Novell CEO picking his battles

Novell wants to shed historical comparisons with industry titans and focus on developing its core technologies into a set of infrastructure services it says will define its success going forward, according to company CEO Ron Hovsepian.

Novell, which celebrated its 25th anniversary this week, lost its industry titan tag more than a decade ago, but its strategies continue to draw comparisons to the likes of IBM and Microsoft. Hovsepian says he won’t back down from a fight, but that Novell is now picking its battles, and its friends, wisely.

“We are past that old business of hanging on,” Hovsepian says. “As you look at the [networking] stack it is about knowing what your role is at each layer at macro and micro levels.”

The Novell chief, known for a friendly demeanor that hides his competitive fire, says the company will continue to battle the likes of Microsoft in certain areas, such as server and desktop operating systems, but will complement Microsoft and other vendors in technology areas such as systems management and applications.

The latter is evidenced by this week’s extension of a partnership with SAP that opens to Novell the huge SAP install base and the opportunity to supply it with platform, virtualization and identity support.

Novell’s strategy, called Fossa and introduced this week at its annual BrainShare conference, calls for delivery of network infrastructure as a set of services that can be interconnected, integrated across platforms or run stand-alone. The modular platform isn’t long on new technologies, but mostly includes enhancements, acquisitions and infusions of standards to its Linux, virtualization, orchestration, policy, identity, compliance, management and collaboration tools.

Hovsepian says he set the ball rolling on Fossa in 2006 when he aligned Novell’s core strengths with network layers and began figuring out where Novell would compete and partner.

The major milestone has been the controversial interoperability and cross-patent licensing deal Novell signed with Microsoft in November 2006. The latest signs of the plan have been acquisitions of collaboration vendor SiteScape and virtualization management player PlateSpin.

Hints of success were also evident in Novell’s 2008 fiscal first quarter earnings that showed a 65% revenue increase in its open platform division that includes SUSE Linux desktop and server. In addition, net income hit $16.8 million, a significant turnaround from the $19.5 million loss Novell posted in the same quarter a year ago.

“[Fossa] is not a far-flung dream,” Hovsepian says. “It is a lot of reality; it is our core competencies. We are just tying them together. We have to look at the market segments and we have to attach ourselves to those markets.”

Hovsepian may be on to something as Fossa, which Novell admits is in the vision stage and might not fully bloom until 2012, is getting a warm reception nonetheless from the company’s users.

Those users see Novell regaining its balance and pointing in the right direction, albeit with a few corrections needed in the short term such as fostering the education of more certified Linux engineers.

“We are interested in Fossa not because of the open source, but because of the concept that the whole environment should be dynamic and intelligent enough to handle user needs, and to see it all integrated in a way that includes compliance and security,” says Pepijn Visser, program manager for corporate operations and information services at ING Group. Visser is using Novell’s Identity Manager to help synchronize 120,000 user identities spread across multiple disparate systems.

“Novell’s consistent strategy means a lot to me from an open source perspective,” says Mark Shackelford, vice president of information services for Baldor Electric, a manufacturer of industrial electric motors, power transmission products, drives and generators.

Hovsepian says Novell is first a network infrastructure company and will use Linux to keep customers and attract new ones. The next step is to supply those users with technologies such as virtualization, identity, and policy enforcement to build out their platforms, or to ensure interoperability with their existing infrastructure.

He says Novell’s platform will be the foundation developers use to run their Web 2.0 technologies.

Hovsepian says his infrastructure “stack” includes operating systems, the database, systems management, security, middleware and application servers. At each level, Novell has a compete and/or complement strategy.

“We are not going to replace system management frameworks, but we solve a unique set of problems that are new because of the evolution of consolidation, virtualization and optimization. We can build on top of those frameworks and that is where Novell gets a legitimate shot,” Hovsepian says.

He says the stack can be built on one of two foundations: J2EE or .Net.

“Let’s be realistic — I want you to pick the J2EE stack not the Microsoft stack,” he says. “But after you pick one, I want to show that I do this better at the [operating system] level than anyone, that I have the best desktop-to-data center Linux story and I work with Windows. That is the subtlety that is very important for us.”

Hovsepian is pumped up to take his shot against anyone, but Novell is not without its challenges, including Red Hat, which owns nearly 80% of the Linux market.

Observers say that his strategic tactics, however, are a pragmatic evaluation of Novell’s future opportunities.

“It’s smart for Novell to define the way they want to compete and to create an image of how they want to be positioned and not fall into the trap of letting others put them in a box,” says Gerry Gebel, an analyst with the Burton Group.

Novell is using acquisitions to help refine that positioning, including its February purchase of SiteScape and its ICEcore collaboration tools, a Web-based team workspace and real-tine conferencing platform that includes Web 2.0 and social networking technologies.

Those qualities were missing from a collaboration portfolio that included just GroupWise, an aging messaging platform Novell has spruced up over the years with features such as instant messaging.

Novell, which will sell the SiteScape technology in an OEM capacity before buying the company, not only turned the technology into its Teaming Conferencing platform, but it continues to support the open source ICEcore project.

The project encourages contributors to build Web 2.0 and social networking tools for the platform much the same way Microsoft is encouraging developers to build those add-ons for SharePoint and IBM/Lotus is doing with Quickr.PlateSpin, to fill out its product line and meet its strategic goals,

Novell plans to continue to tap acquisitions, such as SiteScape and the recent $205 million purchase of

“You are going to see us use organic and inorganic, or acquisitions, as methods to innovate and to position ourselves,” Hovsepian says. “We don’t need to go outside those businesses because those markets are so big.”

As Novell looks long range, users are hoping it will clear up some short-term issues including education, certifications and desktop application support.

“When it comes to hiring people it is a challenge for us,” says Tom Johnson, director of IT of Chicago-based Metropolitan Bank Group. “Novell could help by expanding its [Certified Linux Engineer] program, their certifications and getting people more educated.”

Baldor Electric’s Shackelford said in independent software vendor support is getting better but needs improvement if Novell really wants Linux to find a place on the desktop.

If Hovsepian has his way, the short-term issues will get solved within the success of his overall plan.

But now that Novell has its goals defined, it faces the lingering nemesis from its closing days as a big-time technology provider – execution.