Novell

History

The company began in 1979 in Orem, Utah as Novell Data Systems Inc. (NDSI), a hardware manufacturer producing CP/M-based systems. Former Eyring Research Institute (ERI) employee Dennis Fairclough was the member of the original team that started Novell Data Systems. It was co-founded by George Canova, Darin Field, and Jack Davis. Victor V. Vurpillat brought the deal to Pete Musser, chairman of the board of Safeguard Scientifics, Inc., who provided the seed funding.

The company initially did not do well. The microcomputer produced by the company was comparatively weak against performance by competitors.

In order to compete on systems sales Novell Data Systems planned a program to link more than one microcomputer to operate together. The former ERI employees Drew Major, Dale Neibaur and Kyle Powell, known as the SuperSet Software group, were hired to this task.

At ERI, Fairclough, Major, Neibaur and Powell had worked on government contracts for the Intelligent Systems Technology Project, and thereby gained an important insight into the ARPANET and related technologies, ideas which would become crucial to the foundation of Novell.

The Safeguard board then ordered Musser to shut Novell down. Musser contacted two Safeguard investors and investment bankers, Barry Rubenstein and Fred Dolin, who guaranteed to raise the necessary funds to continue the business as a software company as Novell Data Systems' networking program could work on computers from other companies.

Davis left Novell Data Systems in November 1981, followed by Canova in March 1982.

Rubinstein and Dolin, along with Jack Messman, interviewed and hired Raymond Noorda. The required funding was obtained through a rights offering to Safeguard shareholders, managed by the Cleveland brokerage house, Prescott, Ball and Turben, and guaranteed by Rubenstein and Dolin.

Major, Neibaur and Powell continued to support Novell through their SuperSet Software Group.

In January 1983, the company's name was shortened to Novell, Inc., and Raymond Noorda became the head of the firm. Later that same year, the company introduced its most significant product, the multi-platform network operating system (NOS), Novell NetWare.

NetWare

The first Novell product was a proprietary hardware server based on the Motorola 68000 CPU supporting six MUX ports per board for a maximum of four boards per server using a star topology with twisted pair cabling. A network interface card (NIC) was developed for the IBM PC industry standard architecture (ISA) bus. The server was using the first network operating system (NOS) called ShareNet. Later, ShareNet was ported to run on the Intel platform and renamed NetWare. The first commercial release of NetWare was version 1.5.

Novell based its network protocol on Xerox Network Systems (XNS), and created its own standards from IDP and SPP, which it named Internetwork Packet Exchange (IPX) and Sequenced Packet Exchange (SPX). File and print services ran on the NetWare Core Protocol (NCP) over IPX, as did Routing Information Protocol (RIP) and Service Advertising Protocol (SAP).

NetWare uses Novell DOS (formerly DR-DOS) as a boot loader. Novell DOS is similar to MS-DOS and IBM PC DOS, but no extra license for DOS is required; this came from the acquisition of Digital Research in 1991. Novell had already acquired Kanwal Rekhi's company Excelan, which manufactured smart Ethernet cards and commercialized the Internet protocol TCP/IP, solidifying Novell's presence in these niche areas.

Novell did extremely well throughout the 1980s. It aggressively expanded its market share by selling its expensive Ethernet cards at cost. By 1990, Novell had an almost monopolistic position in NOS for any business requiring a network.

With this market leadership, Novell began to acquire and build services on top of its NetWare operating platform. These services extended NetWare's capabilities with such products as NetWare for SAA, Novell multi-protocol router, GroupWise and BorderManager.

Beyond NetWare

However, Novell was also diversifying, moving away from its smaller users to target large corporations, although the company later attempted to refocus with NetWare for Small Business. It reduced investment in research and was slow to improve the product administration tools, although it was helped by the fact its products typically needed little "tweaking" — they just ran.

Under Noorda, Novell made a series of acquisitions interpreted by many to be a challenge to Microsoft. In June 1993, the company bought Unix System Laboratories from AT&T Corporation, acquiring rights to the Unix operating system. In 1994, Novell bought WordPerfect Corporation, as well as acquiring Quattro Pro from Borland.

One of Novell's major innovations at the time was Novell Directory Services (NDS), now known as eDirectory. Introduced with NetWare v4.0 in 1993, NDS replaced the old Bindery server and user management technology employed by NetWare 3.x and earlier.

