In association with heise online

05 June 2009, 12:19

Novell - On the way to becoming a Linux business?

by Dr. Oliver Diedrich

Although it has been one of Novell's success stories, the company has none-the-less remained circumspect about committing to Linux.

Novell's recently released figures for the second quarter of 2009 showed an 8.5 per cent drop in sales compared to the previous year – not a big surprise in light of the much debated economic crisis. Even so, the latest figures are in line with the broad trend at Novell. Sales have been falling for years – from just shy of $300 million per quarter in late 2004 to around $216 million now.

However, one area of the business has enjoyed constant, indeed double-digit, growth over the last few years – Linux. Three years ago, sales from the Linux business were around $10 million; this year they have already hit $37 million (see table).

Sales growth at Novell
In US dollars
Quarter Total sales
(Change compared to previous year)
Turnover from Suse Linux
(Change compared to previous year)
2/06 278 Mil. (-6,4%) 10 Mil. (+25%)
3/06 241 Mil. (-16,9%) 12 Mil. (+50%)
4/06 245 Mil. (-23,4%) 13 Mil. (-13%)
1/07 230 Mil. (-16,1%) 15 Mil. (+15%)
2/07 239 Mil. (-14,0%) 19 Mil. (+90%)
3/07 243 Mil. (+0,8%) 21 Mil. (+75%)
4/07 245 Mil. (0%) 22 Mil. (+69%)
1/08 231 Mil. (+0,4%) 28 Mil. (+87%)
2/08 236 Mil. (-1,3%) 29 Mil. (+53%)
3/08 245 Mil. (+0,8%) 31 Mil. (+48%)
4/08 245 Mil. (0%) 33 Mio. (+50%)
1/09 215 Mil. (-6,9%) 35 Mil. (+24%)
2/09 216 Mil. (-8,5%) 37 Mil. (+25%)

Despite this, Novell's management has not given the impression of having a clear idea of how to get the Linux business to really take off – how else can you explain Novell CEO Ron Hovsepian's assertion that the figures for the Linux business for the first quarter of 2009 (up 24 per cent year on year, six per cent quarter-on-quarter) did not meet the company's expectations?

But things look to be changing. At a press conference to present the figures for the second quarter, Hovsepian highlighted Linux (alongside identity management) as the area with the greatest potential and the best outlook. Perhaps the Novell boss has finally spotted that the success of the Linux business runs counter to the general trend.

Novell's Linux sales are growing steadily.
Novell's Linux sales are growing steadily.

So will Novell become a Linux and open source business? To many users, the company currently feels more like a general store – Novell has identity and compliance solutions, system management software (ZENworks and products from last year's acquisition of Platespin), then there's the Groupwise collaboration line and then there's Linux. Too much to establish itself as a specialist in a particular area, not enough to compete with IBM and consortia as a full service provider. A little open source (Novell pays a number of Linux developers and is involved in a range of other open source projects), but also too much proprietary software – indeed Novell has elevated this to a principle which it calls 'mixed source'.

Clearly Novell doesn't yet really believe that you can earn money with open source; it appears to be afraid of opening up its own products and prefers to rely on traditional proprietary software. The success of its own Linux line, however, should give it some pause for thought...


Print Version | Permalink:
  • Twitter
  • Facebook
  • submit to slashdot
  • StumbleUpon
  • submit to reddit

  • July's Community Calendar

The H Open

The H Security

The H Developer

The H Internet Toolkit