Schmidt aims to change Novell's image

Eric Schmidt the new chief executive officer of Novell Inc. arrived in Washington D.C. last week and immediately began to tackle what he believes is his No. 1 mission: to change the perception and image of Novell in the marketplace. He made high-level customer calls in Defense and civilian agencies as part of a broad effort to convince users that the company is viable and its products superior.

"Novell historically has had great technology and weak marketing " he said. "It's time for Novell to be focused and well-managed around a few great things."

But his first job must be to persuade buyers that the company is sound and they can safely purchase its products. "Novell has $1 billion in cash " he said. In addition it owns a substantial slice of Corel Corp. and The Santa Cruz Operation Inc. and has a huge installed product base that will generate revenue for the company for the foreseeable future he said.

However Schmidt acknowledges that he has his work cut out for him. Many federal agencies including the U.S. Postal Service and the Navy have standardized on Microsoft Corp.'s Windows NT a main competitor of NetWare which is Novell's flagship network operating system product. And Microsoft has made inroads into Novell's traditional stronghold of the smaller local-area network markets. Still there are at least 13 federal procurements in "the pipeline that mention Novell as a requirement for support " noted Bob Dornan a senior vice president at Federal Sources Inc. McLean Va.

Schmidt said his mission is to persuade customers to "judge us against the products that are available today in the market not against someone's promises."

A year from now Schmidt said he wants Novell to be the leader in Internet and intranet solutions. The next generation of Novell's products - including the next version of IntranetWare dubbed Moab - will be Internet Protocol-enabled. The company's products have historically used the Novell Internet Packet Exchange protocol.

Schmidt said Novell's strengths include its scalable server platform and Novell Directory Services (NDS). A directory which acts as a type of database of network information is essential Schmidt said if organizations want to build mission-critical networks. The Defense Message System is built around the concept of an X.500 directory.

"We have the only deployable directory solution today with NDS " Schmidt said. "Microsoft has a directory product that isn't shipping yet." A combination of directory services and scalability are key to solving the DMS problem he said.

Novell is currently the market leader in directory services but faces a future challenge from Microsoft's upcoming Active Directory technology noted Greg Cline director of Internet and networking research at Business Research Group a Newton Mass.-based market research firm. Active Directory which will ship with Microsoft's Windows NT 5.0 will address the scalability limitations of NT Directory Services he said.

Schmidt said he came to Novell earlier this year from Sun Microsystems Inc. because he sees strong future growth in networking. "I looked at the industry " he said. "The only place where we have free clear open running is networking. And Novell has the most number of people [devoted] to this."

While Novell has been suffering from a perception problem for the past several years Schmidt said the "understanding and urgency of the problems are clear" now. He has already laid off 1 000 employees left from now-disposed product lines and is restructuring the company. He wants Novell to be known as the best specialty supplier of network services and platforms.

The federal business for Novell should be huge Schmidt said. "Selling to the government is not that different from selling to the commercial side. There are the same issues. It is clearly a market of people that care about scalability reliability and security."


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