VNU Net: Novell criticised over directory strategy

By Linda Leung, VNU Net

Researcher Gartner has slated Novell for not giving away Novell
Directory Services (NDS) free of charge to sew up the market before
Microsoft launches Active Directory as part of Windows 2000.

Gartner research director Neil MacDonald said: “It’s
not about directory technology. The value is in the software and
the management of directories. If Novell had given NDS away
free it would be more successful selling directory-enabled
management products because it would have already seeded the
market.”

Speaking at Gartner’s US Spring Symposium in San Diego this
week, MacDonald said the directory services market will disappear
by 2003 as it becomes commoditised and that Novell should turn its
attention to pushing directory-enabled management tools.

He also said that Novell is too reliant on Netware, which
accounted for two thirds of the company’s revenue in 1999, while
products for the directory-enabled management space, the firm’s
biggest opportunity, contributed less than one per cent.

Netware will account for 37 per cent of sales by 2004, while
directory management will pull in 14 per cent of revenue, said
Gartner.

Novell will begin to lose network operating system market share
to Microsoft by 2002, as organisations standardise on Windows NT
and 2000, said MacDonald. Although this will not mean the immediate
death of Novell, the networking company is not growing because of
its inability to sell outside its large and loyal installed
base.

“Novell should get revenue outside of Netware by moving to
directory-enabled management, for example, but it will still have
extreme difficulty targeting products outside its installed base
with things that appeal to new customers, said MacDonald.”

One market that has not been exploited is in companies with
fewer than 3000 desktops where Microsoft is strong. Last year, 69
per cent of Novell’s revenue came from companies with more than
3000 desktop systems, but this will grow to 78 per cent by 2004,
predicts Gartner.

MacDonald said Novell’s strength lies is its multi-platform
support for NDS, but warned that not all versions are equal. For
example, NDS running on Netware provides users with a comprehensive
set of features, but users of IBM’s OS/390 platform just get
internet packet exchange (IPX) support, said MacDonald.

Despite Novell’s promise to make all its products cross-platform
under its directory enabled infrastructure model strategy announced
last month, MacDonald said the company will drop support NDS’
support ofAIX, HP-UX, Linux, OS/390 and SCO Unix by the end of
2004 as it becomes expensive to develop various version in a
commodity market.

He said identity management also represents a good opportunity
for Novell as this draws on its experience in directory services
and as organisations move information policies beyond firewalls.
One example of Novell’s product in this space is Digitalme, which
enables consumers to manage their identities on the web.

Gartner said Digitalme should either be spun off or absorbed
into a larger initiative by the end of next year to ensure its
success.