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Any life left for Novell?

Brainy Eric Schmidt may have been a geek's geek, but CNET News.com's Ben Heskett says Novell and its outgoing CEO failed when it came to communicating the company's mission.

    Whenever a high-profile technology chief executive steps aside abruptly, questions are quickly raised about what really happened. In the case of Silicon Valley veteran Eric Schmidt, what happened was Novell, the Jurassic software company.

    Novell has a long heritage, helping to initiate the growth of the corporate PC network, known as the LAN (local area network). It was also the largest provider of server-based operating system software at one time. This must have been what attracted Schmidt, a well-regarded technologist from Sun Microsystems, when he joined the company in 1997.

    But it's hard to turn around a largely immovable object--a fact that may have led to Schmidt's quiet shift in responsibilities.

    Novell was late to embrace the Internet, and its long and sometimes ugly fall from grace has been fait accompli ever since. Schmidt's role in Novell's continued muddling is an interesting lesson, given the hype surrounding his hiring, the well-placed expectations associated with his vision for the company, and the overwhelming sense that at the end of day, the company still wants to fight a battle it lost to Microsoft and others long ago.

    As Schmidt slides into a new "chief strategist" role, Novell devotees gather next week in Salt Lake City to hear about the company's latest vision of the future and size up the company's latest CEO. Some may be confused, since a new vision seems to come out of this company every year, followed by a litany of bad earnings news, a rash of executive departures, and a new wave of acquisition rumors and concerns about the company's direction.

    This is, after all, Novell we're talking about here.

    As one former executive, brought in during the early days of Schmidt's turnaround, said: "Eric brought Novell new life for a while. His ability to gather attention wherever he went was what Novell needed--a sort of public-relations side effect that Novell took advantage of. He tried to turn Novell into an Internet play, but the NetWare mafia is still in the back rooms."

    From a formerly dominant position, Novell's NetWare operating system software has been passed by Microsoft's Windows 2000 software and various forms of Linux, according to the latest analyst data for 2000.

    This is the same company that greeted its customers with an XFL-like show at a conference in 1997, briefly renamed its flagship product "IntraNetWare" to try to latch onto a new technology lexicon, and continues to be a Netware-centric sales machine even as its leader has espoused a more Net-friendly vision where Novell's greatest asset--its directory services management and administration software--becomes its flagship technology.

    More recently, at last year's user conference, Novell spoke of a new "One Net" vision for its software just before its sales imploded and another round of executive talent streamed out of the company. Schmidt has also stressed a new focus on "Net services" software as a catchy phrase for the company's technology, yet its quarterly earnings reports continue to reflect a reliance on Netware as a cash cow.

    What is curious about the latest twist in the Novell saga is how Schmidt's exit as chief executive was done. It was noted almost as an aside in the fifth paragraph of a press release detailing Novell's acquisition of consulting firm Cambridge Technology Partners this week.

    Now, as Schmidt shifts his role to chief strategist, his shortcomings as a chief executive mirror the issue that has long plagued what most regard as an otherwise top-notch technology company: a lack of effective marketing.

    "What he brought to Novell was a lot of discipline on the product conceptualization and development," observed Dwight Davis, a longtime software analyst at Summit Strategies. "Then the same issue that always hobbles Novell comes up: the ability to effectively market. Eric was never able to overcome the company's marketing shortcomings."

    Attempts to discuss the state of Novell with Schmidt in person, over e-mail and via the telephone were unsuccessful.

    High technology is littered with companies that maintain a large cash-generating business but lack the growth characteristics of some of their entrepreneurial competitors. They simply milk a loyal customer following for sales, tweaking and tuning products to give the installed base of loyalists a reason to upgrade their systems rather than desert the ship.

    Novell technology hyperbole aside, the time is long past to add Novell to the list.