Novell’s Linux investments are finally showing results as its Linux revenue of $61 million (EUR 52 million) jumped 418 percent from last year’s fourth quarter. Novell announced its fourth fiscal quarter and fiscal year financial results, which ended October 31, 2005, on Thursday.
If Novell would open source NDS, Groupwise, and the rest of their products, they could collecting on the support contracts that businesses would inevitably want. They would have a solid foundation to build on. The sooner the better, before RedHat (not necessarily developed entirely by RedHat) has an open source alternative for every Novell product imaginable.
“razor and blades” economics all over again.
i never heard of this type of economics before. supply and demand, net gain or net loss, fair market competition, dow jones industrial, nasdaq… these are words i am more familiar with. care for some explaining ?
i never heard of this type of economics before. supply and demand, net gain or net loss, fair market competition, dow jones industrial, nasdaq… these are words i am more familiar with. care for some explaining?
If I’m not mistaken, I think he’s referring to the way razor companies (Schick, Gillette, etc) perform business. They practially give away the razor, but then charge a fortune for the blades. Kind of like printer companies with their cartridges. Anywho, if I’m mistaken, someone please correct me.
How about you go and look at the cost of “giveaway” razors.
is a $9.99 Razor a “giveaway” compared to others?
Compared to the prices of the blades, yes. Same thing with printers. In my area, the cheapest inkjet printer can be bought for about 40$, yet a set of black and colour cartidges for that same printer is well over 80$… I sold my Epson printer for a laser because of that gammick. A cartidge set was something like 100$. Not that toner isn’t a gammick, but it’s cheaper…
So, basically, Novell could gave away their products, yet provide their services at a high premium. Perhaps they could do like some companies do: giving away their stuff, yet making it so bloody complex that you need them for operating it.
Apparently somebody forgot to mention this “good news”:
<ul>Nevertheless, net loss available to common stockholders for the quarter was $5 million or 1 cent loss per diluted common share.</ul>
Novell lost money. Who gives a crap whether Linux gains if you net lose money for your shareholders? How long do you expect to run a company like that — and keep shareholders?
This is good news for people in the open source community and for corporates who are hesitating to jump in the same bandwagon.
It’s about time Novell. The more big names we have in the linux camp the better.
The more people there are contributing to Linux the more suitable it will become to accross the board tastes.
Oh yeah, their Linux business is skyrocketing…NOT.
)))
$61 million won’t even show up in the rounding of a REAL business.
Besides…who cares about revenue? What was their Linux *earnings*?
Revenues doesn’t keep a company in business.
There is in fact a huge difference between revenue and earnings. Considering the depth of the hole Novell is attempting to climb out of…. nearly anything generating revenue is positive at this point.
Nobody cares about revenue, income doesn’t keep a company in business, 61 million USD is nothing… bloody brilliant analysis that.
Your comments are full of hattred and you seem to lost the point, since you are giving a comment which only shows hate. If you really wanted to comment about it, I think there are other ways. Do you know the ‘polite’ word?
I’m not saying what you said is false. Just find the way to say it, please, dude.
Do you know the ‘polite’ word?
f–k?
Awww, f–k it, people are too f–king polite. Stop being sofa king retarded.
Look at in the context of the message it’s replying to and don’t read anything that isn’t there.
Your comments are full of hattred and you seem to lost the point, since you are giving a comment which only shows hate. If you really wanted to comment about it, I think there are other ways. Do you know the ‘polite’ word?
I’m not saying what you said is false. Just find the way to say it, please, dude.
WTF are you to assess the “hatred” in his point?!? He made some valid factual points. The fact that you don’t like them doesn’t equate them with “hate” for the things that you “love”. Geez, get a grip. Must be a freakin’ groupthink Euro-dweeb.
Income is what keeps a company in business…revenue is meaningless when the cash flow is negative, as is the case with Novell.
And yes, $61 million REVENUE is peanuts.
If it were $61 million *INCOME*…that is not peanuts and would be something to celebrate.
I would like for Novell to succeed, as I am a big Mono enthusiast. But, for now I will reserve celebrating until this company is able to produce some solid results.
Nobody cares about revenue, income doesn’t keep a company in business, 61 million USD is nothing… bloody brilliant analysis that.
It’s the smart analysis. Yes, their Linux revenue has increased by a relatively small margin, but really, how much of that is from people switching from Netware to OES (which essentially still is Netware)? If that’s the case then they’re not attracting any new customers, and they don’t exactly have to get many Netware people to switch to apparently boost their figures. You have to remember that most of their revenue this year was from Microsoft and from products which provide revenue but have no future. And anyone can redefine what Linux revenue actually means.
