09.27.07

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Novell’s Linux Business Does NOT Climb Since its Deal with Microsoft (Updated)

Posted in Deception, Finance, GNU/Linux, GPL, Microsoft, Novell at 2:59 pm by Dr. Roy Schestowitz

Don’t judge the health of a 25-year marriage based on the honeymoon

The press if going ga-ga after Justin Steinman’s claim that Novell is doing well despite and because of the deal with Microsoft. But Justin is a PR agent, and the reporters do not bother to perform a quick and independent sanity check.

I was going to write more about this tomorrow because I’m submitting my thesis today (didn’t have any free time), but while the press is blindly spreading such disinformation, I can’t help it anymore. To keep this short, watch what we said just days ago and follow the links therein. It’s clear that while Steinman says:

“The affect on sales year over year, for Novell’s first three quarters of our fiscal year, which ends Oct. 31 — our Linux business was up 243%”

Ron Hovsepian confusedThe reality is (from last week’s news): “As Linux sales slowed in subsequent quarters — from year-over-year growth of 659 percent to 114 percent to 95 percent — executives have backed away from espousing the importance of Linux orders to Novell’s overall business strategy.

This comes from the article, “One year after Microsoft deal, Novell’s Linux sales growth slows,” which shows that Novell/Microsoft’s quota of SUSE coupons has almost been exceeded and the ‘gift’ (as in “Greek bearing gift”) runs out. We have covered many such articles and this one just happens to be the most recent. The articles are consistent, and it’s a damn shame that ComputerWorld decided to blindly project (or echo) Novell’s PR pitch.

Quick temporary boosts cannot be described as a climb, especially when they involve an ill reliance on a fierce rival, which has already backstabbed Novell.

There is some similar misinterpretation about the GPLv3 at the moment, with figures that come from Evans Data. Keep on eye only on Palamida, which shows that GPLv3 adoption keeps climbing.

Update: another source agrees. Hours after we had posted this item. the following was posted elsewhere.

Details Needed On Novell’s Allegedly Soaring Linux Sales

Slashdot is linking to a story supposedly showing that Novell’s Linux business has seen amazing growth in the nine months since they signed a controversial patent deal with Microsoft. “The affect on sales year over year, for Novell’s first three quarters of our fiscal year, which ends Oct. 31 — our Linux business was up 243 percent year over year,” said Novell exec Justin Steinman. But so far, at least, this growth doesn’t appear to be reflected in Novell’s financial results. If my math is right, Novell’s revenue for “Linux platform products” totaled $32 million in the first three quarters of 2006, while the total for the first three quarters of 2007 is $53 million.

Once again, Novell’s PR spins like a ballerina. I’ve left a comment in Slashdot.

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16 Comments

  1. Harsh Chaudhry said,

    September 28, 2007 at 9:55 am

    Gravatar

    Could you please provide a permalink to the slashdot story?

  2. NoDough said,

    September 28, 2007 at 10:16 am

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    It’s interesting that you use math to validate your posts. Let’s use some math on the figures you provide above as evidence of slowed Linux sales.

    We’ll start with some arbitrary number to use as Novell’s Linux sales, say 10,000 units. Then we’ll apply the year-over-year growth numbers you show above.

    10,000 + 659% = 75,900 an increase of 65,900 units
    75,900 + 114% = 162,426 an increase of 86,526 units
    162,426 + 95% = 316,731 an increase of 154,305 units

    I’m sorry, explain to me again how this is a slowdown in sales.

  3. Duncan said,

    September 28, 2007 at 10:58 am

    Gravatar

    @NoDough:

    You aren’t familiar with corporate financial reports, are you?

    It works like this. Typically, a corporation may do half of its business in a single quarter. As an easy example, for retailers at least here in the US, that’s normally the quarter before Christmas. It follows that for such retailers, the quarter after Christmas is often much smaller than the previous quarter, even if they are growing. Likewise, a tax services business will do probably 80 or 90 percent of its business in a single quarter, over 50 percent in a single month, the one taxes are due.

    The comparison is thus much more accurate if done against the same period last year, thus accounting for seasonal variations. Each quarter is compared against the same quarter the previous year, not against the previous quarter.

    Thus, your math above is based upon an invalid assumption. Each quarter is compared against the same quarter a year ago, and we have the first quarter up 659% against the year ago quarter, the second quarter up only 114%, the third up only 95%. The trend is clear, and if it contiinues, first quarter next year will be negative several hundred percent even if the base growth continues, because most of this year’s figure for that quarter was the one-time boost in sales from MS. (I’ve not bothered doing the specific math.)

    Duncan

  4. NoDough said,

    September 28, 2007 at 11:12 am

    Gravatar

    Duncan,

    We are having a good laugh at your expense on a forum I frequent. May I have your permission to post your explanation there? It’ll have them ROFLTAO.

  5. Mickey Mouse said,

    September 28, 2007 at 12:44 pm

    Gravatar

    >> The trend is clear, and if it contiinues, first quarter next year will be negative several hundred percent even if the base growth continues, because most of this year’s figure for that quarter was the one-time boost in sales from MS.

