Novell's second wind

The company's biggest line of business is still NetWare, but it is one that has long been dwindling. Now, Novell is on the cusp of a new stage in its life, hoping to revive its bottom line by diversifying into e-business consulting services through its pending merger with Cambridge Technology Partners.

Even in its future of selling both services and software, though, Novell sees NetWare as crucial to its success as a supplier of networking infrastructure. And with this fall's launch of NetWare 6, Novell is going back to its past: The company is hoping to drive upgrades and new sales based on, at least in part, new Internet-enabled file and print services - a new generation of the same core features that once made NetWare the most popular network server on the market.

Novell desperately needs to shore up its market share. While the Provo, Utah-based company's installed base remains strong, sales to new customers in the past few years have fallen behind both Microsoft Windows 2000/NT and Linux, according to industry analysts. In surveys by IDC, 20 percent of NetWare users say that they plan to replace some of their NetWare with something else - and more than 80 percent of the time, Windows was the replacement. And even though Novell's NDS eDirectory wins awards and has a head start of many years over Microsoft's Active Directory, Windows server applications - such as the Exchange e-mail server - push customers toward Active Directory and away from Novell Directory Services.

Novell's launch of NetWare 6 will follow its merger with Cambridge, expected to be completed in mid-July. At the same time, its leadership will change: Eric Schmidt, Novell's current chairman and CEO, will step away from day-to-day operations, while remaining chairman, and Cambridge CEO Jack Messman will become CEO of Novell.

Schmidt understands the daunting tasks that lie ahead, as well as the competitive threat from his old enemy: "Microsoft is always a competitor - to everyone. Customers will view Microsoft as a player, and our job is to integrate solutions and solve enterprise problems in a heterogeneous way."

In contrast to Microsoft's philosophy of tying applications to Microsoft clients and servers, Novell has separated NDS eDirectory and its other directory-based products from NetWare servers. Now, NDS eDirectory can be hosted by non-Novell server platforms, including IBM mainframes, Linux, Sun Microsystems' Solaris and Windows NT. But only recently have server-agnostic NDS products become available.

Novell is extending that open networking strategy with NetWare 6. One of its most attractive new Net services products to be included with NetWare 6 is iFolder, which allows users to access, synchronize and manage personal files from any place that has Internet access. Background synchronization keeps server-based files and remote files on a laptop or home computer matched.

Furthermore, iFolder, which is also available for NetWare 5.1, allows full and secure access to files via a Web browser, so someone can download, upload, copy, delete or rename files from any Internet connection.

IFolder has been "a godsend," says James Taylor, managing partner at The East Cobb Group, a technology consulting firm. Taylor says he and his co-consultants "work 99 percent remotely, and we've had a real hard time synchronizing documents." The firm creates a standard iFolder log-in for each project, and gives the log-in information to its clients. Thereafter, all project-related documents go into that folder, so everyone has access to the same documents.

Light, browser-based client access opens the doors for Novell in ways never before possible, says Jim Tanner, Novell's director of NetWare product management.

"When the full NetWare client was required, it was tough" for administrators to add new network services unobtrusively, Tanner says. "With a pure IP [Internet Protocol] network, now, along with wide protocol support, we see deployments quickly with additive functions like iFolder and iPrint."

Novell's new iPrint, based on the Internet Printing Protocol specification, uses a browser interface to make it easier for users to pick a printer, download the proper drivers automatically and print documents. Printing over a network is a common task, but improvements to the process are needed - printing problems rank first or second among most corporations' helpdesk calls. Tanner says that one beta customer, which he declines to name, has been running iPrint for three weeks. That company estimates that it will see $350,000 in savings this year alone because of reduced tech support, he says.

"All you need to do is send the user the URL for the printer map, and iPrint manages the difficult infrastructure of printing," Tanner says.

NetWare's file services, long recognized for their outstanding performance and security, have also joined the light-client brigade. Using NetWare 6's Native File Access Protocol feature, Linux, Macintosh, Unix and Windows clients can access NetWare file servers without having to install Novell client software. Security controls mimic those of the client file access protocol, such as Windows networking or Apple Computer's AppleTalk, rather than the more stringent NetWare client authentication procedures.

Behind NetWare 6 lurks another push for Novell: advanced storage systems, including server clusters controlling storage area networks. Licenses for two-node server clusters will come standard with NetWare 6, with optional licenses for additional cluster nodes. Pricing hasn't been announced for the extra NetWare 6 cluster nodes, but the current NetWare 5.1 version costs $4,995 per server.

Getting the NetWare message across to customers in a market dominated by Microsoft - as well as fighting high-profile battles with Sun and Linux server vendors - will be tough. Novell's Schmidt promises that hardware partners for NetWare 6 in general, and storage services in particular, are solidly on board, and he says that integration companies remain sold on the Novell vision.

But analysts say that NetWare 6 alone will not be able to reverse Novell's fortunes. "NetWare 6 is clearly a product that they'll be successful in selling to their installed base, but the overall NetWare business is still in decline," says Jamie Lewis, CEO of analyst firm Burton Group. "The company's future clearly lies in new lines of business, and as of yet they don't have a line of business that replaces NetWare."

Novell hopes that will change through its merger with Cambridge. But Cambridge was having financial problems itself, and many observers - including Novell's top executives - were anxious that the combined company would conflict with Novell's large integration partners, such as Deloitte & Touche. "We were worried about losing a big integration partner [because of the merger], but we lost none," Schmidt says, adding that Deloitte just renewed its commitment to Novell.

Schmidt believes that projects will be cooperative ventures between the combined Novell-Cambridge and other high-end integrators, and that those partnerships will win the company new business. New customers that Novell has recently announced include American Airlines, Lockheed Martin Global Telecommunications, Lufthansa, Nissan Motor and Toyota.

Novell still faces an uphill climb. But, with its back-to-the-future release of NetWare 6 and new consulting business - courtesy of Cambridge - the company is hoping the pendulum is swinging back its way again.