As Novell faced new competition, Noorda was replaced by Robert Frankenberg in 1994. The Noorda-era acquisitions were short-lived: In 1995, Novell assigned portions of its Unix business to the Santa Cruz Operation. WordPerfect and Quattro Pro were sold to Corel in 1996. Novell DOS was also sold to Caldera in 1996.

In 1996, the company began a move into Internet-enabled products, replacing reliance on the proprietary IPX protocol in favor of a native TCP/IP stack. The move was accelerated when Eric Schmidt became CEO in 1997, succeeding Frankenberg, who had resigned the previous year; Christopher Stone was brought in as senior vice president of strategy and corporate development, reporting to Schmidt.

The result was NetWare v5.0, released in October 1998, which leveraged and built upon eDirectory and introduced new functions, such as Novell Cluster Services (NCS, a replacement for SFT-III) and Novell Storage Services (NSS), a replacement for the Traditional/FAT filesystem used by earlier versions of NetWare. While NetWare v5.0 introduced native TCP/IP support into the NOS, IPX was still supported, allowing for smooth transitions between environments and avoiding the "forklift upgrades" frequently required by competing environments. Similarly, the Traditional/FAT file system remained a supported option.

Decline

The inclusion of networking as a core system component in all mainstream PC operating systems after 1995 led to a steep decline in Novell's market share. Unlike Windows 3.1 and its predecessors, Windows 95, Linux and OS/2 all included network functionality which greatly reduced demand for third-party products in this segment.

Novell's decline and loss of market share accelerated under Eric Schmidt's leadership, with Novell experiencing an across-the-board decline in sales and purchases of NetWare and a drop in share price from $40.00/share to $7.00/share. Analysts commented that the primary reason for Novell's demise was linked to its channel strategy and mismanagement of channel partners under Schmidt.

Under Ray Noorda's leadership, Novell provided upgrades to resellers and customers in the same packaging as a newly purchased copy of NetWare, but at one third the cost, which created a "gray market" that allowed NetWare resellers to sell upgrades as newly purchased NetWare versions at full price periodically, which Novell intentionally did not track. Ray Noorda commented to several analysts that he devised this strategy to allow front line resellers to "punch through" the distributors like Tech Data and Ingram and acquire NetWare versions at a discounted rate, as Novell "looked the other way"; this helped fund the salaries of Novell Field Support Technicians, who for the most part were employees who worked for the front line resellers as Novell CNE (Certified NetWare Engineers).

Noorda commented that this strategy was one he learned as an executive at General Electric when competing against imported home appliances: allow the resellers to "make more money off your product than someone else's". Eric Schmidt embarked on a disastrous strategy to remove the upgrades as whole box products without understanding Novell's channel dynamics, then directed Novell's general counsel to initiate litigation against a large number of Novell resellers who were routinely selling upgrades as newly purchased NetWare versions.

Although this move bolstered Novell's revenue numbers for several quarters, Novell's channels subsequently collapsed with the majority of Novell's resellers dropping NetWare for fear of litigation.

By 1999, Novell had lost its dominant market position, and was continually being out-marketed by Microsoft as resellers dropped NetWare, allowing Microsoft to gain access to corporate data centers by bypassing technical staff and selling directly to corporate executives. Most resellers then re-certified their Novell CNE employees— the field support technicians who were Novell's primary contact in the field with direct customers—as Microsoft MSCE technicians, and were encouraged to position NetWare as inferior to Windows 2000 features such as Group Policy and Microsoft's GUI, which was considered to be more modern than the character-based Novell interfaces. With falling revenue, the company focused on net services and platform interoperability. Products such as eDirectory and GroupWise were made multi-platform.

In October 2000, Novell released a new product, dubbed "DirXML", which was designed to synchronize data—typically user information—between disparate directory and database systems. This product leveraged the speed and functionality of eDirectory to store information, and would later become the Novell Identity Manager, forming the foundation of a core product set within Novell.

In July 2001, Novell acquired the consulting company Cambridge Technology Partners (CTP), founded in Cambridge, Massachusetts by John J. Donovan, to expand offerings into services. Novell felt that the ability to offer solutions (a combination of software and services) was key to satisfying customer demand. The merger was apparently against the firm's software development culture, and the finance personnel at the firm also recommended against it.

