We chose to become a product company

Ron Hovsepian is responsible for setting Novells strategic direction and
leading its growth as a global provider of enterprise-class software and
services. He joined the company in June 2003 as president of North America, and
has most recently served as COO. As COO, he had direct worldwide responsibility
for product development, marketing, and field operations including sales,
consulting, and technical services. In an interaction with Dataquest, Hovsepian
speaks about the companys India strategy and the challenges ahead. Excerpts

What value does Novell bring to the enterprise IT ecosystem?

Novells value proposition is in the enterprise infrastructure category. We
bring our core values to harmoniously bring together mixed source. For
customers, it is all about interoperability, and we let them manage
heterogeneous environments through our product portfolio. We make sure our
product portfolio works well with Microsoft.

A long time ago, LAN meant Novell and Netware was the default solution.
Today, it is no more the case. The fact is that the world has networked more but
your growth has not kept pace with it. What is Novells strategy for the new
networked world?

The company went through a series of changes in the last ten years but lost
focus on the most important needs of customers due to competitive pressures.
Most customers need applications to help them do some sort of business function,
and save cost. We did not stay with our application part. Now we have shifted
our whole thinking toward what can be done in the Open Source stack with
closed-door stack so that customers benefit from it.

How would you assess your partnership with Microsoft? What has been its
impact on your overall business?

The impact has mainly been on three areas. The most important area is from
the customers perspective. The customer can now get support of virtualized Suse
Linux on the top of Windows or Windows on the top of Suse Linux. This is an
important breakthrough for customers as they are now able to manage mixed
environments and dont have to worry about them.

Ron Hovsepian president and CEO, Novell

The second thing is that the relationship generated more technology
innovation and the opportunity to do things together. We are working together on
WS Man (Web Services Management), Moonlight, and Media Player on Linux. All
these things would not happen technologically.

The third important thing is partners who will have footprints in both Open
Source and Windows Stacks so that customers can juggle both environments; and
our ability to help them do that is very important. It has been good
economically as well, and we were able to generate invoicing revenue of $122 mn
through Microsoft channel that I think is pretty impressive.

What is Novells acquisition strategy? There were some reports that talked
about Novell missing out on some of the acquisitions to compete with the likes
of VMware. Your comments...

We are primarily looking at acquisitions around two markets. We want to be a
component player in the virtualization space. Through the acquisition of
PlateSpin, which allows customers the ability to be Hypervisor-independent to
really go from physical to virtual, virtual to virtual, and virtual to physical,
we focused on both halves of that equation. So, historical products and
companies focused on physical only or in some cases it focused on virtual only.
This company bridges this gap and partners very effectively.

We think Hypervisor is going to be more commoditized in the market and,
therefore, the real value is in the management tools for customers.

Novell has focused on growth through channels, especially after you took
over? Can you elaborate this strategy of yours?

This strategy is working very well for Novell. The most important message
that we set for our channel partners was that we were no longer in the
consulting business. This allows us to have a working relationship with our
consulting partners in the market place.

Prior to that, we only had the Cambridge assets. The partners were not sure
whether they should trust Novell or not. We chose to become a product company
and we are doing it very effectively. We have reduced ourprofessional services
and consulting business. The professional services business is about $75 mn.

What is Novells strategy for Web2.0 and the unified communications space?

Our next generation of Suse Linux is taking into account a lot of additional
Web 2.0 features. To address the unified communications space, we bought a
company called SiteScape, which is an Open Source project for collaboration. It
is critical to have a unified communications environment APIs to hook into the
unified communications vendors. We build the application that they could use. We
are not going to be in the actual physical unified communications space.

What is your India strategy?

Our India strategy is three-pronged. One is at the corporate strategy level,
by partnering with companies like SAP and others, where we have exclusive
offerings for small and medium businesses. Last year, we gained market share
against Red Hat; and according to our estimate, the swing was about 5%. We are
penetrating into their home market. The other focus is to get closer to our
partners that are guiding us.

India is a huge growth market. We have added 70% manpower in this geography
from the global engineering perspective.

Sudesh Prasad

sudeshp@cybermedia.co.in