. That's something that I think was an area of execution that we can improve on as an overall business. They're aware we're a Linux company. It's more that we have not engaged with our partners at the level that we are capable of, in terms of working with them while they're working with customers.
How important are NetWare-to-Linux migrations for the future of the company? How do you encourage customers to migrate?
Hovsepian: That growth is what's critical for us. Now we need to make sure that we continue to maintain our base business, and make that full transition. What we've seen so far is that 80 percent of our revenue base, in terms of our customers, have selected the OES product. So that's really nice to hear; that's a good indicator. But [with that] you can run either NetWare or Linux as the OS. What we have to do with our service account managers and our teams is to walk through these migrations with out customer. We're telling [customers] to go do your pilots, tell us what we need to do to improve product, then you do your full migrations and rollouts.
And as you know, any operating system takes multiple years to do that [kind of transition]. We're not going to force our customers to do anything unnatural. We're going to make this a joint migration with our customers. But the first step you would look for is, are they moving towards the new product? The answer is yes. Now, the question is, how do we keep the evolution going through the rest of the lifecycle.
What is your strategy for drawing new customers, besides just converting existing NetWare customers to Linux?
Hovsepian: First thing I noticed when I came in here is that we have a great relationship with our base of customers. We have approximately 50,000 customers worldwide, so we're very blessed to have that inside the business. What we've done is turned our demand generation engine, focused a higher percentage of our dollars to be spent on acquiring new customers, while maintaining our old customers with continuous communications.
But we've really focused the aspect of the aspirational part of our spending on these new market places, to the tune of roughly 70/30 -- that's a focus on marketing and demand generation, specifically underneath. Behind that, you put your channel, your field bodies to be aggressive about doing that.
We're tracking new customers. In the Americas, we had 648 new customers there. You have to measure it, and have deadlines. That's the way you run a business. That's part of the evolution of our company is to really bring some of that discipline back into the organization.
Luring Microsoft desktop users to Linux has been a challenge for all Linux vendors. What is your strategy to do this?
Jaffe: It's important to be realistic about the rollout of the desktop because today the desktop is a Microsoft world. We don't actually expect all enterprises will become Linux-based in the next 12 months.
Hovsepian: We're happy to take [customer] orders, but we're pragmatic about it.
Jaffe: But we think that the next six months are a very important time for the industry. In early 2007 is when large enterprise customers will have to make their Vista decision. Vista is going to be a very important decision for them. We don't want to tell them to make it or not to make it. 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 choice. There really is an alternative. There is something that you can get which [is] basically one-tenth the cost of Windows with the Office suite, MSRP. For a class of users -- not everyone, not for the power user, but for a class of users -- it has everything that you want, plus a lot of innovation.
With that backdrop, what we think is appropriate for the industry at this stage is that each major enterprise should be running a pilot. For a pilot, you don't really need the major support of the IHVs. A pilot could be 30 users, 100 users, 300 users -- whatever people want. As Ron says, we'll take the orders.
But people should just get knowledgeable and understand the choice. Come February next year, you have to make the decision if you like paying 10 times the cost, and you like bloat-ware, and you want to go only Vista, and not have Linux at all, we'll respect that. But for a class of customers and a class of users, we think that if they evaluate it, the market pull will come from that.
Are pilots happening with your customers?
Hovsepian: We've [talked with] some large organizations with opportunities for thousands of desktops. The interest is definitely there... We're seeing really good interest, and from my vantage point, that's a good proxy for the future. 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.
What would be considered a successful Linux desktop pilot?
Hovsepian: It breaks down into really two or three buckets. First one is the interoperability piece, that we drop in. The term I use is that we have equivalent experience. You want to create an assimilation from one to the other. You want to capture some of the approaches and make them better -- so, interoperability at the user experience, and interoperability in the connection of what we get done in terms of connecting into the enterprise. Those pieces of interoperability will be critical.
Another part, which we've experienced internally, is the transition cost. We have to make sure we understand that the full-value innovation metric gets played out there. We have a ton of innovation at an incredible value. We have to make sure that this gets realized by the customer. So internally we have 94 percent of our staff running on the Novell Linux desktop.
Right now what our competitor likes to do is say there is a big transition cost coming at you [in terms of training]. I recently talked to a room full of people -- some who went through training on the new desktop, and other's who didn't. I myself am not a power user. One thing we all agreed on was that there's no training [that's really necessary]. Some buttons are in different places, but it's something most people can figure out pretty quickly.