New Novell CEO Hovsepian Plans Linux Channel Charge

Hovsepian, named CEO with Novell's ouster of Jack Messman in a management shakeup, said in an interview with CRN on Thursday that he aims to simplify corporate operations and alignment on Linux and give partners rebates and other tools to make more money selling the open-source operating system.

For example, Hovsepian and Novell channel chief Steve Erdman pointed to a 20 percent rebate that the Waltham, Mass.-based software vendor enacted earlier this month to drive partners' SUSE Linux sales.

"Over the years, we've ... maintained a lot of different pricing models. That makes it harder for our partners ... to do business," Hovsepian said.

He acknowledged that some VAR partners have adopted Microsoft practices in recent years as NetWare has declined, but he insisted that Linux will bring those solution providers back to the Novell fold.

"We're seeing partners expanding their businesses, and when we think about the Microsoft partners, their wage rate is now down in the $35- to $45-per-hour range. And that's going in the wrong direction for partners," Hovsepian said. "The partners make their best money when there's a sea change in the industry. ... Linux gives them a chance to reset the bar to generate profitability."

Novell's channel remains strong, and its Linux business is growing nicely, said Hovsepian, 45, who, prior to taking the CEO post, had served as president and COO since October. More than 70 percent of Novell's total revenue is driven by the channel, he said, adding that he expects that percentage to rise as more resources are devoted to partners to generate Linux sales.

"When we did the analytics on the market, only 27 percent touch was direct-only, or 73 percent of my revenue touches a partner. So the heart and soul of this company goes to partners," Hovsepian said. "We have to get more leverage out of it for ourselves, and this is one of the things we're working on. The Linux rebate program is a good partnership approach."

Novell also recently launched its Open Workgroup Suite for Linux and Windows for small- and midsize-business partners after developing and piloting the program with three European partners, according to Hovsepian. The product generated $8 million in sales last quarter, including $2.4 million from new customers. Novell had expected the product's sales to total about $2 million during the quarter, so the results exceeded projections, he said.

Erdman said the Linux rebate and adoption of specializations will help Novell boost Linux sales through partners. He also hinted that Linux partners will be rewarded well under his leadership.

"We're taking it to the next step," he said, adding that training will also be available. "Linux partners will have different value and profit metrics than, say, workgroup partners."