However, he was right. When it comes to Novell a miniscule increase in Linux revenue is meaningless when compared with their absolutely incredible fixed costs and overheads. The essential arithmetic is that Novell have to be making something like $2 million worth of clear profict, every single day, to simply break even. Novell are culturally acting as they did in the eighties and nineties as if they still have billions in revenue coming through the company to be able to afford multiple campuses and private jets. Times have changed and the penny simply hasn’t dropped. Novell have needed to carefully cull about four fifths of their workforce and all the extravangances in order to remain competitive in the market that they’re in. Realising that they need to make further redundancies after the current wave would be an absolutely disastrous mistake and one many companies make.
The salesman in the COO now in charge has come out, and God knows it needed to because Novell were and are awful. The clue that this has been about selling is that Netware’s business has increased by 3 percent, and shows how pretty woeful Novell have been. However, he still has to have the vision, the technical nous and the ideas to navigate Novell to a prosperous future.
It is ridiculously easy to make apparently huge improvements in a company because all it shows is how badly it really was, and is, doing. I really don’t know how they can predict a ten to fifteen percent operating margin by 2008 – their revenue will have to increase extremely dramatically or their costs will have to reduce really dramatically.
Edited 2005-12-02 21:35
The essential arithmetic is that Novell have to be making something like $2 million worth of clear profict
That should read $2 million worth of income. $2 million dollars worth of profit to break even? God, not even life is that unafir!
they also swtich them welves over to ‘linux’, this is (afaick: still) their biggest ‘linux’ project.
i dont know if the ‘revenue’ generated by this project is also part of this total…
Cies Breijs.
This is good news since Novell are running fully Linux desktops and Open Office in there company. There model seems to be working great and hopefully other companies will see this.
The new numbers are reflected by the sale of the new Linux-kernel based NetWare, so you can say it’s their old customers purchasing the next version of NetWare, they are not real “converts”.
But whatever. I don’t care on way or the other, except I am not sure there was anything wrong with the NetWare kernel.
But whatever. I don’t care on way or the other, except I am not sure there was anything wrong with the NetWare kernel.
It doesn’t have much to do with a technical problem with Netware, it’s the almost empty cache of third party developers for netware. Novell is trying to woo developers with their linux strategy, mostly. Simply, if Novell can match a MS product line(or parts of it anyway), then all they need to do is price cheaper than MS(which they do already) and they can dig themselves out of the hole. First they need the developers and development. Then consumers will say, “hey, this company has a ton of support, and all the products we need at our widget producing company, and they’re cheaper to boot!”. That’s the strategy I gather.
Makes sense too. But can they pull it off? Time will tell.
The new numbers are reflected by the sale of the new Linux-kernel based NetWare, so you can say it’s their old customers purchasing the next version of NetWare, they are not real “converts”.
True; no use promoting revenue growth if there is merely a transfer of Netware products to Linux – what Novell need are NEW customers, customers who have NEVER used Novell products before, and if possible, win back OLD customers that they lost.
This is good news as it proves that there is money to be made building upon linux. The last thing anyone wants to see is Novell go bust; failure for them is not an option (duh).
It is also good for all users of linux as the amount of corporate investment in linux is proportional to the amount of money they can make out of it.
Novell’s Linux revenue accounts for only around 12 per cent of their total revenue and is not on its own going to pull Novell’s butt away from the fire. Yes it’s good news, as is the increase in their revenue from “identity-driven” products, but there is an awfully big mountain still to climb and if the Netware side takes a sudden nosedive things will get very tough for them. Somehow – and I don’t know how – they need to do more to break Red Hat’s “We are Linux” grip on the market.
Novell’s Linux revenue accounts for only around 12 per cent of their total revenue
This is overall last year, in the last quarter it amounted to about 20% of revenue. This is is consistent with the the year to year increase for the last quarter of about 450%. Their Linux sales are now taking off with a massively accelerating increase in revenue. It looks like Linux can indeed pull them out of the financial pit they are in.
The truth is the may still have a big hole to climb out of. However any progress in the Linux Market is progress for opensource. Look at the big picture Novell success can be nothing but beneficial to opensource, there are still so many so called check signers who don’t understand anything outside of Microsoft. So Novell and Redhat’s progress means that so-called check signers will be more open to Linux. This will in turn leave the real decision makers IT, the ability to promote whatever their flavor, Ubuntu, Suse, Fedora whatever. For me Novell, and Redhat is just used to raise check signers awareness of something other than Microsoft
Netware will certainly decline. The upside to this report for Novell is that their Linux products have started to show some positive return before the Netware products are in [significant] decline. Imagine if instead of a 3% increase of revenue from Netware, there had been a 10-20% decrease.
