Larry has a great post that takes Novell's SUSE Linux numbers to task. Novell made much of its "83% jump in SUSE Linux revenues" but failed to highlight all the cracks in those numbers. Larry is much kinder than I would have been, but makes some great points along the way:The sales pop from Microsoft is waning for Novell. More optimistic analysts call this waning “normalizing.” On the earnings conference call, N Larry has a great post that takes Novell’s SUSE Linux numbers to task. Novell made much of its “83% jump in SUSE Linux revenues” but failed to highlight all the cracks in those numbers. Larry is much kinder than I would have been, but makes some great points along the way:The sales pop from Microsoft is waning for Novell. More optimistic analysts call this waning “normalizing.” On the earnings conference call, Novell CEO Ronald Hovsepian said that in the last two quarters the company has received $91 million of a $240 million five year contract with Microsoft. That’s roughly 38 percent of the deal complete in just two quarters. The issue: Most of that pop came a quarter ago. For the second quarter Linux invoicing declined 75 percent from the first quarter. Sure it’s up a bunch from a year ago, but that’s a way easy comparison. Non-Microsoft related pieces of the Linux business fell 39 percent in the second quarter compared to the first quarter. Playing with the numbers, SUSE sales without Microsoft had an invoice total of $11 million compared to the $29 million figure reported. The remainder of that sum is Microsoft.In short, Novell got a big boost upfront from Microsoft, but that boost is starting to seriously waver and may evaporate completely with GPLv3. It’s potentially another case of Novell leading with its mouth, rather than with fundamentals (i.e., sales). It’s one thing to talk a big game, and another to bring it. And when you can’t even bring the game yourself, but rely on your product’s worst enemy to sell for you, you’re in a world of hurt. There’s a way out of this for Novell. Several, actually. First, dump Microsoft. Second, dump all the ancillary products that continue to bring in stale maintenance revenues but mire Novell in its past. Third, and related to #2, focus its value closer to the one product in its arsenal that customers care about (Linux). On this third option (which would align its strategy closer to Red Hat’s), Novell dearly needs to stop pretending GroupWise is a natural complement to Linux is a natural complement to Identity Management is a natural complement to ZEN….Start at the operating system layer and build up from there, piece by piece. You need to establish value where the market perceives it, and that is SUSE Linux, not the other products.Maybe Novell should acquire MySQL. Maybe Zend. Or maybe it could take some proprietary products open, the way Red Hat has. (Note, however, that doing so requires a willingness to shed a fair amount of the profitability of that proprietary product as you morph it into a subscription-based model.) But it needs to focus the company’s value on the one product that the world still cares about when it thinks of Novell: SUSE Linux. Otherwise, Novell will be left with Microsoft as its savior, and I can’t think anything more naive. Open Source