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Netscape, Novell in Net pact

The two companies are snuggling up in an effort to stave off the advances of Microsoft's Windows NT operating system.

Netscape Communications (NSCP) and Novell (NOVL) are snuggling up in an effort to stave off the advances of Microsoft's (MSFT) Windows NT operating system.

As previously reported by CNET, the two companies today announced a new jointly owned company called Novonyx. The venture will be dedicated to translating Netscape's SuiteSpot server products to Novell's IntranetWare network operating system. Netscape will also provide a source code license for its FastTrack Server software to the joint venture, the companies said.

Another Novell technology, Novell Directory Services (NDS), will get a boost next week. The company plans to announce a licensing agreement with Oracle on Monday at the BrainShare '97 developer conference that will tie the database giant's Web Application Server to NDS. Integration between the two technologies is yet another step in Novell's strategy to proliferate NDS across as many platforms as possible.

The first products to emerge from Novonyx will be the Netscape Enterprise Server and Netscape FastTrack Server for IntranetWare, due to ship this fall. The companies will offer a peek at the beta version of the Netscape Enterprise Server 3.0 running on the IntranetWare operating system at Novell's annual BrainShare conference next week in Salt Lake City.

The partnership could help bolster Novell's network operating system, which has lost market share to Windows NT Server in recent years. Novell has tried to make its OS more Internet-friendly, recasting its proprietary NetWare product last year as IntranetWare and offering its own Web server for the operating system.

But IntranetWare has failed to attract broad support from most Internet software companies. IntranetWare versions of SuiteSpot, which includes a Web, email, directory, and other servers, could give the Novell OS a much-needed boost. It could also help Netscape broaden the market for its servers. In spite of increased competition from NT, Novell still holds the majority of the local area network OS market.

Jim Barksdale, chief executive officer of Netscape, said today that IntranetWare versions of SuiteSpot will give customers a better reason to stick with Novell's OS instead of switching to NT.

"If they're not committed to NT now, they don't have to be to take advantage of these products," he said.

Some analysts echoed that view, but said Netscape's support for IntranetWare won't affect the surge in demand for NT.

"It's a defensive move to protect the 4 million users of IntranetWare servers," said Chris Galvin, technology analyst at Hambrecht and Quist. "I don't think it is going to force people to reconsider NT."

This is not the first time Novell and Netscape have worked together. Last year, the companies jointly promoted adoption of LDAP (lightweight directory access protocol), a standard technology for access directories that store user names, email addresses, phone numbers, and other data. Novell's technology comes with its well-regarded directory services, which the two software makers hope will be attractive to corporate customers.

In spite of their new relationship, Netscape and Novell will remain competitors in the intranet market. Novell's GroupWise messaging system and NDS offer many of the same features that SuiteSpot does. Novell also offers a Web server for IntranetWare, the 3.0 version of which shipped this week. Company executives said Novell has no plans to discontinue the products.

"It's interesting from the perspective of Novell getting better credibility in the Internet and intranet space," said Ray Laraquenta, analyst for the Gartner Group. "It's confusing once you get beyond the Web server port," he said. "Do I buy [Novell's] GroupWise? Do I buy SuiteSpot? Who do I buy it from?"

The Gartner Group analyst added the biggest challenge facing the fledgling Novonyx organization would be separating themselves from the parent companies. "I think that's going to be real hard to do."

Laraquenta predicted Novell's Web Server will be gone from the product line next year as a result of the agreement.

Novonyx will be based in Utah, and will be jointly funded by Netscape and Novell. Executives of the two companies declined to specify how much each company is investing in Novonyx. One of the reasons Netscape and Novell formed a separate company is that they hope eventually to take Novonyx public, Barksdale said.

The companies also said they will throw the combined weight of their marketing and distribution networks behind the products that emerge from the Novonyx venture.

Recent industry moves indicate a massing of vendor forces against Microsoft's Internet and enterprise push. Sun Microsystems' top technology guru Eric Schmidt will soon join Novell as CEO, and Netscape and Oracle continue to ramp up integration efforts for the IntranetWare platform, heightening the competitive landscape. Though these vendors would seem to be likely suspects for an anti-Microsoft effort, their cozy relationship could force the Redmond gang into an increasingly competitive posture.