Novell plans counterattack to Windows 2000

The new Microsoft operating system upgrade will officially debut next week, signaling the end of Novell's opportunity to take advantage of continued delays by the Redmond, Wash.-based giant in delivering the much-hyped software. But Novell chief executive Eric Schmidt has long been preparing for that day, revamping his company's plans so that it does not depend on products that directly compete with Microsoft.

As a result, Novell--riding a wave of renewed confidence in the firm among investors--will seek to gain an upper hand tomorrow as it unveils its own strategic plans for e-commerce and back-end Internet-based software in advance of Microsoft's anticipated launch.

Novell has been forced to essentially shadowbox a product and a set of features that did not exist, up to now, according to company executives, and would prefer to see Windows 2000 ship. Now, Schmidt says, Novell is ready to become a leader in so-called network services--a new niche, he claims, composed of all the software a company needs to do business on the Internet and with partners.

Novell plans to provide further details of this strategy, highlighted by its "iChain" initiative for e-commerce Web sites and further updates in its networking software, tomorrow at a press conference in San Jose, Calif. The company has characterized the announcement as a "new direction" in press materials.

A Novell representative refused to comment on details of the announcements.

Novell once battled Microsoft on the operating system front with NetWare, but has increasingly shifted its message away from its former flagship product to a new set of software "services" that take advantage of what many believe is the company's greatest asset: its Novell directory services, or NDS.

NetWare grabbed 22.8 percent of the network operating system business in 1998, compared with 38.3 percent garnered by Windows NT 4.0 (the precursor to Windows 2000), in a market in which 4.4 million units of operating software were shipped, according to data from International Data Corp. Upstart Linux experienced the largest growth gain for the year. In fact, Linux is expected to surpass unit shipments of Netware in 2003, according to IDC.

Schmidt has characterized the NetWare vs. NT argument as "last year's debate."

Increasingly, company executives have said, Novell should be measured by the success of its NDS software, along with a slew of management tools and associated Web-based applications that take advantage of its expertise in networking. To that end, much of tomorrow's announcement will focus on taking "the next step" with NDS--or eDirectory as it is now called--along with how iChain can help businesses. Related partnerships will also be announced, according to a company spokesman.

Some analysts note that Novell will have to make sure it separates itself from its foe in Redmond as the Windows 2000 marketing onslaught begins. The company needs to "get ahead of the wave," according to Dwight Davis, of industry consultants Summit Strategies.

The fight has already begun. The two companies have long attempted to stress their differences using their Web sites as a forum. The debate has been particularly heated on the directory software front, where Microsoft will have a competing technology called Active Directory in Windows 2000.

At one point last month, Novell claimed a Microsoft document comparing Active Directory to NDS was "false and misleading" and contained many "blatant untruths."

Novell said it notified its legal counsel of the "inaccuracies" and the Microsoft document has since disappeared from the company's Web site.

Such Web site wars could be the first skirmishes in a renewed battle between the two companies, according to some.