Novell: The Avis of Open Source?
Whenever The VAR Guy hears chatter about Novell, he thinks of Avis — the Number 2 rental car company that proudly declares “We try harder” as it pursues the market leader (Hertz, er, Red Hat). Hmmm. Is 2008 the year that all of Novell’s hard work in the open source market finally pushes the company into the fast lane? UBS, the Wall Street analyst firm seems to think so. But The VAR Guy isn’t so sure.
First, let’s start with the good news. UBS has upgraded Novell shares to a “buy” from a “neutral” rating, based on an analysis of three key factors (cash on hand, legacy software sales and Novell’s newer business units). Barron’s mentioned the upgrade today. And The VAR Guy has been quick to note that Novell is successfully pushing its desktop SuSE Linux business deeper into China.
Wonderful. But Red Hat still commands overwhelming mind share and growing market share in the open source sector. In fact, company officials have boldly stated that they expect Red Hat to command more than 50 percent of the server market by 2015.
Red Hat may regret such statements if upstarts like Canonical (promoter of Ubuntu Linux) gain momentum or if another disruptive technology comes along. But the market share prediction also reinforces that Red Hat has the upper hand against Novell.
Full disclosure: The VAR Guy owns a handful of Red Hat shares and a Linux PC running Ubuntu. He’s never owned Novell shares. And he hasn’t run a Novell operating system since Personal NetWare took over his 386 PC in 1994.