The CEO of CTP, Jack Messman, engineered the merger using his position as a board member of Novell since its inception, and as part of the deal became CEO of Novell. Chris Stone, who had left in 1999, was rehired as vice chairman to set the course for Novell's strategy into open source and enterprise Linux. With the acquisition of CTP, Novell moved its headquarters to Massachusetts.

In July 2002, Novell acquired SilverStream Software, a leader in web services-oriented applications, but a laggard in the marketplace. Renamed to Novell exteNd, the platform comprised XML and web service tools based on Java EE.

Linux

In August 2003, Novell acquired Ximian, a developer of open source Linux applications (Evolution, Red Carpet and Mono). This acquisition signaled Novell's plans to move its collective product set onto a Linux kernel.

In November 2003, Novell acquired Linux OS developer SuSE, which led to a major shift of power in Linux distributions. IBM also invested $50 million to show support of the SuSE acquisition.

In mid-2003, Novell released "Novell Enterprise Linux Services" (NNLS), which ported some of the services traditionally associated with NetWare to SUSE LINUX Enterprise Server (SLES) version 8.

In November 2004, Novell released the Linux-based enterprise desktop Novell Linux Desktop v9, based on Ximian Desktop and SUSE Linux Professional 9.1. This was Novell's first attempt to get into the enterprise desktop market.

The successor product to NetWare, Open Enterprise Server, was released in March 2005. OES offers all the services previously hosted by NetWare v6.5, and added the choice of delivering those services using either a NetWare v6.5 or SUSE Linux Enterprise Server v9 kernel. The release was aimed to persuade NetWare customers to move to Linux.

In August 2005, Novell created the openSUSE project, based on SUSE Professional. openSUSE can be downloaded freely and is also available as boxed retail product.

Stagnation

From 2003 through 2005 Novell released many products across its portfolio, with the intention of arresting falling market share and to move away from dependencies on other Novell products, but the launches were not as successful as Novell had hoped. In late 2004, Chris Stone again left the company, after an apparent control issue with then CEO Jack Messman. In an effort to cut costs, Novell announced a round of layoffs in late 2005. While revenue from its Linux business continued to grow, the growth was not fast enough to offset the decrease in revenue of NetWare. While the company's revenue was not falling rapidly, it wasn't growing, either. Lack of clear direction or effective management meant that Novell took longer than expected to complete its restructuring.

In June 2006, chief executive Jack Messman and chief finance officer Joseph Tibbetts were fired, with Ronald Hovsepian, Novell's president and chief operating officer, appointed chief executive, and Dana Russell, vice-president of finance and corporate controller, appointed interim CFO.

"Your Linux is Ready"

In August 2006, Novell released the SUSE Linux Enterprise 10 (SLE 10) series. SUSE Linux Enterprise Server was the first enterprise class Linux server to offer virtualization based on the Xen hypervisor. SUSE Linux Enterprise Desktop (popularly known as SLED) featured a new user-friendly GUI and XGL-based 3D display capabilities. The release of SLE 10 was marketed with the phrase "Your Linux is Ready", meant to convey that Novell's Linux offerings were ready for the enterprise. In late September 2006 Novell announced a real-time version of SLES called "SUSE Linux Enterprise Real Time" (SLERT), based on technology from Concurrent Computer Corporation.

Agreement with Microsoft

In 2004, Novell sued Microsoft, asserting it had engaged in antitrust violations regarding Novell's WordPerfect business in 1994 through 1996. Novell's lawsuit was subsequently dismissed by the United States District Court in July 2012 after it concluded that the claims were without merit.

Despite this, on November 2, 2006, the two companies announced a joint collaboration agreement, including coverage of their respective products for each others' customers. They also promised to work more closely to improve compatibility of software, setting up a joint research facility. Executives of both companies expressed the hope that such cooperation would lead to better compatibility between Microsoft Office and OpenOffice.org and better virtualization techniques.

Microsoft CEO Steve Ballmer said of the deal, "This set of agreements will really help bridge the divide between open-source and proprietary source software."

The deal involved upfront payment of $348 million from Microsoft to Novell for patent cooperation and SLES subscription. Additionally, Microsoft agreed to spend around $46 million yearly, over the next 5 years, for marketing and selling a combined SLES/Windows Server offering and related virtualization solutions, while Novell paid at least $40 million yearly to Microsoft, in the same period.

One of the first results of this partnership was Novell adapting the OpenXML/ODF Translator for use in OpenOffice.org.

