Yes, Novell has a ways to go to catch up with Red Hat, but with yet another strong quarter it's becoming increasingly clear that the enterprise Linux market is a two-horse race again. Importantly, Novell is competing much more strongly without backup from Microsoft.
Novell saw its Linux business top $29 million in its second fiscal quarter of 2008 ($30 million in total Open Platform Solutions revenue), up 31 percent over the same period a year ago, with other business units also seeing healthy growth. Only its Workgroup business unit continues to founder, down 1 percent in the period that ended April 30.
More importantly (to me), I asked Justin Steinman, Novell's director of Marketing for Linux and Open Platforms, how much of this is attributable to Novell's partnership with Microsoft. It turns out that Novell is starting to really grow its Linux business on its own, though it still looks to Microsoft as a strong partner to drive interoperability:
Novell's core Linux business is growing. By "core," I mean that our non-Microsoft- related Linux business is growing. These are Suse Linux Enterprise Server subscriptions sold directly by the Novell sales force or by our channel partners, without any Microsoft certificates or Microsoft salespeople involved.
However, the important thing is that our total revenue picture for Suse Linux Enterprise is growing, as our customers increasingly don't distinguish. As we've said before, Microsoft offers an alternate avenue for purchasing subscriptions but we are focused on growth of the whole category.
This is very, very good news, even if Novell refuses to wholly disown its Redmond uncle. Increasing independence from Microsoft is good for Novell's long-term health and it's good for true competition in the Linux market. It means that Novell can compete on its own merits, and not merely in Linux.
Novell's Identity and Security Management grew to $31 million in the second quarter, up 13 percent over the year-ago period. Systems and Resource Management hit $41 million, up 15 percent year over year. Workgroup remained the biggest business unit but also the weakest, down 1 percent to $92 million.
Novell may like the Workgroup revenue, but it's unlikely to magically turn into an innovation and growth segment anytime soon. This is unfortunate since Novell is actually an innovation leader in parts of its Linux business (retail, desktop, virtualization) and in identity management. Band-aids like Sitescape won't rescue the Workgroup business, either. It's time to jettison it or invest in it.
But that's a quibbling point on a strong quarter, one for which Novell should be proud. I've been a critic of Novell for several years, but it's starting to earn my respect. Not that it has been waiting around for my favor. It's done quite well without it.