Dr Eric Schmidt is well disposed towards making hay while the sun shines. He is determined to maximise on his company Novell's apparent return to form and its coverage in industry publications. The sun may not be at its zenith, but it is on an upward course.
In Dublin earlier this week, Dr Schmidt, chief executive officer of Novell was on a tour of Europe. He is busily trying to get the message out that the networking software company is back on its feet and ready to move into the next phase. Though widely credited with the company's turnaround since he joined Novell from Sun Microsystems a year ago, he is a reluctant saviour.
"I wanted to work on directory services and security technology, and Novell was the largest player in that space, so I made the decision to move here. I didn't really want to be CEO, and I certainly didn't want to be part of the turnaround, but that came with the package."
Nevertheless, Novell's fortunes have taken an upward turn after it reported net income of $19 million (£13.8 million) for its second fiscal quarter of 1998, up $5 million from the first quarter. This contrasts heavily with its 1997 year-end income of $7 million. Obviously, there is still a long way to go before Novell gets close to recording profits of $338 million, as it did in 1995, but some of the problems have been smoothed out.
"There was too much inventory in the channel and too many employees rowing in too many different directions. We also brought in a very good director of marketing, so now we have common goal messages with everybody singing the same song in every country every week. I think that's a start, but we are by no means done. Customers are happy, the first phase of righting the ship is closing."
Dr Schmidt also cleared the decks at management level and laid off almost 1,000 employees shortly after he joined the company, another contributing factor in improving the bottom line. Now, Novell is addressing the company's product line as it prepares to launch the latest version of NetWare, its flagship network operating system. This was the product that brought Novell to prominence. NetWare 3.0 was a muscular operating system capable of networking huge enterprise systems, its follow-up version, however, was a disappointment. NetWare 4.0 featured a lot of bugs and made no provisions for the Internet. Now the industry is reacting favourably to the imminent NetWare 5.0 version, which is a rewrite of its predecessor based on Internet network protocols (TCP/ IP). "The old Novell was very late to the Internet," concedes Dr Schmidt. "There were lots of excuses, but the fact of the matter is they were very late. I just have to make sure we deliver Internet performance between five and 10 times better than everybody else's product this time."
That includes Microsoft's Windows NT 5.0. Though set for launch next year, the air of expectation in IT circles is almost tangible. Dr Schmidt is unfazed by the threat, and would seem to have little faith in Microsoft's next offering. "There are a lot of things coming, it's a question of when it is coming. Microsoft is very good at talking about futures that haven't occurred yet. In any case NT is primarily targeted at Unix, Sun and Oracle spaces where it remains to be seen how robust it is or how scaleable."
Scaleability is where Dr Schmidt believes NetWare will outperform Windows NT. It's the difference between cars and trucks, he says. On complex mission critical networks, NetWare will perform, while NT is more suited to smaller networks. "A truck is 10 times more capable of propelling a certain load, but you wouldn't use it just driving your family around."
While Dr Schmidt insists NetWare is not battling head to head with NT, US magazine Computer Reseller News saw fit to pit the two against each other just last month. Novell emerged first in five of the eight areas featured in the survey, trouncing Microsoft in product quality and reliability, technical support, return policies and vendor response time.
Dr Schmidt will quickly admit Windows NT has its own areas of strength. "There are a whole bunch of applications running on NT that won't run on NetWare." He sees Novell working more closely with Microsoft in the future. Already it has established a broad partnership with Microsoft for application development on top of the NT platform.
Though confident NetWare 5.0 will steal the march on NT with an earlier release date, Dr Schmidt is very conscious of Microsoft's marketing advantage. Despite an annual marketing budget of $200 million, it is still not enough to threaten the Microsoft juggernaut. He maintains Novell's NetWare will move away from its pole position opposite the industry giant by offering superior strength for directory services and security on the network.
Recently, Novell announced that its Java virtual machine, created in partnership with Sun Microsystems, had been adjusted to run faster on Intel processors. Dr Schmidt was one of the original team at Sun to develop the Java programme, bestowing on him the onerous title Father of Java. He network computing. This was based on the premise that personal computers were generally too complicated for the specific needs of most end users. It would be better to store the complexity centrally at the back end of the network. Its biggest promise was considerable savings in the total cost of technology ownership for enterprises. The reality has given rise to a hybrid networked PC, and Novell is hoping to maximise on its requirements.
"Our second phase starts this summer with the articulation of the networked PC, where people can use the central directory to solve the problems on their networks, provide Internet leadership through the TCP/IP stuff and eventually the destination is electronic commerce."
In the meantime, Ireland remains central to Novell's future. Currently, there are 100 people in Dublin running Novell's European operations, and further plans have been announced to centralise all of its European processes here. Dr Schmidt has indicated this will lead to more jobs. Novell employs 4,500 people directly worldwide, but approximately half a million people are employed indirectly leveraging products through the distribution channel.
"We have a ratio of about one to 100 employees to leverage. That's a real secret to success, having so many people working for you without directly employing them."
