Cannonball Run

Raven-coloured hair, glowing skin and a bushy tache - it must be BurtReynolds. No, says Paul Bray, it's the new president of Novell, JoeMarengi

How the mighty have fallen. Ask Joe Marengi, the new president of Novell, about his plans for the company's future, and he will reply: 'To make Novell a great networking company again.'

Historically, the odds are against him. Athens, Rome, Imperial Spain and the British Empire have never been restored to their former glories, so why should Novell?

As if in reply, Marengi hastily qualifies his statement. 'I mean, in mind share rather than market share. Our market share is still very, very strong. We sold about 850,000 operating systems last year, and we will sell about a million this year. Microsoft will sell between 400,000 and 500,000 operating systems this year, and only about 30 per cent of those are focused on the network.'

Suggest that Novell's existing customers might be confused by its change of direction over the past few years, and Marengi leaps to the defence of Netware, insisting the company's aim is to develop the product further.

Yet he is clearly worried about Novell's continuing status as a one-horse company and wants to diversify.

'We have to minimise the amount of Netware from a revenue perspective,' he says. 'If Netware is 60 per cent of our business today, I could make it 40 per cent of our business in two years, 30 per cent in three years, and have other products that are 20 per cent each. That way, we would spread out the revenue stream.

'That's not to say Netware won't grow, it just means that other product lines would grow faster,' he explains. 'Groupwise is growing at more than 60 per cent a year. The network operating system (Nos) business is projected at about 15 per cent.'

Novell is looking for new markets, and the world's media is hyping the Internet/intranet for all it is worth. You don't need to be Mystic Meg to predict Novell's next direction. This has been revealed with Intranetware, a kind of Netware with intranet knobs on.

When asked whether such a strategy might be too little, too late, Marengi bristles. 'We are absolutely not too late. The intranet market is forecast to increase a hundredfold over the next four years. With Intranetware, we give our installed customer base a nice evolutionary path from Netware to Netware, with open standards to Netware being used as an intranet service.'

At last September's IDC Forum in Paris, attendees were asked who was their preferred intranet/Internet vendor. 'Fifty-four per cent of the respondents said they didn't have one, so there isn't a clear-cut winner,' he says.

Marengi plans to use the battle on the desktop between Netscape and Microsoft as a smokescreen, beneath which he will dig Novell into a cosy niche further down the line.

'The mindshare to date has all been created in the browser space, and that's very different from the server category,' he says. 'Netscape's server business last quarter was under $10 million, so by no means are we out of the game.

'But the end points - the Web server and the browser - are not necessarily where we want to play in the Internet. We're going to find our niche wherever we can add performance and value on top of the intranet server and the Web server itself.'

Marengi refuses to be drawn on details, but hints at areas such as performance, file-sharing and offloading the burdens of the network. It all sounds a far cry from the days when Ray Noorda, Novell founder, was buying desktop application and operating systems companies in a bid to compete head-to-head with Microsoft. Yet Marengi believes Noorda would have understood the marketing potential of the intranet.

'Let's not forget what the Nos was,' he says. 'The Nos was a marketing term. Ray Noorda invented the Nos, because it was hard to explain what Netware was. It wasn't a minicomputer operating system, so Noorda called it a Nos. The name stuck and that was it. Sun kind of played with intranets and all of a sudden intranets stuck. The intranet is nothing more than a marketing term.'

And, talking of pure marketing, what about Novell's old enemy Microsoft?

Having an arguably better product did not stop IBM losing the desktop battle to Windows, did it?

'That's correct,' he concedes 'so we need to be a more aggressive marketing company - a very different company. You know the way Microsoft is.

It's all over you all the time. All we need is to be more like that.'

As former Novell VP of sales and marketing, it is no surprise to learn that Marengi has ambitious plans for marketing and branding. 'Part of our focus is to get the Novell name in front of business people, so that when decisions are needed, Novell becomes a recognisable entity,' he says.

Can we expect an advertising campaign aimed at business people? 'It's already happening in the US where we actually advertise these products in Sports Illustrated, Forbes and Business Week,' replies Marengi. 'There is a brand called Novell now, and there are three major brands beneath that: Intranetware/Netware, Groupwise and Managewise.

