Where does Novell go from here with Linux?

A recent Network World article on Novell’s NetWare and Linux strategy is a must-read for server admins that use these two operating systems.

Novell bought German Linux powerhouse SuSE for $210 million two years ago, but so far the company has not seen the payoff, the story says. Revenue is down in the most recent quarter, and a big layoff recently cut out 10% of the company’s workforce.

Novell’s move was bold, but not completely unforeseen. Novell’s NetWare server software had been consistently losing market share to Windows Server, and especially the red-hot Linux operating system, over the last several years. Without the cash to buy Red Hat, Novell went for the next best thing.

SuSE, the Pepsi of the Linux industry to Red Hat’s Coke, had a loyal following prior to the Novell merger, especially in Europe. It did, and still has, a strong relationship with IBM, which offers SuSE Linux as an option on all of its server platforms – from single-chip Pentiums to the mainframe.

But SuSE was never a profit-making machine. It was not profitable when Novell bought it – neither was market leader Red Hat, for that matter. Novell has done some interesting integration between its line of proprietary network management and infrastructure tools and SuSE Linux, but nothing innovative enough to crack the problem facing most vendors in open source – how to make money off of free software.

Switching its vast installed base from NetWare to Linux – and to use SuSE, not Red Hat – is clearly Novell’s key challenge going forward. But even if it achieves that goal, whether it can make money off of Linux converts the way it did from its NetWare customers will still be the billion-dollar question.