Last week America Online signed Novell as an ally in its Instant Messenger fight with Microsoft, and the most amazing thing happened. People noticed.
It may be the most startling turn around story of the decade. In just 30 months, Eric Schmidt, formerly chief scientist (and chief Java evangelist) at Sun Microsystems, has made Novell viable again.
Schmidt has done it by pointing Novell directly toward Internet standards, like Java and HTML, while opening up its NDS directory service. Schmidt also moved the center of gravity for the Utah-based firm squarely into Silicon Valley.
It’s quite a contrast to what may be the saddest (and in retrospect) funniest meeting I ever covered in my career to date. It was the opening session of Networld in Atlanta, after Schmidt’s predecessor, Robert Frankenberg, arrived from H-P to take over from founder Ray Noorda.
The meeting looked and felt like a Soviet Party Congress. Red flags were flying everywhere, the man at the podium made a long speech that made no sense, and a crowd of identical suits applauded each paragraph as though they were reading cue cards. The chairman then bolted without taking questions. All he was missing, I told a friend, was a birthmark on his forehead.
Quite a contrast to Schmidt’s early Novell days when he dressed-down deliberately, spoke passionately at shows like Internet World without notes, and stayed to answer questions until reporters were exhausted. The contrast gave Novell a publicity breather and a strategic direction, but when the headlines faded, most of us went back to ignoring the old firm.
NetWare, after all, was a network operating system that made Windows look simple. In the early 90s every company had to have a “NetWare engineer” on hand to keep their network running, and when alternatives arose that didn’t require this gatekeeper, most ran to it as fast as possible. Schmidt’s new company had a huge “installed base,” but then so did MS-DOS in the early days of Windows.
Times have changed. If you want to build your network around true Internet standards, Novell is now the best-supported choice. Netscape’s support staff has been gutted since its merger with America Online, while Sun has its own operating systems. Most reviews I’ve read give Novell’s NDS directory system higher marks than that of Windows.
Schmidt is not out of the woods yet. Novell still gets an awful lot of its money from old, obsolete products. While insisting his company is really a “niche” network player, not a direct challenger to NT, Novell can no longer come in under Microsoft’s radar, not with the AOL deal in-hand. As a commercial product, Novell can’t compete politically with the attraction of Linux, either. But for the first time in years, Novell seems to be a player with a game plan. The stock’s now trading at a price-earnings multiple of over 60, slightly richer than Microsoft’s own P/E of 57. (Apple’s current P/E, by contrast, is 16.67.)
There’s even a benefit here for those of us in e-commerce. By moving the old NetWare under the Internet standards umbrella, Novell has made all our efforts to link with Intranets easier. It makes me wonder what Schmidt has in mind for an encore.
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