Having only converted a small percentage of its claimed one million NetWare 3.x users to NetWare 4, Novell Inc has an opportunity to turn their reluctance to its advantage by developing a new version of NetWare 3. Analysts at brokerage house Morgan Stanley briefed by Novell executives on its attempt to upgrade the 3.x base to NetWare 4, say that having reached wits end, management decided to give those users what they want, a new version of NetWare 3 that’s easier to use and more reliable. When we asked the company to explain more about its plan it told us it hadn’t yet made such a decision. The company also disagreed with guidance given to Morgan Stanley by market research companies suggesting only 7% of the NetWare 3.x base has made the transition to NetWare 4. Apparently that figure only applies to organizations which have gone over lock, stock and barrel to NetWare 4; Novell says the percentage of users with mixed NetWare 3 and 4 environments is far higher than that. Meantime, Novell expects the majority of its NetWare 3.x and 4 users to purchase Moab, its forthcoming native Internet Protocol version of Intranetware. Novell says Morgan Stanley’s assessment that Moab won’t now appear until mid-1998 is wrong and that it’s still on schedule for late 1997 or early (first quarter) 1998. The Windows NT version of Novell’s key NDS NetWare Directory Services NDS will be available in the fall and the company plans a big announcement around the product next month. It’s also bullish about the Border Manager firewall and proxy services which ships in August. Novell management reportedly thinks the product could be half as big as Intranetware itself given the widespread need for a native IP environment and the fast performance they are seeing in the labs. Border Manager ties a slew of internet security and administration services tie all to single directory, where other offerings are claimed to use separate directories. In other areas Novell’s readying a patch for NetWare 3.x which fixes a Y2K problem. Novell claims more than three million NetWare servers installed in total. Morgan Stanley sees the first quarter of next year as the departure point for Novell’s revival with new products and a clean channel after returns of around $40m to purge over stocking. The bank reckons distributors need 30 to 45 days of inventory so channel inventory won’t get down to zero as long as the distributor model is in place. Only on-line distribution directly to the reseller would lower the figure further but that’s a way off, Morgan Stanley thinks. It also observes Novell’s now counting revenue in slightly different ways: OEM revenue is being recognized on rather on sell through rather than up-front payment.
