Information Week: Novell May Be Down, But It’s Not Out

“Critics will be ready to hammer another nail into Novell’s
coffin this week, when the company reports that revenue for its
second quarter will fall well short of expectations. Novell is
already moving to address at least some of the problems responsible
for its predicament, including turning its attention to the service
provider market it has long neglected. Also in the company’s favor
is the fact that some loyal users are beginning to rally in support
of its far-reaching vision of a directory-based network

“But not everyone has caught up with Novell’s grand idea,
analysts say. “Companies are still struggling with the mundane
stuff, like trying to get their back-end applications integrated,”
says Steve Foote, president and CEO of consulting firm Enswers.com.
“Many companies won’t be looking at deploying directories the way
Novell envisions for another nine months to a year. So instead of
selling only the One Net vision, Novell needs to show its existing
NetWare clients how they can use the directory to bring real
business value.”

“Novell had better do so soon, says Morgan Stanley Dean Witter
financial analyst Chuck Phillips. “They have two or three quarters
to turn themselves around,” he says, “or they’ll continue to be
marginalized as companies continue to bet on Microsoft.” But
pressures brought by Windows 2000 and Active Directory can’t solely
account for Novell’s disclosure earlier this month that revenue for
the quarter ended April 30 will total only $300 million-$16 million
less than the year-ago quarter and $60 million short of its own
sales projections. While part of the problem may be that Novell
is selling its directory services concepts ahead of the curve,
analysts point out that Linux is also putting the squeeze on


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