New boss has six months to make Novell work

Analysis: Novell's incoming chief executive Ron Hovsepian has a simple job description, according to the analysts: improve sales fast, or else
Written by David Meyer, Contributor and  Peter Judge, Contributor

Ron Hovsepian, the new chief executive at Novell, will have to improve the company's sales in the next six months or face the same fate as predecessor Jack Messman, according to analysts.

"He doesn't have much time," says Laurent Lachal, senior analyst at Ovum. "Novell needs good figures — if not next quarter, then the following one."

Hovsepian was put in place yesterday after Novell's board, tired of seeing Novell's profits fall while rival Red Hat's surged, sacked Messman.  

Novell is struggling to convert its investment in Suse Linux into a business that can replace the company's legacy NetWare network operating system revenues, which means the incoming chief executive will face the same internal conflicts as his predecessor: "I think there’s been a fair amount of tension at Novell for a while now," says James Governor of RedMonk. "Some very different cultures were being integrated alongside very different technology."

Last November, when Hovsepian became president during a major restructure, his contract terms made it clear he was expected to succeed Jack Messman.

"Everyone knew that Hovsepian was going to become CEO," says Ovum's Lachal. "If Novell was bolder, it would have made him CEO from day one. It is better late than never, but it is late."

Lachal claims Hovsepian is more of sales person than former consultant Messman — and that's what Novell needs at the moment. "I went to [Novell's conference] Brainshare, and it was clear that Hovsepian was in charge, not Messman. By comparison Messman was a poor performer in public. At the first day's press conference, Messman's performance was the worst I have ever seen in my entire life."

With the chief financial officer also going, Hovsepian will have room to manoeuvre and his focus will be "execution", which means making more sales for the company. This is a priority given the widening gap between Novell and Red Hat, the leader in business Linux, according to analysts.

Novell needs to get more information about the customer base and improve its handling of basic tasks like following up subscription renewals, Lachal claims. "That's the kind of low level pragmatic execution Novell needs. It needs to know the customer base better. It is humdrum stuff, but you have to get it right," she says.

While pushing Linux, Hovsepian will also have to balance Novell, to make the most of its strengths in ID management and resource management.

Novell's Linux offerings, including Open Enterprise Server — a hybrid product of Suse and its legacy Netware platform — are doing relatively well, but its software revenue is still too low. Crucially, the OES growth is less than the decline in Netware, according to Lachal, so Novell is losing customers.

""Look at how much business Red Hat is doing, and how quickly it grows, and ask yourself why isn't Novell doing the same?" said Lachal.

At Gartner's Midsized Enterprise Busines Summit, in Paris, this week, research vice-president Philip Dawson said he had been struck by how many worried NetWare users he had been approached by. During one of his sessions Dawson asked delegates how many expected to be using NetWare in five years and no-one in the audience raised their hands.

"NetWare is a legacy product and is going nowhere. At the moment Novell is losing more customers to other platforms than it is managing to move on to OES," he told ZDNet UK.

Analysts claim they haven't seen the kind of the growth that might have been expected, given the new areas Novell is pushing into."With all that going on, might Hovsepian just look at selling out, to IBM or Oracle?" says Governor.

But Novell could also act as an acquirer, which would be interesting given the number of small interesting companies in the Linux field, added Governor. 

"Novell has the potential to get on track," says Lachal. "Things can only get better — they are so bad at the moment."

Editorial standards