A much stronger showing from Novell’s Linux and service products might also be the impetus necessary to allow Novell to open up some of their other technologies. Novell may have purchased the rights to a very good Linux product, and they may be quite positive about open source. But, their business model couldn’t change overnight any more than they could suddenly drop support for their existing customers to move in a different direction.
I love “rock” solid netware products like Netware 3.x and 4.x. But they should have gone with BSD and not gambled their feature with the bad designd monolotic Linux kernel.., Novell will slowly die if the not change to BSD kernel or some well designd kernel..
Novell is doing AWESOME!!!
THANK YOU OPEN SOURCE NOT EASILY UNDERSTOOD OR IMPLEMENTED BUSINESS MODEL!!!
Please go to http://www.google.com
next, type
novell layoffs
and do a search.
Now reread all of the comments posted. Shills or fools, the lot of you.
Novell is doing AWESOME!!!
THANK YOU OPEN SOURCE NOT EASILY UNDERSTOOD OR IMPLEMENTED BUSINESS MODEL!!!
Please go to http://www.google.com
next, type
novell layoffs
and do a search.
Now reread all of the comments posted. Shills or fools, the lot of you.
Please go to google.com and type in “red hat revenue” (without quotes)
🙂
My point has ZERO to do with Red Hat and neither does this article (love that you got +1 and I got -1.)
My point was that just because a software company open sources their product does not make them instantly profitable or successful. novell has been in it’s death throes since Windows 2000 Server and Clients came out.
Yet with all of the links the google search comes up with about Novell’s recent losses and declining userbase PEOPLE STILL POST “Oh that’s great, they should open source all their other software and they’ll be even more successful!”
They company’s business model IS NOT WORKING AND HAS NOT BEEN WORKING. That needs fixing , pronto or it’s Chapter 11 or Chapter 13.
“Novell is doing AWESOME!!! THANK YOU OPEN SOURCE NOT EASILY UNDERSTOOD OR IMPLEMENTED BUSINESS MODEL!!!”
Novell is doing for shit, and I don’t believe for a second open source has done them a damn bit of good at this point….. Other than contributions to the community, it’s not put a thin dime in their pocket.
This is about dollars and sense…..Novell ain’t making many dollars, or demonstrating a good deal of common sense.
Novell likely went broke the day they became involved in Linux. They just don’t know it yet.
Actially they they went on the way to get broke when MS cut their air supply. Now they are looking for options. At least it’s better than doing nothing and waiting for a bailiff.
Companies do what they must to survive. Regardless of the downsizing, increased revenue based on linux is a good thing.
And please, try not being so offensive – it wins you no friends.
lets do some numbercrunching:
2004:
revenue: $1.166 billion
earnings: $31 million
2005:
revenue: $1.198 billion
earnings: $378 million
and now lets remove the $448 million they got from ms (shouldn’t it be $536 million?)
378-448=-70 million
so effectively novell were $70 million in the red.
I don’t think this is something to be proud of
Thanks for the heads up on the revenue/profit; question; how the hell are they making a loss when they’re bring in, in regards to revenue, $1.198billion?
They’re obvious either a VERY inefficient business or they need to grow a brain and move their business to a cheaper country to do business in.
“They’re obvious either a VERY inefficient business or they need to grow a brain and move their business to a cheaper country to do business in.”
Most of Novell’s problems begin at the top with Jack Messman the Chairman of the Board and CEO of the corporation.
As long as Messman remains at the helm; Novell ain’t got a prayer of survival, much less a return to profit. He appears to consistantly turn right, everytime he should turn left.
Very true; what Novell need is a clear, written down direction.
On the desktop; they need to design a desktop that covers ALL areas that are required; they then need to mould GNOME to that design and add features that are lacking.
On the server front, they need to move away from simply selling a server OS, and provide a complete solution, from end to end – simply being the OS vendor without value added middleware and services ontop is a doom strategy – operating systems are now a commodity. The money is in the middleware, not the mundane operating system.
Please go to google.com and type in “red hat revenue” (without quotes)
From wikipedia ( http://en.wikipedia.org/wiki/Red_Hat ) – Revenue $196.47 million USD (2005).
So redhat have a lower cost base than novell, thats it. Its not exactly an incredible revenue stream for a company valued at $4.5 billion. Accounting 101 folks.
But back to Novell, from CBS Marketwatch’s report –
“At Jefferies & Co., analyst Katherine Egbert highlighted that the strong results were aided by a very large deal, “which may not be repeatable.””
and the fact their own guidance was out by a factor of 20% (they had guided around $260 million). I really wouldn’t be writing home anything about these results.