CNET también está disponible en español.

Ir a español

Don't show this again

Christmas Gift Guide
Tech Industry

Resilient Novell tries again

If the networking software pioneer fails to recapture some of its former luster, it won't be for lack of effort. Now it's eyeing the Web services market.

If networking software pioneer Novell fails to recapture at lease some of its former luster, it won't be for lack of effort.

The company's latest plan to reinvent itself kicked off Monday, with the purchase of SilverStream Software, a maker of development tools.

Novell Vice Chairman and No. 2 executive Chris Stone sees the deal as helping the company expand into the market for Web services--an increasingly popular way to develop software. If Novell successfully integrates SilverStream into its product line, it could possibly revive interest in Novell's NetWare operating system and directory services software as a Web services development package. At the very least, the deal gives Novell a much better arsenal of software development tools.

"I got kind of tired of the knock that we don't have a good developers story, or even a developers story," Stone told CNET News.com. "Well, now we do."

Stone also said the deal lets Novell go toe-to-toe with Microsoft and IBM in the Web services market. "I would argue that we're the only company out there, in fact, that can now play with the big boys, and the SilverStream deal only reinforces this."

But analysts warn that the Web services market is unproven, and Novell faces a tough battle against the entrenched products--and deep pockets--of Microsoft, IBM and other established companies.

Those are familiar foes for Novell. The company fell on hard times in the 1990s due to an acquisition binge and increasing encroachment from Microsoft. Novell's NetWare once commanded more than 70 percent of the server operating-system market. But competition from Microsoft's Windows and, more recently, from Linux, has whittled Novell's share of the market to roughly 17 percent.

Now, Novell will need to fend off Microsoft with its .Net strategy, Sun Microsystems and IBM with Java software in Web services, as well as competition from IBM and BEA Systems in the application server software area.

"I don't think they're (Novell) going to convince anyone using (IBM's) Websphere to now use Novell," said Mike Neuenschwander, analyst with the Burton Group and a former Novell executive.

Still a bit player?
Novell is in a tough position. It has a NetWare server operating-system business that has matured, but remains steady; a leading-edge directory services and related software business that has yet to make up the difference; and a recently acquired consulting business that continues to shrink due to the technology downturn. It also has scared off a once-loyal sales channel and fallen off the map with developers more interested in the Web than a specific company's technology.

And the company has--at least until now--never fully addressed the primary hole in its strategy: A solid line of software tools that can attract an army of developers to its technology, giving the company a bit of sway in an industry that seems to have written it off.

Several analysts voiced doubts about this latest revival attempt, given Novell's already precipitous drop in mindshare. "I don't (think) this particular move is going to get them any closer," said Neuenschwander. But "Novell has to have some sort of Web services story."

There's still plenty of time for new players to jump into Web services, but viewing it as a business savior may be risky at best.

"At what point does (Web services) move from a technology to a market? That's a tricky question," said Ron Schmelzer, analyst with industry consultants ZapThink.

A saving grace for the company could be the lingering indecision among technology buyers. Analysts say many buyers are sitting on the Web services sidelines until standards gel further.

And Novell's strategy is still evolving. Some analysts believe the SilverStream purchase will be just one of several acquisitions in the coming months intended to put some polish on its product lineup.

"We view this acquisition as a step in the right direction: Novell needs to build a portfolio of new products to offset declining NetWare revenue trends and we would not be surprised to see the company make additional acquisitions to further the development of its advanced integration platform," Don Young, equities analyst with UBS Warburg, said in a report this week.

Novell in recent months has taken other steps to move itself into the forefront of technology. For instance, last month the company released a new software specification for linking an important underlying standard for Web services, called Universal Description, Discovery and Integration (UDDI), to a significant existing technology for directory services software, called Lightweight Directory Access Protocol (LDAP).

Directory services software, a database of information on computer users, software, systems and other information that resides on a corporate network, has long been one of Novell's strengths.

Novell also plans to counter competitors with a set of software and services it acquired from Cambridge Technology Partners. In the coming months, the company said it plans to round out a strategy to deliver an "advanced integrations platform" that it has yet to detail.

But any success seems a long way off. "It's hardly a time to spike the ball," Neuenschwander said.

Novell remains undaunted, hoping it can return as a force to be reckoned with in Web services. Yet the same ghosts from its past--failed acquisitions used to expand into new markets, executive shuffling, a sales organization overly focused on NetWare--may creep up once again, making life difficult for Stone.

"Novell has to get aggressive, compete head-on, and win based on our ability to solve a problem, not just (based on) the world's best technology," Stone said. "Oftentimes, being just good enough gets you far--witness Microsoft. We now have both."