Novell Inc.'s poor financial results are often excused with the line: we can't grow Linux as fast as NetWare is dying. Since NetWare's decline is a long standing fact in the industry, it's easy for Novell to get investors to buy this line. However if we compare financial results from 2003 with 2006, we can see that this is not accurate.

2003 was the last year in which Novell's centerpiece was NetWare. SuSe Linux was bought that year but officially it was going to coexist happily with NetWare.

So how was Novell doing then? In 2003 net revenue outside the USA was up an average 10%, within the USA up 1%. In total 1.1 billion. New licenses – often taken to be NetWare's big failing – summed to $265 million.

By 2006, however, first quarter NetWare revenue was down 11%. Second quarter, 16%; 3rd quarter 19%, 4th quarter 25%. And in 2006, new sales of NetWare or Linux based software were only $173 million. In that year too, revenue fell sharply to 0.96 billion after years at about 1.1. billion. There is a marked change in 2006; Novell lurched downwards.

What happened was that in 2005 Novell stopped telling people that NetWare had any kind of future. In 2006 the market reacted. Resellers and End-Users only did what Novell were telling them, in effect: Stop using NetWare.

It's like a promoter who puts on a new show in a new theater because his old show is losing audience numbers. Anyone calling up for tickets to the old show is told that it is soon closing and they should buy tickets to the new show. So, the old show audiences go from 100 to 50 a night, and the new show grows to 20 a night. Does anyone not expect the old show to fall rapidly under these circumstances?

Only if Novell had continued with the Linux/NetWare coexistence would they be entitled to claim that NetWare is still dragging them down. It's wrong to keep blaming poor sales of a product after you've in effect replaced it.

The real issue is why more people are not buying Novell Linux. No one can doubt NetWare was steadily declining, but the figures when it was still Novell's platform of choice are still not too bad.

Novell Inc had some problems with NetWare, but it has a lot more without.