When Eric Schmidt first settled into the CEO’s chair at Novell Inc. back in 1997, he called his new job “the opportunity of a lifetime.” And that it definitely was. Novell had a loyal installed base of customers, but was nevertheless struggling to grow beyond its strength of enterprise directory services. The new post represented a chance for Schmidt to shine as the technology visionary he had proven to be while at his former job at Sun Microsystems.
Now, after having announced last month that he will be surrendering that chair, it’s quite clear that his opportunity has turned out to be an unfulfilled one.
At the company’s annual BrainShare conference last month, it was announced that Novell would be purchasing Cambridge Technology Partners, an IT services firm, and that Cambridge’s head honcho, Jack Messman, would be taking over from Schmidt. Taken together, the two announcements represent the ultimate failure of Schmidt attain his goal of turning Novell into one of the most important IT companies in the world, of putting them in a league that includes Cisco, Microsoft and IBM.
The raising of the white flag was not a result of a lack of visionary capability on Schmidt’s part. His record as CEO is chock full of innovative products that were, for the most part, applauded by analysts and users alike. They included ZENWorks, a directory-enabled desktop management application released in 1998; the Novell Internet Messaging System in 1999, which represented a effort to push the company’s directory services into the provider market via directory-enabled applications; and, most recently, the release of Novell’s OneNet strategy, an effort aimed at creating a user experience whereby various types of networks appear to be one single infrastructure.
What always confounded long-time Novell loyalists and observers, however, was what didn’t go along with these initiatives: hype. While Microsoft was busy inking deals with the Rolling Stones to push its Windows platform, Novell was as quiet as Salt Lake City’s main drag at midnight. Why they never managed to make as much noise as the Mormon Tabernacle Choir does on a Sunday morning was beyond most analysts. It’s astounding to consider that it was not until last year that Novell released its first television advertising campaign.
It became disappointing to staunch Novell supporters to have to continually ask themselves if they should keep going down the Novell path, even though they wanted to, all because the message wasn’t getting out to potential new customers. It was hard for users not to notice that Microsoft’s NT platform was consistently outselling Novell’s NetWare. And it was also hard for them not to get frustrated when the company failed to capitalize on Microsoft’s long delays in shipping its Windows 2000 operating system.
Despite these mistakes, and despite the fact that Novell salespeople have had little success in the past 18 months, Schmidt did enough right things to give Novell some reason to look forward to the future. The installed base is mostly still there, as loyal as ever. By purchasing Cambridge, it seems clear that Novell is intent on moving more into the consulting services business (in 2000, this area accounted for just five per cent of Novell’s revenue; it’s aiming to bump that up to 30 per cent this year).
The move makes sense, as there is a market for such offerings; many Novell users find themselves requiring extra expertise to get the most out of their purchases. As a result, Novell could very well survive.
If it does, however, it won’t resemble the type of company that Schmidt envisioned it being back in 1997. Because of that, it has to be concluded that the outgoing CEO’s “opportunity of a lifetime” has passed him by.