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Hovsepian: Balancing on the Novell-MS Tightrope
Stemming the Tide of Potential Linux Customers to Windows
November 30, 2006
Balancing the needs of a public company that sells open source software is no easy task--just ask Ron Hovsepian. Hovsepian, the CEO of Novell, Inc., is getting an up-close and personal education in just how demanding those challenges are, as he and his company continue to come under fire for the November 2 partnership announcement with Microsoft.
Almost immediately after announcement, once jaws were collectively lifted off the floor, the community was polarized in their reaction. Many saw the positive technological and business benefits of the relationship, but there seemed to be just as many questions about the nature and rationale for the litigious aspects of the new partnership--specifically, the promise by Microsoft not to enforce their patent portfolio on Novell customers or on non-commercial software developers.
As time went on, the intellectual property segment of the partnership completely overshadowed the other parts of the agreement--a situation further exacerbated by the Microsoft CEO's public statements that indicate he, at least, still believes that Linux does indeed infringe on Microsoft's IP in an undisclosed manner. Despite a quick public response from Novell that argued against Ballmer's insinuations, community opinion about Novell has become decidedly negative in the past couple of weeks.
Which prompted the question to Hovsepian in an interview with LinuxPlanet yesterday: when Ballmer made those remarks, didn't you want to toss a chair in his office? A weak joke, which drew an appropriately weak chuckle, but an honest response: "it's definitely frustrating."
Hovespian's frustration may stem from Microsoft, but it also could stem from the balance the CEO feels he must maintain to make Novell a successful company. When posed the question on how hard it was to balance the needs of shareholders versus the needs of the open source community, Hovsepian was quick to elaborate.
"No, it goes beyond that. We have multiple responsibilities as a company: to our customers, the sharesholders, our partners, our employees, and the community," he explained. It was a desire to try to present a win to all of these aspects that led him to implement this partnership with Microsoft in the first place.
Novell, Hovsepian insisted, "is absolutely very concerned about the community," adding that they haven't hesitated to use parts of their own patent portfolio from the "old world" Novell to defend the "new world" business, as well as being in full support of the Open Invention Network (OIN).
Based on the feedback they have received from the community, the general reaction has become more balanced with positive comments as the community learns more about the details of the partnership, Hovsepian maintained.
"The lack of information available at the beginning probably exacerbated the situation," Hovsepian said. "That's why I sent out the open letter [to the community."
Novell has had the community in mind all along, as Hovsepian firmly believes that the way to strengthen the open source community is to connect customer revenues to development projects. While the community is capable of connecting to its own customers, it's the revenue that Hovespian sees as a vital need to get to community projects, so more developers can apply their talents full-time to various projects.
"That's the lifeline," Hovsepian said.
At this point, it was hard not to point out the continuation of that metaphor: why would Novell would seek to establish a revenue lifeline from one of the very companies trying to drown Novell and arguably the entire notion of open source?
Hovsepian responded to this question be citing a recent conversation with one of Novell's customers, a systems administrator who listened to Novell's pitch about the cost and technology benefits of Linux, but then posed his problem to Novell: he was an administrator with 5,000 Linux boxes and 10,000 Windows machines and he needed a way to make them all really work together. Not as separate components, but inter operating in a real and tangible way.
Even as they acknowledged Linux' virtues, Novell was seeing potential customers shying away from Linux because of these interoperability issues. Hovsepian also had access to additional data that made him see that Novell--and the rest of Linux--was losing a lot more customers to Windows than many initially thought.
It is common knowledge that Linux is growing at the expense of Unix operating systems, but a 2006 report from analyst IDC throws a huge challenge at that conventional wisdom. Hovsepian cited the report's statistics: of users who were moving away from a Unix platform, more were going to Windows than they were to Linux.
It varied from Unix flavor to flavor, in actuality: of users migrating away from Solaris, for instance, 28% went to Windows and 58% to Linux, which supports conventional wisdom. Other Unix migration stats, however, do not: of departing AIX users, only 23% moved to Linux servers, while 44% went to Windows .For HP-UX, the margin was tighter: 40% of departing admins shifted to Windows and 34% to Linux.
Faced with his customer feedback, and these surprising numbers, Hovsepian realized that his company had to somehow get in front of those customers abandoning *Nix for Windows.
"After all, if [Linux] can't get Unix customers," Hovsepian said, "then how well can we do getting other customers?"
It was the technology interoperability that really drove Novell to propose this deal with Microsoft, Hovsepian emphasized. In making this deal happen, he added, Novell got Microsoft to do something that no one would have thought possible: "We got them to admit that this Linux thing is here to stay."
By strengthening interoperability and virtualization between the two disparate operating systems, the customer immediately benefits and Linux is placed on a more level playing field with Windows, and customers will be free to choose the better operating system.
One could argue that customers were free to choose before the Novell-Microsoft deal, and, if the IDC numbers are correct, the customers were voting against Linux, so why would this change? Hovsepian believes that the deal will directly challenge and knock down pre-existing barriers for customers considering a migration to Linux: application support, platform support, uncertainty about Linux, and maturation of the Linux/Windows support process.
The latter two obstacles are immediately swept away, the Novell exec said, because of Microsoft's participation in the deal. As time goes on, application and platform support will become that much stronger and any hesitations about migrating to Linux will be lessened, if not outright removed.
With what seems to be a solid business motivation in place, it still does not address the fact that despite its intentions, Novell has still angered quite a few people in the community. There are even members of the openSUSE development community that have expressed concerns about the various IP aspects of the partnership.
To those concerns, Hovsepian again repeated that Novell admits to no infringement in its deal with Microsoft, and they continue to defend Linux and open source through their ongoing legal action against The SCO Group and their support of OIN and other pro-free patent organizations. But, he added, his company could not ignore the regulatory processes of the various nations in which Novell does its business, particularly the regulations surrounding IP.
As for allegations that Novell has intentionally or naively entered a deal with the devil, Hovsepian was candid in his remarks: "We've been competing with Microsoft for 20 years. We didn't just get stupid overnight.
"I believe we have the better operating system. They believe they have the better operating system," Hovsepian added. That competition is not going to change. Nor, he stated, was Novell's commitment to Linux.
"Everything we do is done with the desire that Linux will win in the marketplace."