Time running out for Novell rebirth

By ROB O'NEILL*

After an apparent renaissance last year, software giant Novell is once again in the doldrums as use of use of its Netware operating system in New Zealand declines.

On May 3 the company's stock price plummeted 40 per cent after it announced that it would not meet analysts' earnings estimates for the second quarter of 2000.

Netware sales overall have been falling year by year and New Zealand users are following this trend. According to respondents to this year's MarketTrends report, the number of users connected to servers running Netware will decline from 19 per cent now to just 14 per cent in three years.

Meanwhile, rival Microsoft continues to push ahead. Over the same period, corporate users expect numbers using Windows servers to grow from 51 per cent to nearly 59 per cent. Microsoft is also on the verge of launching Windows for the data-centre, which it says will be scalable for high-end enterprise users.

It is clear the company is getting close to the goal of delivering true enterprise scalability. It is also clear that it has a simple and easily communicable strategy. Novell, on the other hand, still has trouble explaining its mission. Some analysts want to see the company split to quarantine its Netware legacy and allow it to concentrate on its new internet and management tool products.

To achieve a successful turn-around the company has to not only ignite sales in its new product categories, but also ensure these grow faster than Netware sales decline. That's one tough mission.

* Rob O'Neill, an analyst with Strategic Research, can be contacted at robo@strategicresearch.com