Cereal killer

Earlier this summer, around 3,000 enterprise customers of Novell’s NetWare software got cereal boxes from Microsoft in the mail marked “Microsoft Server Crunch.”

Presumably it was to become the breakfast of IT champions, given a claim on the back of the box that Novell was getting out of the OS business and focusing instead on services. The question I had, which was never answered, is what you were supposed to pour on such a cereal — other than the spilt milk Novell was supposedly crying over.

It turns out the joke’s on Microsoft, which was court-ordered Tuesday to send out a letter taking back the offending statements. This is actually the second letter it will have sent out, which indicates the one mailed Sept. 27 didn’t retract all that much (Don’t dare call it an apology; in these cases companies like Microsoft prefer “clarification”). Even so, Novell plans to push ahead and sue for damages.

As a marketing tactic, Microsoft Server Crunch smacked of desperation where there shouldn’t have been any, and a low-class approach to competition in the software development space. It was also really funny. Perhaps most importantly, however, it highlighted an ongoing concern over Novell’s future direction in the wake of its merger with Cambridge Technology Partners.

While not nearly as large in scale, the announcement of Novell’s Cambridge buyout was couched in much the same way that Hewlett-Packard discussed its pending takeover of Compaq. Services provides a path to profitability, particularly when paired with the right product line, and in this case Cambridge didn’t have any products of its own which might have overlapped with NetWare or eDirectory. In a way, it was more like what we might have seen had HP successfully merged with PricewaterhouseCoopers last year.

Like HP, Novell still has to prove it can successfully integrate the consulting strengths of Cambridge with its existing operations while maintaining and growing its software lineup. Microsoft’s gambit is effective in that it casts some doubt on Novell’s commitment to the platform. Spokespeople at Microsoft say Novell has hinted at leaving software behind in interviews with the media, but in a conversation with ITBusiness.ca’s Neil Sutton earlier this year, Novell Canada director of channel and segment sales Rick McHale said the company was interested only in offering a more complete solution. This is IT industry-speak for keeping your options open, but in this case Novell is wise not to burn any bridges.

Whatever its drawbacks, NetWare has shown remarkable resiliency despite the competition. If you haven’t already, read our recent “Worth Keeping” section featuring NetWare 3.2, which has been phased out but continues to find a place in customer environments. With newer versions, like NetWare 6 released this month, the company made the shrewd move of side-stepping the OS wars by allowing users to access mission-critical data from a browser. As it lost share to Windows NT and Unix, NetWare now emphasizes the convenience and security of its file and print capabilities. This shows an impressive adaptability in the face of challenging market conditions.

As Novell has no doubt learned since the Cambridge deal, services are not a sure-fire win: Gartner recently predicted marginal growth in the near future. If it can bring to the rest of its portfolio what it has maintained with NetWare, Novell could use Cambridge’s cache to get its products noticed by more senior decision-makers. In the meantime, while the cereal box prank may have stung, Novell has the satisfaction of having made Microsoft eat crow.

sschick@plesman.com

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