Novell CEO cautious about China

SALT LAKE CITY — Novell may be a U.S. company, but as a Linux vendor it is still struggling for respect in a U.S. market dominated by Red Hat. But over the last year Jack Messman’s company has tightened up relationships with vendors like IBM, Dell, and Hewlett-Packard, and the Novell chairman and CEO hopes to eventually leverage those relationships to bring Novell’s Suse Linux success not only to the U.S., but also other international markets. Still, Messman says that China, one of the fastest-growing and largest markets in the world, is not on his radar just yet.

In this interview, conducted Tuesday at Novell’s BrainShare 2005 conference in Salt Lake City, Messman shares his thoughts on China and Red Hat, and explains why the Linux desktop is important to Novell.

IDG News Service: Tell me a bit about your international Linux strategy. Suse is obviously well known in Europe, what other regions are you focused on?

Jack Messman: Red Hat has a seven year head start in the U.S., but I think we’re going to catch up. It’s not going to be overnight, because the OEMs (original equipment manufacturers) have to ramp up. We have relationships with all the key OEMs and they’re now selling Suse Linux. There are certain applications where our stuff is better, but when you have an IBM salesman who for seven years has been checking the box called Red Hat, and all of the sudden there are two boxes to check — if he’s been successful with (Red Hat), he’s got to have some reason to start checking the Suse Linux box. So we’re working on that with them.

I think it’s in the best interest of all the OEMs and large IHVs (independent hardware vendors) and ISVs (independent software vendors) to have two suppliers so there’s competition. I don’t think they want one, because they don’t want to create another Microsoft, I don’t think they want three, because they’ll have to port to yet another (vendor). There will be two. And they can control that by how they allocate their business.

IDGNS: Do you have any specific goals for market share in the U.S. over the next year?

Messman: This is a developing market and it’s tough to get a handle on the segments. We see momentum building across the spectrum in terms of the number of ISVs that are signing up, the number of products that are being ported, and the number of customers that are asking about it.

We think that the (Windows) Longhorn release is going to be the point at which there will be an inflection point, because customers are then going to have to decide whether they’re going to migrate to Longhorn or migrate to Linux, and we think it’s going to be an easier migration to Linux.

So we have a couple of years’ window for certain products that don’t have the total functionality yet to compete directly with Microsoft. Like the desktop: if you compare Novell Linux Desktop versus Windows with all of that thick-client functionality, it’s not there. In thin-client applications or portals or call centers, we can win.

IDGNS: People have talked about the Linux desktop taking off for years now. Why are you investing in it and what makes you think the Linux desktop is any more likely to be accepted now than it was five years ago?

Messman: I think that you have to have a full solution. We learned that. Microsoft was able to arbitrage us because they were at the server and the desktop, they would work the pricing against us in terms of competing with us. We’re not going to let that happen again. And our customers tell us they want us to be there. We may not get a lot of revenue out of the desktop, but our channel will get a lot of revenue from installing a lot of desktops.

IDGNS: Who has got your largest Linux desktop deployment?

Messman: They don’t want you to know that.

IDGNS: Why not?

Messman: They don’t want Microsoft coming down and breathing down their necks and beating them up on that.

IDGNS: Other than the U.S., are there other markets that Novell is focused on?

Messman: The people in the industry that we would partner with are focused on Brazil and India, and I didn’t say China.

IDGNS: Why not?

Messman: Because they believe that there is no revenue opportunity there in the short term, until China solves the IP (intellectual property) issue. And so when we talk to them about spending our dollars and how we’re going to get some of this stuff done, they don’t want to spend their dollars in partnership with us to go after a China solution.

We have talked to people in China about using Suse Linux as a base distribution, and putting a thin wrapper around it so they can call it Asianix or Red Flag or whatever, because they don’t need to replicate that work. We haven’t been able to get much movement from the Chinese government companies or the Chinese commercial companies.

IDGNS: What do you think it will take to get into China?

Messman: Well I’m supposed to go to Beijing in May, and I’ll try and figure that out. But before I feel comfortable contributing a lot to it, I’m going to make sure that we’re not just throwing away dollars and effort because they don’t honor intellectual property.