‘We are the only company that can offer the infrastructure that will be the basis for ecommerce.’

–Dr Eric
Chairman and CEO, Novell.

dt-3.JPG (13783 bytes)When Eric
Schmidt assumed charge of Novell as its Chairman, he was known as a techie, and as a nice
guy taking on what was called the ‘toughest job in the world.’ Two days into his new job
Schmidt said, “I was in over my head.” So Schmidt did the only thing he could
do-think Novell through. Eighteen months and NetWare 5 later, Schmidt is being hailed as
the ‘turnaround man.’ All that Schmidt has done has turned Novell over on its head, and he
has transformed from a nice guy to a tough guy, who is still nice. Like he told DATAQUEST,
“You don’t have to be loud to be effective.” Schmidt has seen Novell stock sink,
and sink, only to rise in the last few months. Considered in the global industry to be an
intellectual, Schmidt has infused a clarity of vision at Novell and then has followed up
his rhetoric with a slew of product releases, last amongst which was NW5, a full seven
days ahead of schedule. On his first visit to India, Schmidt was surprised when he was
told that he was the first Novell CEO to visit India-“that doesn’t make sense.”
What does make sense is the first media interview he gave in India to DATAQUEST on his
early days at Novell, his vision of the future of computing, and his view of what Novell
will be in the near term. Excerpts from a conversation with Silicon Valley’s new
turnaround thinker:

When you took charge of Novell
after Sun, what was the state of Novell?
Well, as you know, I have no experience of being a CEO. I didn’t know what to
expect. I was very pleased with the customers and the engineering people and the
day-to-day employees and I was very unhappy with the business practices and with most of
the executives. The problem was that the company was not managed…we changed the company,
we brought in a whole bunch of new executives. We are now much more productive. It took
about six to nine months. And frankly, I did not know that this was going to go like this.

You also said, and it was quoted
widely at that time, that if you had known the shape of the company, you might never have
taken up this job…

…I think that is true. If you had told me what I had learnt [subsequently], I would have
told you I am not competent, I don’t know how to do it, I don’t have the experience….
Having said that, I am very happy that I took over the job. So sometimes, it is better not
to know, because if I had known, I might not have taken up the job. I want to be very
clear about this. I am very happy, personally, about where Novell is today [and about] my
own personal involvement.

But the problems that you
encountered and the fixes that you gave, like replacing 60% of the top management etc, are
they symptomatic of an organizational problem or was there something wrong with the very
technological focus of Novell?

What seems to me interesting about Novell is that the technology of the company has always
been excellent. It is the strategy, the execution and the leadership of the company [which
were not]. For example, as a company which says we are going to be an internet leader, it
did not organize along its internet product, and we have done that. And there are several
examples of that. There was a problem of properly managing the inventory for the channels
and we fixed that. For instance, earlier Novell bought WordPerfect, Unix etc. In my
opinion, they are extremely difficult [to manage]. My own feeling is that the executives,
instead of focusing on network leadership, were focusing on other initiatives.

Novell has undergone rather
dramatic changes from Noorda’s vision of an OS-centric networking company to Frankenberg’s
application company with Unix and NetWare to you. What is your idea of what Novell should
and will be?

Novell is the leading internet and directory services company. Our platforms are used to
make networks work. Novell has always been the largest deliverer of networks in the world
and, of course, our networks have to have the maximum scalability, resources, they have to
be the safest… all those kind of things. So what I have done is I have intentionally
focused the company on what it was prior to [the changes].

Every IT company in the world says
that it is or wants to be an internet company. In your view what is an internet company
supposed to be doing?
We are infrastructure suppliers. With NetWare 5, we are shipping the largest
number of servers, we are shipping 95% of the protocol called SLP. Our directory is used
by more people than anyone else’s in the world-it scales very well with all internet
protocols. In the next six months, we are working very hard to bring out scalable
directories and much more powerful applications. We are trying to define a set of
services. In the next five years, it will be the network operating systems strategy

In the corporate environment, now
you have a network operating system and an applications operating system. This is like
saying that you need a separate car for a highway and a separate one for cities…

…Is there a difference between cars and trucks? How would you define it? Do you get my
point? Trucks are used for institutions, businesses, are bigger, and certainly are bigger.
Trucks are more profitable…one size does not fit all. I think there is a need for
helicopters, trains, boats…

Microsoft says it is better to have
one supplier for all-cars, trucks…?
Sure, are you aware of any such examples? Microsoft is not a supplier of
everything. In fact Unix is growing faster than the PC industry. Do you see my point? Just
because Microsoft makes a point, that does not necessarily make it true. The fact of the
matter is that customers buy the best very consciously. Do the customers prefer to buy one
device that does everything. Sure, I will prefer to buy one device for my kitchen. I don’t
think there is any evidence of that. They are all different suppliers. I am just trying to
be precise here, because people get confused. A vast majority, 99.9% of the customers, buy
Unix servers, they buy mainframes, they buy desktops, Macintoshes, specialized vector
processors…. It would not be normal, it would be exceptional for one vendor to be
supplying all their products.

Sure. The problem, however, is that
when you have two sets of operating systems with the plethora of hardware as you
mentioned, how does the integration take place? How do you see the evolution of a seamless
integration across OSs and platforms?

Well, there are a number of things. The most significant one we are doing is the
architecture. We are defining a slightly different and more scalable architecture than
what Microsoft has. Microsoft’s architecture presumes a lot of competition on the clients,
a lot of competition on the server. Our view is that servers are where the work is done.
You can have a lot of different clients, you can move between clients. Our architecture is
more scalable than theirs. What this means is that our servers have all the required
protocols to talk to other servers. We actually make Microsoft’s networking work well with
others and that is the value add that our customers say they appreciate. Our customers mix
and match.

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