20 To Watch: 5 Companies

By CRN Staff

10:09 AM EST Fri. Jan. 02, 2004
From the January 02, 2004 issue of CRN

Novell is on an M&A tear to transform itself into a leading Linux software company and, at the same time, regain its once-lofty status in the operating system market. In the last half of 2003, Big Red put into motion plans to acquire Linux desktop hotshot Ximian and, more significantly, SUSE Linux, the No. 2 supplier of Linux distributions.

Many expect Novell will try to migrate its NetWare installed base to Linux rather than lose the business to Red Hat or Microsoft. Novell executives expect the Linux business to grow 30 percent annually but are careful to emphasize the company is not abandoning its NetWare cash cow. “We have no target for either migration or for an expected market-share shift,” says Novell Chairman and CEO Jack Messman.

Some solution providers maintain the Linux play is Novell’s only chance to hold on to its installed base—and stay in business—as the market moves to open standards. “Recently Novell ran a Linux Seminar in Miami, and it was standing room only,” says Michael Goldstein, vice president at LAN Associates, Fort Lauderdale, Fla., noting Novell’s enhanced relationship with IBM is raising interest among customers. “I think that many customers are rethinking their OS decision now.” --Paula Rooney

Hostility. Fear. Back-room maneuverings. That’s right, it’s the Oracle-PeopleSoft saga. The question on everyone’s mind: Will Oracle Chairman and CEO Larry Ellison abandon his plan to buy the provider of enterprise applications? While it’s impossible to plumb the mind of Ellison, the Magic 8 Ball says, “The chances are likely.”

Oracle’s hurdles include antitrust reviews by the U.S. Department of Justice and the European Commission. But its biggest obstacle may be the stock market. With PeopleSoft trading up since the bid, Ellison could be looking at an $8 billion price tag rather than the $5.1 billion he offered in June. Perhaps more telling, PeopleSoft customers continue to buy. The company closed eight deals in the third quarter of 2003, three worth more than $1 million.

Solution providers are also watching the saga closely, wondering how the drama will impact them. When PeopleSoft bought J.D. Edwards, the direct vendor also acquired its first channel organization. While PeopleSoft is melding product lines and says it plans to continue selling rebranded J.D. Edwards applications through partners, it remains unclear how solution providers fit into the enterprise picture. --Rochelle Garner

With momentum building behind Business One, its integrated CRM and business management offering for SMBs, not to mention its NetWeaver application integration platform, SAP AG is pushing slowly but steadily into the U.S. channel.

Customer confusion over Oracle’s hostile bid for PeopleSoft has also given the company a boost heading into 2004, not to mention its partnerships with integrators such as Accenture, which says it plans to ramp its SAP CRM practice by 300 percent this year.

The company isn’t entirely in the clear. Third-quarter sales were relatively flat at $1.92 billion compared with the year-earlier period. U.S. revenue was up 35 percent, however.

Korey Lind, president of Third Wave Business Systems, Elmwood, N.J., who picked up Business One last February, says SAP’s Business One strategy has given her a valuable selling tool for midmarket prospects who thought they were too small to use mySAP. And she says SAP’s channel team is serious about wooing partners of all types. “They’re not joking around; they will be a major player,” Lind says. --Heather Clancy

If 2003 wasn’t the year Macromedia shattered the myth that its tools are only for creative types who see Web application design as an art form, it wasn’t for lack of trying. Last year, the company introduced a host of products, including Macromedia Flex, Contribute and Breeze, aimed at making the development of multimedia-rich Web applications palatable to all forms of developers. Macromedia also unveiled Macromedia Central, an environment for delivering content and applications to the Flash player on a client machine. Macromedia’s multimedia design tool, Flash, is in fact the company’s secret weapon for delivering what it calls “rich Internet applications.”

“If nobody buys into it, all of these products are for naught,” says Jim Burke, CEO of Boston-based solution provider Mindseye. “If it takes hold, Macromedia is well-positioned from a developer and creative standpoint to really kick some [butt].”
--Elizabeth Montalbano

Following its acquisitions of Legato and Documentum and its planned acquisition of VMware, EMC is looking more like a software powerhouse than an increasingly marginalized hardware vendor. And company execs hint there may be more acquisitions to come. But is there synergy?

CEO Joe Tucci thinks so. He says he sees big changes ahead for storage and plans to lead the charge into “information life-cycle management,” which envisions the management of unstructured content and data moving deeper into the storage infrastructure.

The company’s $1.7 billion purchase of Documentum initially struck some as a bit odd. Sure, Documentum’s content management software provides structure to content, a key step in managing it. But EMC will need to work with every content management vendor.

VMware’s hot server virtualization software may provide more immediate synergies—it gives EMC a play in heterogenous environments.

“All they have to do is put VMWare on top of an EMC drive … and they don’t have to worry about the next Unix or Solaris or Windows,” says Nani Narayanan Srinivasan, chief scientist at solution provider Nexgenix, based in Irvine, Calif.
--John Longwell

Published for the Week Of January 5, 2004

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