Novell announced its 3rd quarter financial
results on Thursday of last week. To get some additional information on
Novell's results, we spoke to Novell spokesperson Bruce Lowry about the
results, and how the purchase of SUSE Linux and Ximian is working out for
First on the agenda was Novell's financial results. Novell brought in $305
million in the third quarter, with a profit of $23 million, compared to
$283 million in the third quarter of 2003 and a loss of $12 million during
that period. Part of Novell's overall profits this quarter resulted from
one-time payment of $19 million from The Canopy Group.
Overall, Lowry said that the company was happy with the profit from the
third quarter, but "a little disappointed with the top-line revenue
number." He explained that the sales of the company's Netware
products had slowed their decline in recent quarters, but resumed a 12
percent decline in sales in the third quarter.
While Novell's other product lines have not been meeting expectations, SUSE
Linux provided a welcome boost to Novell's bottom line this quarter. SUSE's
revenues were up $2 million in the quarter, a 20 percent increase from the
second quarter. A big factor in SUSE's increased revenues was a single
customer that ordered 12,000 subscriptions to SUSE Enterprise. Lowry
wouldn't disclose the customer's name, but said that the customer is a
venture-backed company using SUSE in a "ASP sort of
The $12 million in revenue from SUSE products broke down into three parts,
$4 million was from subscription revenue, $5 million was from SUSE retail
sales, and $3 million included "tech support alliance fees and other
software products from SUSE Linux." Lowry noted that the SUSE
subscriptions would continue to show revenue in future quarters, as
subscription revenue is distributed over the life of the subscription
rather than reported entirely in one quarter.
Ximian's revenue is not broken out separately by Novell, as the company
mainly purchased Ximian as "a technology buy."
We basically said that the impact on earnings would be negligible...it's
almost impossible to do that now. The major products were Ximian Desktop,
which we're now combining into SUSE, hopefully later this year. The other
main sort of component was Red Carpet Enterprise... what we did was added
[that] to ZENworks.
We asked Lowry how the integration of SUSE and Ximian into Novell was
going. Lowry said that the Ximian integration into Novell was
"totally complete" and that the SUSE integration is
"moving forward very rapidly," but noted that there was still
work to be done, and that integrating a German company into Novell
presented additional complications.
Lowry declined to offer specifics about the upcoming SUSE release with
Ximian Desktop integrated into the release, saying that Novell was being
"pretty tight-lipped" about the release. However, Lowry said
that SUSE will continue to support KDE and GNOME.
It seems to be an issue that people continue to be hooked on, that we're
trying to get beyond. But, we're trying to give people choice. We'll be
adding the things you'd expect Novell to add... it's obviously going to be
focused on the enterprise user.
We also asked whether the company would also be pushing Mono in its SUSE
product line in order to help adoption of Mono. Lowry said that Mono is not
shipped with SUSE Linux Enterprise Server 9, and said that Novell has
"talked very loosely about it appearing in the desktop."
It's still very much an early stage thing, I have heard talk of pilot
deployments of Mono in corporate environments. It's still fairly
narrow...it's definitely an early stage technology.
He did say that Novell had been using Mono more for internal projects, and
mentioned Novell's iFolder, which is now
written with Mono. Lowry also mentioned the addition
of JBoss to SUSE Linux Enterprise Server 9, and to the next major
release of Novell exteNd as a replacement for Novell exteNd Application
We'll be replacing the proprietary application server in the next major
release, eating our own dogfood. We're going to look at open source and
leverage open source where we can. It makes no sense to try to compete with
a proprietary product in the same place... it's a mixed world. It's hard to
envision a scenario where everything becomes open source.
It should be interesting to see how Novell continues to balance between
open source and proprietary offerings. With iFolder, Ximian's Evolution
Connector, and SUSE YaST, Novell has shown that it is willing to open
source some of its technology when it makes sense for the company to do so
-- and so long as that technology isn't a profit center for Novell.
Unfortunately, Novell does seem to be backing away from support of other
distributions with Ximian Desktop, with only SUSE and older versions of Red
Hat Linux listed as supported.
Overall, though, it seems that Novell's entry into the Linux market has
been both successful and beneficial for the community and has certainly
been beneficial for Novell. Though Novell's income from SUSE is currently
only a small fraction of their revenue, it does seem to be Novell's best
chance for growth.
to post comments)