Linux a good source for Novell

NOVELL HAS thrived by being able to offer customers a mixture of open source and proprietary software, even though it attracted the wrath of the open source community by doing a deal with Microsoft, according to chief executive Ron Hovsepian.

Many in the open source community have viewed Microsoft with suspicion and the complex deal the two companies negotiated in 2006 drew a lot of criticism.

“I think because there was a lot of misinformation occurring, we left too much open for interpretation,” said Mr Hovsepian. “I apologise for that.” At its core, he says the deal was about making it easier for customers to run Microsoft Windows and the increasingly popular open source Linux operating system. He is unapologetic about the relationship’s benefit for customers, which in turn has had positive by-products for the community such as Microsoft’s membership of the OpenPegasus project which will enable Linux systems to be managed from a Windows environment.

“With all the pressure on the customers, they don’t want to have to worry about getting their Linux world to work with their Microsoft world,” said Mr Hovsepian.

The strategy seems to be working for Novell. For the second quarter to the end of April last, it had revenues of $235 million (€149 million) and a pretax profit of $19.5 million. Since taking the top job at Novell in 2006, Mr Hovsepian has focused on simplifying what the company does, which he defines as enterprise infrastructure software. Novell has reduced the number of products it sells and the business model has been rewritten to focus on selling software through partners. That saw it sell off Cambridge Technology Partners, the consulting business it picked up in 2001 to beef up its services business.

“We are a billion-dollar company in a trillion-dollar industry and you have to really know your role in the industry,” says Mr Hovsepian. “We can solve certain sets of problems for our customers with software and we should leave running services businesses to our key partners.”

Novell really moved into open source wholeheartedly in 2003 with the purchase of Suse Linux, now the second most popular version of the operating system after Red Hat. Mr Hovsepian believes the strategy will see Novell through the current economic turmoil in the US and Europe.

“The good news is that our open source and Linux strategy can be a catalyst for change,” explains Mr Hovsepian. “The customer can save money, free up budget and return that to the business. It’s happening – last year, we picked up three points of market share against Red Hat.”

Mr Hovsepian was in Ireland this week, combining a family holiday with his wife and four children with an opportunity to visit Novell’s operations in Dublin. The operations have grown significantly in the last year and now employ 160 staff, up from 100. Novell has centralised financial operations, telesales, and order-processing for all of Europe in Dublin and also operates a localisation centre at its Sandyford offices.

Mr Hovsepian says the educated workforce and Dublin’s attractiveness for young European workers were central to the decision to centralise here. “The U2 factor is very real,” he laughs. “I placed my bet and it’s right here. There’s no turning back.”

This article appears in the print edition of the Irish Times