Microsoft released two public covenants not to sue users of the open source Moonlight runtime—a workalike for the Microsoft Silverlight rich media platform—for patent infringement. One condition common to each covenant was that no Moonlight implementation be released under the GPLv3 free software license.

Reaction of FOSS community

Initial reaction from members of the FOSS community over the patent protection was mostly critical, with expressions of concern that Novell had "sold out" and doubt that the GNU GPL would allow distribution of code, including the Linux kernel, under this exclusive agreement.

In a letter to the FOSS development community on November 9, 2006, Bradley M. Kuhn, CTO of the Software Freedom Law Center (SFLC), described the agreement as "worse than useless". In a separate development, the chairman of the SFLC, Eben Moglen, reported that Novell had offered cooperation with the SFLC to permit a confidential audit to determine the compliance of the agreement with the GPL (version 2). Richard Stallman, founder of the Free Software Foundation, said in November 2006 that changes coming with version 3 of the GPL would preclude such deals. When the final revision of the third version of the GPL license was decided, the deal between Microsoft and Novell was grandfathered in. A clause within GPLv3 allows companies to distribute GPLv3 software even if they have made such patent partnerships in the past, as long as the partnership deal was made before March 28, 2007 (GPLv3 Section 11 paragraph 7).

On November 12, 2006, the Samba team expressed strong disapproval of the announcement and asked Novell to reconsider. The team included an employee of Novell, Jeremy Allison, who confirmed in a comment on Slashdot that the statement was agreed on by all members of the team, and later quit his job at Novell in protest.

In early February 2007, Reuters reported that the Free Software Foundation had announced that it was reviewing Novell's right to sell Linux versions, and was considering banning Novell from selling Linux. However, spokesman Eben Moglen later said that he was quoted out of context, and was only noting that GPL version 3 would be designed to block similar deals in the future.

Intelligent workload management

In December 2009, Novell announced its intention to lead the market in intelligent workload management, with products designed to manage diverse workloads in a heterogeneous data center.

Acquisition by Attachmate

Novell had long been rumored to be a target for acquisition by a variety of other companies. In March 2010, Elliott Associates, L.P., an institutional investor with approximately 8.5% stock ownership of Novell, offered to acquire the company for $5.75 per share in cash, or $1 billion. The company declined the offer, saying that the proposal was inadequate and that it undervalued the company's franchise and growth prospects.

Novell announced in November 2010 that it had agreed to be acquired by Attachmate for $2.2 billion, and planned to operate Novell as two units, one being SUSE. As part of the deal, 882 patents owned by Novell were sold to CPTN Holdings LLC, a consortium of companies led by Microsoft and including Apple, EMC, and Oracle. According to Novell's SEC filing, the patents "relate primarily to enterprise-level computer systems management software, enterprise-level file management and collaboration software in addition to patents relevant to our identity and security management business, although it is possible that certain of such issued patents and patent applications read on a range of different software products". Attachmate expressed in advance of the deal closing that there would no change to the relationship between the SUSE business and the openSUSE project. The merger completed in April 2011, with Attachmate paying $6.10 per share in cash to acquire Novell. Novell became a wholly owned subsidiary of The Attachmate Group, the parent company of Attachmate Corporation.

Concurrent with the closing of the acquisition, some of Novell's products and brands were transferred to another of Attachmate Group business units, NetIQ, and the SUSE Linux brand was spun off as its own business unit. The fourth business unit, Attachmate, was not directly affected by the acquisition.

CPTN Holdings agreement

Immediately prior to merger being finalized, Novell completed the patent sale to CPTN Holdings for $450 million. The U.S. Department of Justice announced that, as originally proposed, the deal with CPTN would jeopardize the ability of open source software, such as Linux, to continue to innovate and compete in the development and distribution of server, desktop, and mobile operating systems, middleware, and virtualization products; to address the department's antitrust concerns, CPTN and its owners had altered their original agreement:

2011 layoffs

In April 2011, Attachmate announced layoffs for the Novell workforce, including hundreds of employees from their Provo Utah Valley center, raising questions about the future of some open source projects such as Mono.

Micro Focus acquisition

In September 2014, mainframe software company Micro Focus announced it was buying Attachmate Group, including Novell, for $1.2 billion.

Certification

Novell was one of the first computer companies to provide certification to its products. They include:

Products

Products marketed by Novell include: