It should be remembered that in the 1980s and 1990s, the concept of networking computers together was the preserve of medium to large companies with IT departments that had the necessary networking skills. But NetWare allowed even small firms to group their PCs together.

NetWare was extremely solid and stable (certainly when compared to Microsoft’s terrible first small office networking attempt with Windows for Workgroups 3.11 in the early 1990s), and it sold extremely well throughout the 1980s.

Novell was able to aggressively expand its market share (via the channel) by selling its expensive Ethernet cards at cost.

Microsoft Challenge

By 1990, Novell had an almost monopolistic position for any business requiring a network. Indeed, before the arrival of Windows NT Server in 1993, Novell claimed 90 percent of the market for PC based servers.

Novell’s Noorda wanted more and soon Novell made a series of acquisitions interpreted by many to be a challenge to Microsoft..

This was because in June 1993, the company bought Unix System Laboratories from AT&T Corporation, acquiring rights to the original Unix source code. In 1994, Novell bought WordPerfect Corporation and its rival products to Microsoft Office.

Novell also acquired the spreadsheet software Quattro Pro from Borland.

But Noorda’s reign in the mid 1990s was coming to an end and he was replaced by Robert Frankenberg in 1994. Noorda’s acquisitions were also soon to be spun out of the company, and life for Novell was about to get very messy indeed.

In September 1995 Novell assigned portions of its Unix business to the Santa Cruz Operation, under and Asset Purchase Agreement (APA). The APA transferred certain rights regarding Unix, and Novell’s UnixWare version of Unix, from Novell to Santa Cruz, and this agreement played a key part in the bitter lawsuit surrounding Unix in the years ahead.

WordPerfect and Quattro Pro were sold to Corel in 1996, and Novell DOS was also sold to Caldera in 1996.

The Decline

At this time Novell had been moving into Internet-enabled products, replacing its reliance on the proprietary IPX protocol in favour of a native TCP/IP stack.

This migration accelerated when Eric Schmidt became CEO in 1997. Schmidt is now perhaps best known as Google’s chairman, but it is fairly to say he had a fairly disastrous reign as the boss of Novell. Christopher Stone was hired as senior vice president of strategy and corporate development, reporting to Schmidt.

The problem for Novell in the 1990s was that Microsoft (with Windows) and IBM (with OS/2) were including networking as a core component in all mainstream PC operating systems.

And because Windows 95, OS/2 and indeed Linux, included network functionality, it greatly reduced demand for third-party products and led to a steep decline in Novell’s market share.

And unfortunately for Novell, this decline and loss of market share accelerated under Eric Schmidt’s leadership.

Indeed many analysts at the time blamed Schmidt for his poor channel strategy and mismanagement of channel partners, and by 1999 Novell had lost its dominant NOS market position to Microsoft Windows 2000 as resellers increasingly dropped NetWare.

Microsoft was also very clever here, and exploited Novell’s weakening channel position to market its products directly to board members, bypassing IT departments altogether.

Years ago Bill Gates had realised that Redmond needed its own server operating system, alongside its desktop OS and Office suite.

Continues on Page 3…

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Tom Jowitt @TJowitt

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

View Comments

  • There were some wonderful dedicated Novell resellers but many were swayed by Microsoft and abandoned Novell. Why sell one Novell server for 500 users and a copy of NetWare when you could sell a customer 3 servers and exchange licences for 6 times the revenue. This was the channel conflict at that time. What we should have done is offer FREE Groupwise with every copy of NetWare. Sherman time to call the wayback machine says Mr Peabody. A great company with outstanding leadership.

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