Although clearly itching to compete with Microsoft on the network and intranet server, otherwise Marengi concedes that his rival is too far ahead to catch. 'There are probably only three or four brands in the world as strong as Microsoft,' he says. 'I don't think we are going to be investing enough money to unseat Microsoft as a brand, but that's not our end goal anyway. Our goal is not to compete 100 per cent with Microsoft. Our goal is to find a niche of our own.'

One such niche is the small business market, which Novell defines as single-server networks. 'Small business will be a segmented market for us,' says Marengi. 'It will be a separate advertising function that goes after small businesses, not necessarily branch offices, because branch offices need full integration with the directory.

'We will ship our first small business product in November, and it won't be a familiar product name. It will be a network people can buy off-the-shelf, go home with or take to the office and plug in. It will be a Nos, a backup, it'll have applications and will be simpler to install. If users want to upgrade to a full network, there will be an economical upgrade path.'

Marengi talks about niches, and has been quick to distance himself from the grander designs of his predecessor Bob Frankenberg, a former Hewlett Packard engineer. Frankenberg's big thing was pervasive computing, a worldwide network that would offer universal messaging, access to information, increased remote working, wireless communications and consumer goodies which bypassed the Internet in favour of something more manageable and more lucrative.

'I have given pervasive computing back to Hewlett Packard - where it came from,' he says dismissively. 'It is not what Novell is about. Novell is a networking software company and we will evolve with the standards of the industry as they come.'

The ghost of pervasive computing lives on in the form of Novell embedded systems technology (Nest), which could see Netware running on central heating timers, cash dispensers or any other device with an embedded processor. Novell will continue to develop this in partnership with electricity companies anxious to turn their grids into ready-made data networks for both homes and businesses.

'But we don't want to position it as being more important than Groupwise, Managewise or Intranetware,' he says. 'Frankenberg used to comment so much on Nest that when it wasn't producing $500 million revenue in six months everyone was upset.'

Marengi regards the two years of Frankenberg's stewardship as a torrid time for Novell's image and a depressing one for its staff. 'My biggest regret is the amount of internal focus the company has required over the past two years and - forgetting the reason why it happened - some bad decisions were made,' he says. 'If we have had one problem over the past two years it has been ourselves, not our technology, not our competitors, but ourselves.'

Asked about the biggest challenge he faces, Marengi looks inside Novell rather than at its competitors. 'The employee base was so shaken by start-stop strategies over the past two years that morale took a hit. 'The issue now is to bring back morale and make people feel proud about being here again.'

Yet the external pressures are intense and will get worse. Marengi plays down Novell's reliance on the Internet. 'The bottom line is we are a network software company and everything we do evolves around the standards that are created for networks. Right now they happen to be Internet standards and all our products are open to them. If that changes in two years to other standards, then Novell will follow them.'

But for the foreseeable future, Novell's wagon is hitched to the Internet/intranet's horse, and Marengi admits that the Net has radically changed the pace of the network operating systems market.

'In the Internet arena, as features are added they're commoditised extremely quickly,' he says. 'You have to be very quick to add new value propositions to your operating system.'

For a seemingly demoralised, introverted company that is facing an enthusiastic, youthful opposition in the world's fastest-growing IT market, it sounds like an exciting and challenging task.

Novell's new president is supremely confident, and excited about the company's future - he has not yet met his Waterloo. But the company's competitors may be secretly hoping that Marengi is about to meet his Marengo.

'Novell's strategy is evolved around four different levels,' says Marengi.

The server operating system. 'Obviously we'll continue to evolve Intranetware well into the future, to add functionality.'

Distributing the services across multiple platform becoming part of the network fabric. 'Directory is probably the biggest case in point for us.'

On top of that we look at management of networks as being critical.

'Today we manage Microsoft NT, Unix and Netware servers in that environment.

We manage them over the Internet through SMNP and see that as a huge future potential. We don't necessarily need to be in total end-to-end management, we need to be in niche management.'

The application or intuitive user interface. 'A product like Groupwise gives you productivity applications or runs on your own internal network and does significant things like workflow. We just announced document management over the Internet, which is an incredible thing when you consider all the documents that are being published on the Net.'