The Bloor Perspective: Novell's directory supremacy, CE's struggles, and the problem of Net taxation

In their regular weekly column, Robin Bloor and his team of analysts back Novell's eDirectory, examine the serious opposition lining up against Windows CE, and suggest a solution to the puzzle of effective ecommerce taxation
Written by Bloor Research, Contributor

In their regular weekly column, Robin Bloor and his team of analysts back Novell's eDirectory, examine the serious opposition lining up against Windows CE, and suggest a solution to the puzzle of effective ecommerce taxation

Many commentators believed that Novell was living under a death sentence, simply waiting to be destroyed by the remorseless advance of Windows 2000. When Eric Schmidt took over as CEO, he did much to revive its flagging fortunes, and was undoubtedly assisted by the excellence of Novell's NDS technology. However, this was generally seen as a short-term reprieve. While the big corporates were deploying a large amount of Windows NT and eating heavily into Novell's NetWare revenues, Windows NT 4.0 was incapable of providing much in the way of network management. In contrast, Novell had NDS, which was just about the only technology available that could span a network and be used as a means of linking together all resources in all domains of the network. If you wanted a common security policy, common logon, well-defined user profiles and so on, then NDS was the only game in town. In theory, Microsoft was waiting in the wings with Active Directory - to be delivered with Windows 2000 - which would provide NDS with direct competition and possibly grind it into history. However, several things have happened to alter this scenario. Windows 2000 was late and the first version of Active Directory does not include the same level of capability as NDS. Linux came along, damaging the momentum of Windows 2000. And finally, a number of large companies, particularly telcos, simply could not wait for Microsoft or anyone else and began deploying NDS extensively. Novell is now releasing eDirectory, an extension of NDS, which will further challenge Microsoft's Active Directory. EDirectory takes NDS a step further, providing the same NDS capability but spanning corporate and public networks. Commenting on the release of eDirectory, Eric Schmidt poked fun at Microsoft, and said: "The question is not 'where do you want to go today' but 'what do you want to do today?'" Schmidt believes that the directory, rather than the operating system, will eventually be the centre of the world - and he's right. An operating system has a number of functions, but the most important one is to provide the user with access to resources. This requirement now goes beyond the operating system and into the network. We expect Microsoft to have some say in the directory market, but we do not expect Novell to be dethroned by Active Directory. ** Why CE won't rule the handheld roost ** It is now looking increasingly unlikely that Microsoft's Windows CE is going to dominate in the small OS market. It is being beaten time and again by competition from Palm OS, Symbian and Linux. The latest move in this market is the announcement yesterday that Sony and Palm (i.e. 3Com) have agreed to share technology. Sony will use the Palm OS in new hand-held devices that combine functions that are typical of the Palm V or Psion Organiser with audio-visual functionality that can be found in various Sony devices. Additionally, Palm will be adopting the Sony Memory Stick as a means of storing and transferring data. The Memory Stick is a small flash memory card with up to 16MB capacity, which can be used to store digital data including still images, video and music. The collaboration between Sony and Palm can be seen as yet another networking move that is not Windows CE friendly. Psion currently believes that EPOC (the Symbian operating system) will win 80 per cent of the market - but that depends on how you define the market. As the boundaries between the hand-held computer and the mobile phone disappear, the Symbian/Nokia/Ericsson/Motorola consortium, which controls over 80 per cent of the market, will establish Symbian's EPOC as a de facto OS. There is also an expectation that Palm OS and EPOC will eventually merge. However, Windows CE will certainly take a piece of the Web device market (set top boxes, etc.) and it has some share of the mobile market. There is also the possibility that Linux will have some share of both markets, simply because Linux is fashionable. We still regard this market as being in its infancy and too early to call. In the end, the operating system does not matter much to the user, so it's simply a matter of license costs and the availability of applications. ** The taxing question of ecommerce ** It looks as though the Internet is going to play a big part in the coming US presidential campaign. Politicians in the US and across the world have been polishing up their Internet credentials for quite some time and, hopefully, any moment now someone is going to try to grasp the nettle of Internet taxation. Roughly speaking the problem is this: the Internet is a great place to avoid paying tax. The only way to implement a sales tax is to pin the tax to a geographical location, but even that has its problems. At the moment, for example, Republican Governor Mike Leavitt of Utah, the current chairman of the National Governors' Association, believes existing sales taxes should be collected on goods sold over the Internet. In this he is at odds with Governor Jim Gilmore of Virginia, the chairman of a congressional Internet tax advisory panel, who wants to prevent sales taxes on most ecommerce. Gilmore is anxious not to impede the growth of Internet with tax, but in reality tax is not what impedes - it is bandwidth. Nevertheless, Governor George W. Bush of Texas, the front-running Republican presidential candidate, supports the three-year moratorium on new Internet taxes and may line up with Gilmore. Senator John McCain of Arizona, another Republican presidential candidate, also appears to be lining up with Gilmore. For the moment, politicians can afford to back the no tax idea, but eventually they will be obliged to adopt a different stance. After all, their power depends on the revenues that pay for them. Leavitt is proposing a plan for States to phase in an ecommerce tax system where a trusted third party would calculate, collect and distribute sales tax - based on the location of the purchaser. This solution will probably turn out to be fraught with problems. Does it mean that you can avoid the tax by purchasing from abroad? If so, Internet surfers will simply use proxies that are out of jurisdiction and avoid tax accordingly. In reality, the only realistic scheme will be to tax both ends of the transaction. * For more analysis, see http://www.it-director.com
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