Novell resellers must invest in retraining now or risk getting lost along the wayside as the company attempts to reinvent itself. Only about 1,000 of Novell's 30,000 European resellers are currently qualified to install Intranets, the keystone of the new Novell strategy.
This was the stark message from Novell?s newly installed vice president for the Emea region, Roland Richter.
Novell is refocusing its strategy from being a developer of general network management systems to a supplier of Internet and Intranet services across a variety of platforms. This means the profile of its 30,000 European resellers, once trained primarily to set up Netware systems, will need to change. Richter believes that currently only 1,000 of its resellers could adequately design Intranets, so many of them must now take two to three weeks out to re-educate themselves.
?Our resellers will need to be able to tie different platforms together and design an environment around central directories that allow for application launchers, and managed networks. There will be lots of training involved. The problem is whether the reseller will have the time,? said Richter. Because of the new challenges, Richter believes some resellers will drop by the wayside. ?The reseller base will shrink because of the challenges, and because some will be unwilling to retrain,? he said.
Novell?s Certified Novell Engineer (CNE) accreditation is also likely to be redesigned, with new modules added. ?CNE programmes used to be training on Novell but now it?s training by Novell,? commented Richter, reiterating the company?s new strategy of basing its products on platforms spanning NT, Unix and MVS, as well as its own Intranetware (the new name for Netware).
The company desperately needs to change. Once, Novell commanded around 70 per cent of the network operating system market, but the story changed dramatically when Microsoft launched Windows NT. Novell could not compete with the formidable Seattle marketing machine and although many analysts agreed that Netware was technically superior, Novell began losing market perception, and so market share.
Last April, Novell installed former Sun chief technology officer Eric Schmidt as chief executive, and soon the company watchwords were Internet and Intranet - markets that boast greater growth rates than Novell?s traditional networking arena.
Said Richter: ?By 2001, the Intranet/Internet services market will be worth $17.6 billion. Even if we take just 10 per cent of that, we would double the size of our revenues.?
Novell?s Internet/Intranet push is based around its Novell Directory Services (NDS) technology, which it is delivering free to developers and OEMs. Revenue will be generated from sales of second licences of NDS, plus add-ons such as messaging product Groupwise, management system Managewise, Intranet firewall tool Border Manager, plus an applications launcher, and a file and print facility.
The fall-out from this new strategy in Europe became evident last month when the company slashed 15 per cent of its workforce in the region. Many of the cuts were understood to be in sales and marketing. Said Morgan Stanley analyst, Chuck Philips: ?I think there was a lot of overhead still left from past acquisitions [which included Wordperfect and Unix Systems Laboratories], so I think the cuts were mostly fat, not bone.?
The redundancies were also necessary because of the company?s sliding results. In June, Novell reported second quarter losses of $14.6 million on revenues of $273 million. However, this was an improvement over the same quarter last year which saw whacking losses of $55.3 million, on revenues of $188.2 million.
Novell is looking to Europe for growth, particularly the eastern European and some southern European countries, which are almost greenfield sites. Company chiefs have said that by 2000, they want 60 per cent of revenues to come from non-US sales, around 35 per cent of which will be from Emea. This means Richter will have to increase revenue from his region from today?s 29 per cent.
To help achieve this, Richter?s boss, Ronald Heinz - Novell?s senior vice president of worldwide sales - has increased Emea?s marketing budget by around 25 per cent. Richter said the money will be spent on selling one message. ?We will be more focused. When we missed out in the past, we had 20,000 products to market. Today we are focusing on solutions for Internet/Intranet, which encompass all our products.?
Richter calculated the company to be three months into its transition phase, which is expected to take between nine and 12 months. In the meantime, Novell is encouraging its resellers to retrain. Although he did not expect to replace resellers, he said they would replace themselves if they did not take up Novell?s new challenge.
CNEs will be expected to gain additional training to familiarise themselves with Novell?s products and markets. Spencer Smart, marketing manager at the Novell Authorised Education Centre, said: ?The CNE programme has not changed dramatically, but it recognises there are other platforms out there, such as Microsoft NT.?
Novell has also created new certifications specifically for Internet and Intranet management.
For distributors, the model will change from shifting 'red boxes' to licensing, which requires less administration effort, and allows for multiple licences. During its current third quarter, Novell has stopped shipping boxes to distributors so they can shift their stock pile of products. The aim is to reduce inventory levels to between 30 to 35 days. ?In the past Novell was a sell in-driven company, now we are a sell-out driven company. We want to establish inventory level where delivery of products is within 24 hours,? said Richter.
In the past year, licence sales through resellers have grown to represent 25 per cent of Novell?s channel shipments. This is expected to increase to up to 40 per cent. Novell also sells around five per cent of licences itself directly, though this figure is unlikely to change.
One of Novell?s long standing distributors is Frontline. Peter Hannah, acting general manager of its networking divisions, did not expect the learning curve for resellers will be steep. ?It will be an iterative process, rather than having to go through a brand new learning curve. Novell?s change has been progressive, rather than a complete rework,? he said, adding that Novell must act now to market to its resellers.
The measure of Novell?s new strategy will depend on the success of its resellers, and how soon they take on the challenge. Richter concluded: ?Some resellers could be early adopters, so they can be ready when demand explodes. If they just wait and see, it just might be too late.?
The same could be true for Novell.
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