Novell is a company that has run out of ideas.
That's not to say it doesn't have some good software, or that there aren't some very good people working there. But the fact is that despite having SUSE Linux Enterprise Server (SLES) and much else to offer, Novell is a company going nowhere fast. Ask yourself this -- which of these two companies does it most resemble: Red Hat, the vigorous, thrusting fellow Linux server operating system vendor, or the crumbling Sun Microsystems, just before Oracle acquired it?
That may be a loaded question, but you know the answer, and it sure as heck isn't Red Hat. There's a smell of death about Novell these days, along with a sense that this is a company that will never again attain the heights it reached in the past with NetWare. Like Sun before the Oracle acquisition, it's in terminal decline. You know it, I know it, and, it seems, the company's management know it too.
Back in March Novell received an unsolicited conditional proposal from a hedge fund looking to buy it for about $1 billion, net. Novell ummed and ahhed for a while before rejecting the proposal, but said at the time it would look at other options, including "a sale of the company."
At the time I wrote, "the real message from Novell is 'come and get me, I'm anyone's for a halfway decent price,'" which prompted some comments that Novell has a lot of talent and great technology and the proposal was irrelevant.
Although I agree Novell has plenty of talent and some great technology, the truth is that once a company talks about putting itself up for sale, all that's left is to negotiate a price. So it's no surprise the Wall Street Journal reported last week that the company was parading itself in its underwear in the hope of finding a suitor:
Novell Inc., which has put itself on the block, plans to accept bids from potential acquirers this week, people familiar with the matter say, kicking off a process that will likely result in a sale of the software company ... A group of finalists will likely be picked from this round of bidders, with final offers due later, the people familiar with the matter said.
Most, if not all, of the 20 or so companies that have so far expressed an interest in bidding for Novell are private equity firms, not rival tech firms like Microsoft, HP or IBM, according to the Journal. "It's really difficult for any single technology company to benefit from all the pieces they have to offer, which makes it a difficult acquisition," said Abhey Lamba, analyst at International Strategy & Investment Group.
In other words, Novell is likely to be broken up.
Novell's Linux business is probably of most interest to tech companies, simply because it's not every day that you get an opportunity to buy your very own enterprise Linux server OS -- especially when SLES and Red Hat Enterprise Linux are really the only two games in town, and Red Hat would probably cost six or seven times as much. Any potential buyer would do well to remember that it's not easy to make money off of an enterprise Linux. Red Hat can do it, but Novell has always struggled.
The company also has some good identity and access management offerings as well as Linux server management offerings and a hodgepodge of other products.
Ultimately, this is a story about a company that does a decent job of developing a range of technologies, but one that hasn't proved to be very good at cross-fertilizing these technologies and making enough money by ensuring that the sum is worth more than the parts. When the parts are worth more than the whole, the market dictates the whole should be broken up. That means Novell has probably reached the end of the line. But it may also mean SLES and Novell's other products go on to greater things.
Paul Rubens is a journalist based in Marlow on Thames, England. He has been programming, tinkering and generally sitting in front of computer screens since his first encounter with a DEC PDP-11 in 1979.