Novell Consolidates Business Units

The Waltham, Mass.-based software vendor is folding its Nterprise and SuSE Linux operations into a single entity tentatively called Platform and Application Services, CRN has learned. The vendor's other two business units, Secure iServices and Resource Management, are becoming one under the potential banner Identity Services.

A Novell spokesman said the changes are an effort to rid Novell of market overlap occurring among the four business units. He said folding them into the two broader categories was a more rational approach. The names of the two new divisions are still not finalized.

The changes should not impact channel partners, the spokesman said, since the reorganiziation focuses solely on Novell's product development organization.

The changes affect Novell executives such as Markus Rex, who joined Novell early this year as part of the vendor's acquisition of SuSE Linux.

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Rex was the general manager of Novell's SuSE Linux business unit. Going forward, Rex will run Novell's SuSE operation as SuSE vice president. Rex will report to David Patrick, Novell's newly named general manager of Platform and Application Services. Patrick was the former CEO of Ximian, a Linux brand acquired by Novell in 2003.

Like the Ximian acquisition, Novell purchased SuSE in an effort to breathe new life into its operations.

Novell has said it expects to launch something of a hybrid SuSE/Ximian Linux desktop platform this fall.

As part of its third-quarter 2004 results, Novell reported that $12 million of its $305 million in revenue came from its SuSE Linux business. Interestingly enough, Novell reported that of subscription sales to SuSE Linux Enterprise Server, 12,000 units of the total 19,000 units sold in the quarter went to one customer.

IDC Linux analyst Dan Kusnetzky said it was a mistake for a company such as Novell to hang too many hopes on Linux as a desktop operating system.

"Even if the share of Linux on the desktop grows from 3 percent in 2003 to roughly 6 percent by 2008, that's still a minor share. For Novell to depend on a fantastic growth rate (for Linux on the desktop) seems unwise."

Kusnetzky agreed that Novell's consolidation could be motivated in part by a desire to make up for times it "missed some opportunity to accelerate its communication with customers and market as a whole."