Novell might reabsorb caching spinoff

Novell is reportedly close to pulling the plug on its less-than-2-year-old caching spinoff Volera.

PROVO, UTAH – Novell is reportedly close to pulling the plug on its less-than-2-year-old caching spinoff Volera.

Sources close to Volera and Novell tell Network World that work is under way to combine Volera’s managed and secure content-distribution capabilities into Novell’s BorderManager. The Internet access and authentication product is just one piece of Nsure, a suite of integrated offerings that Novell says will let businesses govern what users can access on corporate networks.

According to sources, “the deal is as good as done” and Volera will cease to exist as a separate entity sometime in the next few months.

However, a Novell spokesman says that development on Volera’s Excelerator product is continuing independent of work on BorderManager. Next week, Volera will start a beta program for Excelerator on the Linux platform and has 19 companies lined up to participate, he says.

During the company’s third-quarter earnings call in August, CEO Jack Messman said Novell was “re-evaluating [its] strategy at Volera.” Further, in its third-quarter filing with the Securities and Exchange Commission (SEC), Novell says Volera sales have been flat and are expected to remain so through the remainder of the year.

“Volera’s performance has not met the growth expectations of the company . . . ” the filing states.

Volera has yet to turn a profit since it was spun off in February 2001 to take advantage of what Novell saw as a hot market for its content networking products, particularly its Internet Caching System. The trouble was Novell spun off the company at a time when the caching market already was starting to take a hit, analysts say.

“Novell was an early entrant into caching with great technology, but didn’t really succeed because they didn’t solve the problem of how to get to [customers] other than their installed NetWare base,” says Peter Christy, an analyst with NetsEdge Research. “Volera could have addressed that problem, but . . . they were spun out too late.”

By the beginning of 2001, the once high-flying caching firms already were being grounded by the demise of their dot-com customer base and the slowed spending of service providers. CacheFlow announced in February 2001, as Novell launched its joint caching venture with Nortel and Accenture, that third-quarter sales would be below expectations, and laid off half its workforce in a restructuring effort.

Volera has generated $2 million in revenue per quarter, but net losses have been two to three times that amount.

Meanwhile, the caching market has gone from bad to worse. CacheFlow, one of the first caching companies when it was founded in 1996, recently changed its name to Blue Coat Systems and is focused on securing network borders. Other caching vendors also have left the market. Inktomi found that its efforts to move from a service provider focus to serving enterprise customers wasn’t working and scrapped its caching efforts to focus on its core search business. InfoLibria has laid off most of its staff and says it is pursuing “strategic alternatives.”

“Volera is one of the few players left selling software for [enterprise content delivery networks] or caching. That makes you wonder if it’s a market that’s addressable by a separate company or if it needs to be part of a larger group,” says Michael Hoch, research director of Internet infrastructure at Aberdeen Group. “If Novell wants to tie [the Volera] technology closer to its Web services story, it would make sense to bring it back in.”

A Volera customer says such a move wouldn’t surprise him.

“I can believe with Novell under new management that they would want to bring everything in,”says Richard Sun, network systems engineer at W.L. Gore & Associates of Newark, Del.

“I was curious how they are going to [reconcile] the Excelerator/BorderManager product lines.” he says. “However, I would think it only makes sense that whatever Volera improves upon in Excelerator, they would put back into BorderManager.”