The company's latest plan to reinvent itself kicked off, with the purchase of SilverStream Software, a maker of development tools. Novell chief executive Chris Stone sees the deal as helping the company expand into the market for Web services -- an increasingly popular way to develop software. If Novell successfully integrates SilverStream into its product line, it could possibly revive interest in Novell's NetWare operating system and directory services software as a Web services development package. At the very least, the deal gives Novell a much better arsenal of software development tools. "I got kind of tired of the knock that we don't have a good developers story, or even a developers story," Stone told CNET News.com. "Well, now we do." Stone also said the deal lets Novell go toe-to-toe with Microsoft and IBM in the Web services market. "I would argue that we're the only company out there, in fact, that can now play with the big boys, and the SilverStream deal only reinforces this." But analysts warn that the Web services market is unproven, and Novell faces a tough battle against the entrenched products -- and deep pockets -- of Microsoft, IBM and other established companies. Those are familiar foes for Novell. The company fell on hard times in the 1990s due to an acquisition binge and increasing encroachment from Microsoft. Novell's NetWare once commanded more than 70 percent of the server operating-system market. But competition from Microsoft's Windows and, more recently, from Linux, has whittled Novell's share of the market to roughly 17 percent. Now, Novell will need to fend off Microsoft with its .Net strategy, Sun Microsystems and IBM with Java software in Web services, as well as competition from IBM and BEA Systems in the application server software area. "I don't think they're (Novell) going to convince anyone using (IBM's) Websphere to now use Novell," said Mike Neuenschwander, analyst with the Burton Group and a former Novell executive. Still a bit player?
Novell is in a tough position. It has a NetWare server operating-system business that has matured, but remains steady; a leading-edge directory services and related software business that has yet to make up the difference; and a recently acquired consulting business that continues to shrink due to the technology downturn. It also has scared off a once-loyal sales channel and fallen off the map with developers more interested in the Web than a specific company's technology. And the company has -- at least until now -- never fully addressed the primary hole in its strategy: A solid line of software tools that can attract an army of developers to its technology, giving the company a bit of sway in an industry that seems to have written it off.