Novell CEO Shakeup Puts Ron Hovsepian in Charge

jht writes "Arriving in my Inbox a few minutes ago (I'm a Novell Partner), was the announcement that effective immediately, CEO Jack Messman and CFO Joe Tibbetts are out of jobs at Novell. Existing president Ron Hovsepian was named CEO, and an interim CFO was named as well. Messman will stay on the board thru the end of October, though. A webcast of the conference call should be available shortly at www.novell.com/company/ir." ukhackster links to ZDNet's coverage of the shakeup, writing "It looks like [Messman's] been blamed for Novell's poor performance in the Linux space versus Red Hat. But can Linux ever be a real cash cow?"

Re:Return of Hubert Mantel?

[iccaros]

Write [or purchase] an in-house COMPILER!

never used mono or monodevelop I see. both are novell children

Re:Redhat and Novell

[Etyenne]

Helllllllo ?!? Red Hat already have a desktop product, and always had. Red Hat Enterprise Linux WS -> http://www.redhat.com/rhel/details/clients/ [redhat.com]

It's based on Fedora Core 3, just like the rest of the RHEL 4.

I hate to be the Red Hat shill, but damn, there's a lot of uninformed opinions about Red Hat going on around here.

Re:I don't know ....

[Anonymous Coward]

You know Novell also laid around 600 to 1000 employees last year, right?

A positive outlook for RedHat from Barron's

[lotzmana]

Very pertinent to this discussion is a piece from the financial newspaper Barron's which was posted yesterday. It is a positive review of RedHat's business model as one being based on subscriptions and not one time sales. Here is an excerpt from the article:

"But I think the best opportunity is to target companies offering software as a service."

Worldwide software sales should grow 8% this year, which, while down from 8.7% last year, nonetheless proves that "there is clear evidence of pent-up demand for new software technology," says Joanne Correia, a software analyst with Gartner Inc. in Stamford, Conn.

But software spending increasingly goes to the top four vendors -- IBM, Microsoft, SAP and Oracle -- whose combined share of global software spending jumped from 33.5% in 2000 to 36.8% last year, estimates Charles Di Bona with Sanford C. Bernstein & Co. in New York.

So to get a leg up, small young vendors are changing the rules of engagement. They are eschewing the multimillion-dollar one-time contracts for software and instead letting corporate buyers pay for product updates and support on a year-by-year basis.

"We're seeing a shift in the economic balance," in software sales, says Correia's colleague, Simon Hayward. "From this up-front cost of software to an annuity model, with money shifting to firms that are service providers."

Of Red Hat's $278 million in sales last year, 82% was from subscriptions, which the company realizes over the life of a contract of one to three years. Oracle still gets over a third of its sales the old way.

Red Hat's sales should rise 35% this year to $375 million, far above the 15% rate expected for Oracle, according to estimates from Goldman Sachs analyst Rick Sherlund.

Subscriptions should make Red Hat's sales -- and its customers' expenses -- more predictable, which is good.

"You're able to match your revenue model to the way that you provide that product to your customer," notes Ursillo.

"If you are constantly providing them with value as opposed to a one-shot deal, then you can charge them on a regular basis," he says.

What's more, by acquiring subscribers, rather than one-time buyers, Red Hat can milk its customer base by offering more and more new programs.

In addition to the Linux operating system, Red Hat now provides software to let companies take transactions over the Internet.

"They are in the first inning of a very big ballgame," says Steven Ashley, an analyst with Robert W. Baird & Co. in Milwaukee.

---

Blame the ones responsible, please

[hesiod]

> It looks like [Messman's] been blamed for Novell's poor performance in the Linux space versus Red Hat.

Well, I'll bet they were hoping their GroupWise software being ported to Linux would have helped. And it would have, had they done it properly. I tried three times to get that damned thing running on SuSE Enterprise 9, and it's the biggest pain in the ass. I've set up Email servers before with no problem, this was absolutely horrid. At first I blamed the product in general, but after installing it on Windows 2003 I realized that it was actually incomplete! The NetWare client for it does not exist (at least on any of the CDs they gave us -- which were incomplete in & of themselves), and trying to actually manage the thing can be a huge pain in the ass.

They still sell it at full price and still charge $300 for a single support case... It's like MS taking Vista as it is now and selling it as a fully-working product. It is not, and I would have been highly pissed off had our software license not covered the GroupWise software for whichever of the three platforms (Lin, Win, NetWare) we ended up using.

So anyway, unless Messman forced the product out before it was done, it was not his fault. Of course, Novell does more than just Email servers, so this may be only a very small part of it.