Linked by Thom Holwerda on Fri 2nd Mar 2007 21:04 UTC
Novell and Ximian "Novell on Mar. 1 announced preliminary financial results for its 2007 fiscal year first quarter, showing net revenue of USD 230 million. The first quarter's revenue represented a decline of USD 12 million, or about 5 percent, from the prior year's first quarter revenue of USD 242 million. Despite the unexceptional overall results during the first fiscal quarter 2007, however, Novell reported USD 15 million of revenue from Linux Platform Products, up 46 percent year-over-year, and USD 91 million of invoicing, up a whopping 659 percent year-over-year. Linux - make no doubt about it - is Novell's future."
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Business as usual
by moleskine on Sat 3rd Mar 2007 00:36 UTC
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What these figures show is that Novell is doing a good job on Linux, though starting from a very low base, but is quite unable to stop the slide in its traditional, core business. Folks are not transitioning from Netware to Novell's new replacement offerings; instead they are moving off to "competitors", er in most cases Microsoft, one presumes.

The problem for Novell is that the slide in their core business is many times greater in financial terms than the growth in their Linux business. So a nasty gap has developed and it is gradually pulling the company down. If Novell, today, suddenly became a pure Linux business, then it would be about one-tenth of the size it is now. So, 90 per cent of Novell's employees would be fired and the results would go from turning over +/- a billion a year to +/- $100 million a year, if even that.

Novell's Microsoft deal has, literally, bought it cash. So that's the gap plugged, for a short while. And then? Novell's financial plight makes SuSE look like a risky play, a play with a fatal weakness, no matter how good you think the SuSE products are (and most folks, rightly, think them very good indeed).

The solution, eventually, will probably be some kind of buyout or rescue of what is left of Novell. That's why it is fatuous and propagandist to claim that Linux is Novell's future. If Novell ever gets to the point where Linux is all it has left, it will no longer be Novell or remotely recognizable for the company it is today. The horror is that by then SuSE could have become one of Microsoft's portfolio of server tools, perhaps with a smiling Mr Ballmer praising SuSE's rich heritage of hyper-leveraged profit-enhancement and cash-engineering technologies, etc, etc.

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