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Novell celebrates rebirth

Executives portray their company as a newly re-energized force ready to retake a leading position in the networking industry.

SALT LAKE CITY--Novell (NOVL) executives portrayed their company as a newly re-energized force ready to retake a leading position in the networking industry after a period of stagnation at today's opening of the annual BrainShare '97 user conference here.

Signs of rejuvenation were evident throughout morning presentations from key members of the Novell brain trust, including newly appointed chairman and chief executive Eric Schmidt, who joins the company after 14 years at Sun Microsystems.

Novell's fortunes have fallen--even since the last BrainShare--because of the abrupt departure of former CEO Robert Frankenberg, a fire sale of businesses purchased at a premium, and the perception that the company's software is "proprietary" and therefore lagging behind the exploding shift toward open Internet-based protocols. That seemed to be reflected in a poor second quarter of fiscal 1996 that fueled speculation that the company has not kept pace with the industry, according to many industry observers.

And encroachment on the network operating system front from software behemoth Microsoft has not helped matters, either.

The Windows NT Server platform is quickly gaining acceptance in corporate America and Internet-based operations because of its application support. Even though portions of the operating system lag behind IntranetWare from a technology standpoint, the perception remains that Microsoft is ready to steamroll into yet another market.

In the face of this threat, Novell has refocused under the stewardship of interim head Joe Marengi, moving to adopt Internet protocols and expand its partnerships.

"Over the next decade, Novell will remain a major player in the networking industry," the current president and COO said to thousands of Novell loyalists. Noting that he has heard the criticism of Novell, he said, "I can feel the change that's taking place inside the company."

A dual objective of the conference for Novell executives is to persuade both its huge installed base and a skeptical financial community that the best things are yet to come. The hiring of Schmidt, Sun's primary technological guru and a leading proponent of the cross-platform Java programming language, is an important step toward this restoration of faith, industry analysts say.

Schmidt spoke to the gathered throng for several minutes at the conference, even though he will not officially start his job until early April. Received warmly by the crowd, the new CEO pointed to the 250,000 copies of IntranetWare sold in the previous quarter and installed base of 60 million users as evidence that Novell can play an important role in a networked future.

"The problem is nobody knows this. It's my job to fix this," Schmidt told the crowd. "We've only crossed the starting line in the networking industry. Novell is perfectly positioned to lead in this industry."

Two partnerships disclosed today provided further evidence that Novell is not standing still: an agreement with Oracle to integrate key components of their respective technology sets and the announcement of a licensing of an easy-to-use Java-based development tool called Project Studio from Sun.

The company also showed off a tool that can take traffic based on Novell's proprietary IPX protocol and turn it into native Internet Protocol traffic, the dominant communications protocol for the Internet.

In addition, Novell released a beta version of Replication Services for IntranetWare, which allows files to be replicated across numerous servers. And there was discussion of the company's Border Services initiative, which includes proxy caching, firewall, and virtual private network enhancements that Novell executives believe will set them apart from others.

"Novell has a tremendous installed base with a lot of people trained to operate their networks," pointed out Bob Sakakeeny, analyst for the Aberdeen Group. "Those guys can convince the members of their organization buying Windows NT to go with Novell."

It is also clear that Marengi has an important future at Novell. Schmidt took pains to tell the Novell community, as well as industry press and analysts, that the former Novell sales executive fills a key operational role in the company, one that Schmidt may not be as familiar with since he has never headed a company.

Marengi may have summed up the state of Novell best at the close of a late-morning press conference. "We may have been slow to the dance," he said, "but we haven't been left out of it."