Novell's decline in NZ mirrored global trend

Shift from Netware to Microsoft eventually made Novell a buyout target

Novell's sale to Attachmate for $US2.2 billion last month marked the end of a well-known and warmly-regarded IT vendor as an independent entity, a fate the wasn't totally unexpected.

Large organisations replacing their Novell Netware set-ups with Microsoft ones became a familiar story in the 2000s, and New Zealand was no exception to the worldwide trend.

For example, when then-ACC IT services head Warwick Laing spoke to Computerworld in 2006 about the new Fineos claims management system ACC was to install, he also mentioned its 50 Novell servers, and Novell GroupWise and Directory Services applications, were being retired in favour of a Microsoft set-up.

“Novell has become a minor player,” he said at the time.

This process was repeated many times during the past decade, including at the Ministry of Agriculture and Forestry, Waikato District Health Board, the Wellington Institute of Technology, insurance company Axa and, more recently, the Inland Revenue Department.

In the IRD’s case, a significant number of Novell products remain in use, including NetWare 6.0, GroupWise 7 and SUSE Linux, but “an enterprise desktop project is currently underway to replace the Novell environment with a Microsoft-based solution”, an IRD spokesperson says.

Despite the move to Microsoft, Novell retained a strong presence in the education sector, and achieved continued success there with the re-signing this year of the Novell New Zealand School Agreement until 2013.

Novell’s purchase of SUSE Linux in 2003 and foray into security products helped buffer the move away from NetWare, and a series of agreements with Microsoft over patents was also beneficial. But this year the company’s board put it up for sale and, after assessing and rejecting several offers, agreed last month to sell to Attachmate.

Marina Beale, IT services and software research manager at IDC Australia, says that while Novell had “great products”, such as NetWare, its take-up was largely limited to clients in the public sector and financial services industry.

“They stayed in Government and financial services, and didn’t get access to other verticals.”

Not pushing out into other sectors contributed to Novell’s eventual decline, Beale says.

But it was still an attractive acquisition target, and VMware’s rejected offer earlier this year was a missed opportunity for the virtualisation vendor, she believes.

“VMware was talking to Novell, but it didn’t want everything.”

If the deal had gone through, “it would have been a great way for VMware to go up the stack. Oracle, IBM and Microsoft would have had another competitor. It is a case of ‘what could have been’.”

Novell has a loyal following in New Zealand and Australia, Beale says, “and it will be interesting to see how Attachmate operates Novell”.

US columnist Jon Brodkin notes that one analyst described the buyout as "the end of an era".

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