Software supplier Novell is going through a sometimes difficult transition to become an open-source specialist and a broader provider of applications and services. Formerly a giant in the market for network operating systems with its NetWare products, the change of direction has not always been easy – financial results this month showed zero sales growth and a small decline in losses.
Computing talked to Volker Smid, Novell’s president for Europe, the Middle East and Africa for the past two years, about the challenges ahead.
How would you rate Novell’s latest financial results?
They have met our expectations in difficult economic conditions. We increased annual revenue in line with the guidance we gave. Our operating income increased from €46m (£40m) to €97m – an excellent sign. We have increased our revenue and also increased efficiency.
When I look at product revenue, one of the key highlights is the 37 per cent growth in enterprise Linux. This means we are outperforming market growth by 15 per cent. Therefore, we are consistently taking market share. This is one of my key highlights.
How have you changed Novell’s focus in the past two years?
We used to go for mid-market companies across Europe. But in the large economies we have really targeted the top datacentres. Now we are able to quote HSBC, Renault, BMW and Bertelsmann as Novell customers.
We are approaching the largest possible firms and helping them in the first step to virtualisation and the consolidation of their existing infrastructure. We see that as the biggest opportunity for Linux in the back end.
What are the key challenges faced by those large organisations?
In the average 50,000-server datacentre you see about 10 Unix platforms, and one of the key concerns in terms of cost is to migrate workloads from these high-cost Unix platforms to a commodity blade server that runs Linux.
In virtually every datacentre we tap into, we see an existing Microsoft estate, but our close relationship with Microsoft allows us to cross-virtualise Microsoft and Suse Linux platforms into one virtualised environment.
We are already seeing many more commodity platforms being shipped, which is another example of the consolidation of the datacentre, and in the next two to three years I expect to see a huge shift towards migrating Unix platforms to Linux whenever the workload allows it. Because of the economic climate, I see that trend accelerating. One way for datacentres to save costs is by moving away from high-price Unix platforms.
Is there a future for Linux on the desktop?
I see further demand in the desktop market. For example, I see our Suse Linux enterprise desktop system in combination with OpenOffice going further into the corporate desktop estate. As costs accumulate, people will look at these alternatives and we are well connected here. I also see stricter requirements for compliance and audits, and that will create more opportunities.
Every enterprise in the next two years will look into every opportunity to save costs, and in an organisation with 150,000 desktops there are so many opportunities to start saving costs.
The first element of change is the move from a Microsoft document setup to an ODF (Open Document Format) environment. That lets you migrate to OpenOffice, and that is the runway that lets you move from a Microsoft desktop to a Linux desktop.
Like many IT suppliers, you recently cut a number of jobs. Are any further redundancies likely?
There will be no more redundancies. We are running a workforce of 4,000 down from 4,100 despite making two acquisitions in the meantime. We have looked at the economy and have done what we needed to do.