So why has Novell cut costs well beyond the point of "to the bone", and killed any products that are useful to the SMB market? To understand Novell today, you must understand IBM, since 5 of Novell's top 7 execs made their bones at Big Blue.
Many Abend.org readers remember my August 2006 article, decrying Novell's mistake of walking away from the small business market when it killed Small Business Suite. Since I wrote that article - around 1100 hits ago, many of them from Provo - my opinions haven't changed.
Since that time, I've formed opinions on why Novell made this mistake, and my conclusions literally forced me to advise my customers to start looking at platform migrations, away from any Novell products, and straight into the arms of Microsoft.
In late 2006, I started wondering why Novell would be resistant to re-introducing the Small Business Suite (SBS). In a very frank, lively and open conversation with a Novell VP last December, it became clear that this was more than just a matter of some misguided turf battle to market Open Workgroup Suite (OWS). I was told in no uncertain terms that SBS would never again be sold by Novell -- so no, despite rumors and claims by some, there won't be another SBS coming from Novell. This decision went all the way to the top of Novell, and they were sticking with it.
My moment of enlightenment came when I realized that 4 of the top 7 Novell execs are ex-IBM. To understand Novell today, you must understand IBM, since these execs made their bones at Big Blue.
First, per IBM's website, a "small business account" is 1,000 seats and $100,000 in annual IBM purchases. While small companies can buy IBM products from a vendor like CDW, one seldom, if ever, sees IBM servers, Lotus Notes, or even IBM workstations in a SBS-sized company. This reluctance to embrace small businesses opened up the door for companies like Dell and Microsoft, who were very happy to sell small quantities to growing young companies, and in fact, blew IBM out of the entire PC marketplace.
Therefore, it should come as no surprise that ex-IBM execs would see no reason to keep Novell's SBS alive, nor any partner program for the companies that cater to this market. The destruction of this SBS channel is so complete that should Novell ever introduce a replacement for SBS, there won't be anyone around to sell the product. Microsoft is moving aggressively to flip these partners and their customers, all the more reason why I doubt that a new Novell SBS will ever hit the market.
Second, the words "IBM" and "open standards" are not exactly found in the same history books. If you ask any IT person from the pre-PC era, they will tell you that IBM was notorious for making sure that customers bought pure IBM parts and supplies, from IBM. Anti-trust law of the mainframe era was largely written by U.S. v. IBM, which lasted from 1969 until its dubious dismissal in 1981, when technology changes made the whole argument a moot point. In the PC era, IBM attempted to gain control through MicroChannel (MCA) technologies found in the PS/2 series, the ones marketed with Charlie Chaplin's "Little Tramp" commercials. MCA rocked - it was far ahead of anything else in the market - but hardware vendors needed IBM's approval to build a MCA product. An ISA joystick card cost $19, but a MCA joystick card cost $90, and the market spoke loudly.
Make no mistake - this is not 2003, and this leadership team does not include Chris Stone. Novell claims that it's the leader in FOSS, but is lead by executives who were raised by the company whose logo is next to the definition of the word "proprietary." The Microsoft deal wasn't a mistake, but rather the logical outcome of IBM-trained minds -- or rather, Microsoft's recognition of the IBM thinking, and a desire on both sides to avoid a repeat of the IBM-Microsoft lawsuit.
Third, one must ask why a $2.6 billion company (market cap), which already had $1.3 billion in cash reserves, put another $200 million into those cash reserves in a year when profits were only $23 million and profound cuts were being made. Supposedly this money came from the sale of real estate assets, and we should also ask the question of why Novell is selling off real estate assets. Also last year, Novell had a stock buy-back plan which ostensibly was to raise stock prices, but put more stock in firm name. This happened in the midst of deep cuts in staffing, development, marketing, and oh yeah, killing SBS and driving away small partners -- all citing cost considerations.
So why has Novell liquidated from the inside, cutting costs well beyond the point of "to the bone"?
I have no proof - no secret tapes, no smoking gun, no informant named "Deep Throat". What follows is speculation.
I do know that Novell has one thing that IBM needs - UNIX. When the SCO lawsuit is done, and SCO is no more, Novell will be the clear owner of UNIX, and there will be no more contract with SCO to distribute it. IBM needs UNIX for its big iron, and after the PC experience, would be loathe to trust any non-IBM vendor to own UNIX. An IBM buyout has been rumored for over a decade, but given the number of ex-IBM execs at Novell, the hoarding of cash, the liquidation of assets, the purchase of SuSE with the assistance of IBM, the joint cooperation in the SCO lawsuit, and IBM's need to control UNIX, this time an IBM buyout seems very logical. Certainly I've established that there is already an IBM hegemony at Novell. In other words, if it isn't already planned, then people at Novell SHOULD be fired because it makes too much sense.
Compounding the logic of an IBM buyout is the fact that last year, according to published numbers, Novell would've made more money if it would've ceased operations, and simply collected revenue from licensing of its technologies. The outlook for this year and next is the same or worse. Linux sales simply will not replace Netware sales, and $80 per seat support agreements simply cannot compete against "support by Google search" that many IT departments depend on.
It was a sad day when I realized that the Novell that I knew would never again be a vendor partner for me, or a viable business partner for my clients. I went to Brainshares, did beta testing for Novell, attended sales conference, have Novell jackets and mugs and tee shirts and backpacks and water bottles... but it was time to face facts. Novell, in all likelihood, will be bought by IBM. Beyond that, Novell will probably be parted out. None of that is good for my customers, and probably not good for any Novell customer.