News Analysis: Eric the ready guides Novell the unsteady

The arrival of Eric Schmidt completes a team that could propel the networking giant back to the top

Novell lost its way in the early 90s and it is desperate to regain its lead in the operating systems market. Its Brainshare conference, held in Utah two weeks ago, showed it has learned from mistakes and that it has the right ideas and technology to succeed. But it offered little to demonstrate how the company will translate those ideas into sales (PC Dealer, 2 April).

Like Lotus, Novell was pushed aside by the relentless march of Microsoft and its marketing machine, despite trying a number of unsuccessful routes to get itself back on the right road. Now, even company executives admit the expensive acquisition and sale of Unix Systems Labs and Wordperfect were half-baked tactics ? the result of a flawed strategy to broaden and challenge Microsoft?s dominance of the software market.

At Brainshare, Novell recognised that it had made mistakes and said it hoped its massive installed base of Netware and CNE engineers could help it regain the pole position in OSs.

It will focus on networking software ? its one great success. Although its collaboration and email Groupwise product is a useful sideline, the fortunes of Intranetware will determine Novell?s fate.

In some respects, Novell was lucky that the internet took off when it did and as quickly as it did, because companies needing internet and intranet access turned to their OS supplier or Var to add access to their existing Netware networks. Novell was installed in the right place at the right time.

One reseller who attended Brainshare said: ?If corporates had moved away from Netware quicker, Novell could not talk about such a huge installed base and would have to win back customers, rather than just hold on to them. Novell is installed, so my customers have had to decide to jump and leave them ? Novell has to mess things up to lose.?

Like Netware, Unix was the omnipotent OS of choice in its day and still boasts a massive market presence. But the vast majority of vendors and customers are dumping Unix as new technology becomes available and Netware, under its new guise of Intranetware, must evolve rapidly to avoid the same fate.

Novell has vowed that it will evolve and has outlined a product strategy with few frills but built around the network, its core competency.

Unlike Unix, Intranetware works with competitors if necessary. That is important to Novell and its partners, who are also crucial to the future of Novell?s business. In the past three weeks it has announced deals with Intel, Oracle, Netscape and Sun Microsystems ? rapidly growing companies that are backing the network computer and Java. These companies are also the main anti-Microsoft players.

Although Novell claims Intranetware will work with Windows NT, it is clear from the barbed anti-Microsoft comments made by Novell executives at Brainshare that they are still smarting from Microsoft?s victory and particularly the mauling that Word gave Wordperfect before Novell sold it.

But, Brainshare delegates were told, that was the old Novell. Vice chairman John Young, president and chief operating officer Joe Marengi and in-coming chairman Eric Schmidt are leading the vendor in a different direction after painfully repairing the damage of the past.

Denice Gibson, senior VP of products, is typical of Novell?s new executive team. Clearly treated as Marengi?s second-in-command at Novell, Gibson is known as a hard-working turnaround specialist and has been promoted in her nine months at Novell to be responsible for all its product groups.

She is brutally frank about Novell?s past. ?When I came to this company it was sluggish and it was hard to make decisions. There was a lot of in-fighting. Now it has energy and personalities.?

Gibson believes Schmidt will bring technology and vision to Novell. ?A few people will be put in their place,? she said. ?Marketing is a huge issue and Eric can help. In 45 to 60 days he will clarify where we are going.?

Schmidt offered few tangible ideas at Brainshare ? but he only joined the company this week. He said: ?It would be unwise to bet against the Web, internet and intranet. Novell is betting on Java and ISVs that develop on the Java platform. Novell has so much to offer but nobody knows this. It?s my job to fix that.?

Most Brainshare attendees were pleased at his appointment and his technical knowledge, although many expect him to boost Novell?s marketing team.

Jean Bozman, analyst at research firm International Data Corporation, said Novell has the right ideas but needs the right conditions to succeed. Other analysts are impressed by Novell?s new and sensible message but are reserving judgement on its future until they see what Schmidt does next.

The board has the ideas, leadership and tools to get Novell back to the front of the pack. Other companies have recently attempted to reposition themselves around the internet, but not yet reaped their rewards.

Novell has been forced to concentrate only on its core market, find the right partners and rely on its customer base to boost flagging sales. Now, to get back to the front of the race, it needs Schmidt to steer it in the right direction, its partners to help it compete, more marketing expertise and its resellers to favour Intranetware. Otherwise, it will be beaten by Microsoft again and will drift out of the running completely.