Novell would like to teach the world to Linux

Stephen Pritchard hears of the company's 'hip, cool and winning' strategy to head off Microsoft

Businesses too are starting to ask whether they should follow suit, and move away from expensive proprietary operating systems. This is a gratifying development for Jack Messman, chief executive of software vendor Novell.

Novell's core product, the network operating system NetWare, had been losing ground to Microsoft's Windows. But two years ago, Messman sealed a deal to buy SuSE, a German distributor of Linux. Costing $210m (then £133m), the move was widely seen as a gamble for Novell, and one where the rewards were less than obvious. Today, the price paid for SuSE looks as if it might have been a bargain.

At a stroke, Novell acquired a new foundation for its software products. Better still, it bought into a way of marketing those products outside its NetWare base, especially to companies operating Intel-based PCs and servers, and Windows. Novell could sell these companies its GroupWise collaboration software; it could add the systems management tools ZENworks, which work with Windows, as well as other platforms. And, as an alternative operating system for those who wanted to move away from Microsoft, it could offer SuSE Linux.

Into the bargain, Novell acquired what SuSE's head of development and now Novell's chief technology officer, Markus Rex, calls some "hip, cool, winning" technology.

For Messman, the challenge over the past two years has been to integrate the SuSE Linux family with Novell's existing product line, while keeping faith with the principles of the open source movement. He has also had to convince existing Novell customers that their investment in NetWare and GroupWise is safe, now that the company has embraced Linux so wholeheartedly.

Bridging the gap between open source software - developed by hobbyists and mostly distributed for free - and commercial products such as GroupWise is not easy. But Messman believes Novell is striking the right balance.

"We want to be 'mixed source'," he says. "Open means open standards, both for our proprietary and open-source software. For proprietary software it is open standards and for open source it is open and mixed, as the software comes from both the proprietary and open source world."

If that sounds as if Messman is trying to be all things to all men, it's not far from the truth. Commercial customers want to know that Novell will give them the business-level support they need. Linux enthusiasts want to know that they can still download a version of SuSE Linux for free.

Novell's answer is a product called the Open Enterprise Server. This is made up of the Novell-developed Netware services, and two alternative kernels (the core of the operating system): one based on NetWare, and one based on Linux. This, Messman believes, will offer a technology roadmap for NetWare customers and a way of selling Novell's software tools and applications to the nascent, but fast-growing, Linux market.

"We will protect customers who want to stay with NetWare, and for those who want to move to Linux, they can do it at their own pace," he explains. "We don't want to walk away from existing customers, but want to prepare them for a future on open source."

Leeds City Council is one organisation that is following this path. The authority is midway through upgrading its 10,500 workstations, as well as its servers, to run NetWare 6.5. For the future, Leeds has made a strategic decision to consider open source operating systems and software.

But even if Novell can keep large customers on board, it needs to address its problems selling to the wider market. As companies have abandoned expensive mainframe and Unix servers in favour of cheaper boxes based, in the main, on Intel chips, they have also moved to Windows. A newer generation of IT professionals - trained to work with Windows - is less likely to buy from Novell, leaving it with a smaller slice of a larger pie.

"Our overall strategy is to slow the steady decline in the NetWare business, which is the result of Microsoft's aggressive marketing," says Messman. "Customers were unclear about where we were headed with NetWare. We had to come up with a strategy to solve that issue. The first thing we did was to put our services, and NetWare, on Linux."

Before Novell committed to buying SuSE, Messman took soundings from the industry, in particular IBM. "I went to IBM to see that I was not making a wild mistake," he recalls. IBM is a key supporter of Linux and had worked closely with SuSE Linux. IBM rewarded Messman by taking a $50m stake in Novell.

IBM is a powerful partner for Novell in the enterprise computing market, but competition is tougher for business from smaller companies. Here, Microsoft has a compelling offering, selling most of what these customers need in its Windows Small Business Server suite. Novell, though, must capture market share here if its move into Linux is to realise its full potential.

"Little acorns grow into big trees, but small businesses don't have the time to integrate [IT systems]," says Messman. Novell has now released its own small business suite, which comes with desktop and server applications, at a lower cost than Microsoft's offering.

Messman notes that, faced with competition, Microsoft has softened its position on Linux. In some markets, especially Asia, it has cut the price of Windows and Office. But Messman maintains that it is open source, not Microsoft, that will drive development in the IT industry.

"Microsoft takes $1bn a month of free cashflow from the industry," says Messman. "[Other] software companies would rather customers spent that on innovative things, than on a commoditised operating system."