Q&A: Novell's Eric Schmidt

FRAMINGHAM (03/30/2000) - At Brainshare in Salt Lake City this week, Novell Inc. Chairman and CEO Eric Schmidt outlined his "one Net" vision, which involves eliminating the boundaries between intranets and the Internet as well as using NDS eDirectory to control e-commerce relationships with customers and partners. Novell outlined an architecture called Directory-Enabled Net Infrastructure Model (DENIM) for delivering this vision. DENIM pieces together current and future offerings from Novell and partners into a platform for delivering Internet-based, modular and cross-platform services. Schmidt spoke with Computerworld's Dominique Deckmyn.

CW:: DENIM sounds like Next Generation Windows Services, the Internet-based services Microsoft Corp. has recently started to discuss. How would you contrast both concepts?

Schmidt: Microsoft is very good at copying others. Since 1994, in my previous job (as chief technology officer at Sun Microsystems Inc.) and here, I have been talking about a world where you have services that are made available over the Internet and that are consumed by multiple clients using HTML and XML.

That's a key part of what Bill Gates has been talking about. And my answer is, "Welcome to the club." The difference is that they have a very Windows-centric view, and that's a view I don't think is correct.

CW:: A key challenge for Novell is to get independent software vendors to develop for NDS and for this DENIM architecture. Getting software vendor buy-in has been a problem for NetWare. Are you going to have an easier time winning them over to DENIM?

Schmidt: We think so, and I'll tell you why: We think most people will use this platform using XML or JavaBeans (to access Novell services). The creation of interfaces of that type is not a core competency of Novell, witness the lack of success of NLM (NetWare Loadable Module) interfaces as a general interface. So my guess is we'll do very well because XML and JavaBeans will be successful.

CW:: Which parts of the market do you think are ready for this one-Net approach to networking?

Schmidt: We believe all vertical markets will benefit from this. In practice, the people who are developing this are people who need to have an e-business relationship with their customer, integrated through the Internet. In our experience, health care, the media - places where they need a secure connection - seem to be where we win the easiest. But I believe our solutions or something very much like it will ultimately be used by everybody.

CW:: Do you think file and print services, NetWare's original core, have become a commodity?

Schmidt: No I think that's completely false, I totally disagree. If it were true, why would EMC be so successful? Storage is a huge competitive weapon. You don't think people care very deeply whether their storage is clustered and can be backed up inexpensively? You don't think people are spending an enormous amount of money to get the best-of-breed solutions around storage? Of course they are.

CW:: Linux has been emerging as a file and print server. Do you see that encroaching on NetWare at the low end?

Schmidt: We have not seen that so far. It might occur in the future. But the cost of the software is not the primary issue. The cost issues are always around complexity. So if you can, with one product, solve a whole bunch of problems in a scalable way, people prefer that to lots of Linux boxes that they don't know how to manage - even if (Linux is) cheaper.

CW:: Many vendors, including Sun Microsystems, The Santa Cruz Operation Inc. and IBM, are endorsing Linux or the open-source movement in some way. Novell has announced a port of its directory, but isn't there more of an opportunity for Novell here?

Schmidt: There is not in fact a standard model for working with the Linux phenomenon. There's not a standard set of terms, there's not a standard contract and, in almost all cases, the models are unproven. So what we decided to do was take NDS and put it on top of Linux and then get the common management and interoperability that is Novell's strength to apply to Linux as well. So my view is: Let's get that out, see what customers say and then iterate from there.

CW:: Have you considered an open-source future for NDS or NetWare?

Schmidt: Sure, we've talked about that, but again, I think the models are unproven. And you are using the word(s) open source without definition. Every one of the companies that you named uses it in a different way. We have thought about (giving NDS away for free) and we have done bundles and promotions. It's still under discussion.

CW:: Does a model where customers can modify code, enhance it and redistribute it make sense for something like NDS?

Schmidt: Well, as a bit of background, when I was 22 years old, I worked in an open-source movement at Berkeley, which was the group that created the Unix phenomenon that was the backbone of the Internet. So I have a lot of experience with this. And the open-source movement also led to the balkanization of Unix and the wars between Sun and the Open Software Foundation 15 years ago in which I was front and center. So I have a lot of experience with open source, one generation earlier. And the problem with open source is you end up with noninteroperable, nonstandard solutions. The good news is you get tremendous creativity. So I don't know if this generation will make the same mistakes I did, I think it's too early to tell.

CW:: Novell has started to develop appliances based on NetWare, such as Internet Caching Server. Are appliances the future for NetWare?

Schmidt: I think a lot of the NetWare uses will become appliances as we get better at standardizing them because customers are always concerned about ease of management. And with the kind of architecture we have, it lends itself particularly well to appliances. So I think it's a very good opportunity for us. And remember, it's the same code.

CW:: The NetWare business has stabilized but it's losing market share.

Schmidt: The Netware business is growing. You have to be careful what you compare. We use the number of between 10 percent and 20 percent (revenue) growth per year. Unit growth should be low because one of the benefits of NetWare is you can reduce the number of servers. In general, Novell's market share has declined very slowly as measured in units. I'm not going to be worried about that as long as it is server consolidation rather than throwing NetWare out.

CW:: Like all software vendors, Novell will have to address the application service provider (ASP) model. How are you approaching this?

Schmidt: No one has proven the ASP model yet, and it's not a market where I want to be a pioneer. Because I have an existing business model which I happen to like. And my own sense of the ASP model is that it will work quite well for some things and not for others. The broader question is: The ASP thing is going to happen, how will Novell play? And I think the answer is the directory. So if we can offer directory services in various forms to ASPs, we can make lots of money.

CW:: Novell has been building its professional services. Do you see Novell becoming an integrator at some point?

Schmidt: No, we've studied this and what we concluded is that we want to be a highly specialized network service integrator for directory-based solutions.

And that highly focused vendor will work with commercial systems integrators.

They call us to do some of the work, and we make money one level from the customer. That allows us to have fewer people and charge higher prices. Plus we're not very good general-purpose integrators, but we're really really good at using the directory to solve various kinds of problems. And that's the fastest growing part of our business, by the way.

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