  6. Mickey Mouse said,

    September 28, 2007 at 12:45 pm

    Gravatar

    >> The trend is clear, and if it contiinues, first quarter next year will be negative several hundred percent even if the base growth continues, because most of this year’s figure for that quarter was the one-time boost in sales from MS.

    Negative several hundred percent growth, huh? That would be a severe problem for any business indeed.

    Actually, things are even worse for Novell than you have stated. At that rate, they’re going to have to pay other companies to take their Linux products. Yes, that’s right, due to the deal with Microsoft, they’ll have to pay $5000 an installation.

    Of course, that leads to the problem that demand for Novell’s Linux will skyrocket if they’re paying companies to take it, so let’s say they get 100,000 orders next quarter. That will be a loss of $500,000,000 in just one quarter!

    Gee, how wonderful is the liberty that we get with this site! When you can just write down anything you want and pretend it makes sense, life is really interesting! The FSF could learn a thing or two about freedom. How about adding a fifth freedom to the GPL that says your software can do anything you want it to do, so long as your desires are sincere.

    As always, they made a deal with Microsoft, so if it’s anti-Novell, it must be correct.

  7. Lawrence said,

    September 28, 2007 at 1:22 pm

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    @NoDough,

    I am an impartial bystander. Could you please explan why you think that Duncan’s logic is flawed. It makes sense to me, though I am certainly no expert. Thanks.

  8. Mickey Mouse said,

    September 28, 2007 at 2:12 pm

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    Lawerence:

    If your salary increased by 95% last year, you would not say you took a pay cut because it tripled the previous year. If he wants to make a point, he should show factually that without the boost of the Microsoft coupons, Novell would have *less* Linux revenue than it has now.

    That would be a lot more enlightening than speculation about trends in growth rates being interpolated into the future. The average temperature climbs about 40 degrees here from January to July. Therefore by December the average temperature should surely be 125 degrees.

    In calculus terms, he’s confusing his derivatives.

  9. antikristian said,

    September 28, 2007 at 2:41 pm

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    You do know you are reprinting MS bought FUD… I’m just waiting for the Con colivas and TCO punchlines…

  10. Mickey Mouse said,

    September 28, 2007 at 3:01 pm

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    >> You do know you are reprinting MS bought FUD

    There is nothing on this site that is not anti-Linux FUD. Microsoft only wishes someone actually cared about this site.

  11. NoDough said,

    September 28, 2007 at 3:03 pm

    Gravatar

    Lawrence,

    In my opinion, Roy and Duncan are using numbers in a dishonest way to support their anti-Novell bias. My grandmother used to say, “Figures never lie. But liars often figure.”

    In Duncan’s post he attempts to debunk my debunking by pointing out that my calculations are linear while the percentage increases are non-linear. He has a point, but it does not validate Roy’s original hypothesis (which, by the way, is also linear.)

    Here’s the original hypothesis.
    Base facts
    Q1 2006 – Q1 2007 saw 659% growth.
    Q2 2006 – Q2 2007 saw 114% growth.
    Q3 2006 – Q3 2007 saw 95% growth.
    Extrapolation
    Decline in growth will continue at the current rate, therefore…
    Q4 2006 – Q4 2007 will see ~ 0% growth.
    Q1 2007 – A1 2008 will see ~ -100% growth.

    Looks very logical, doesn’t it? But it’s FUD.

    The first problem with these numbers is, as I pointed out in my first post, each percentage of growth number has a different base from which to begin. If you have one customer, 600% growth is relatively easy to achieve and not very impressive. (Wow! A whole six customer increase!) However, if you have 100,000 customers then 100% growth is quite impressive indeed. So, without the actual base figures, the percentages mean nothing.

    In order to do a true trend analysis, you would have to have the actual growth figures, not percentages.

    Mind you, I am no defender of the MS/Novell deal. Frankly, I couldn’t care less if Roy and Duncan want to criticize them for making the deal. However, when they start manipulating numbers to manufacture FUD just to make their point… well, then I have a problem with it.

  12. Roy Schestowitz said,

    September 28, 2007 at 4:37 pm

    Gravatar

    @Duncan: you beat me to it with the explanation. I was just about to respond in the same way after I had read NoDough interpretation. Coupons don’t last forever, and it shows.

    @Harsh Chaudhry: the Slashdot story is here:
    http://linux.slashdot.org/article.pl?sid=07/09/27/1239251

  13. Stu said,

    September 28, 2007 at 9:16 pm

    Gravatar

    Let’s all boycott Novell (owns more patents than any other linux vendor), and when they lose enough money, they will have a patent firesale to try to stay afloat. The high bidder on all those patents will of course be, Microsoft. Absolutely brilliant.

  14. Roy Schestowitz said,

    September 28, 2007 at 9:45 pm

    Gravatar

    Stu, don’t forget their ownership of “UNIX” and never underestimate the scale of acquisitions Microsoft can get away with. Your argument still relies on this far-fetched scenario.

  15. Open Honesty said,

    April 24, 2008 at 3:50 pm

    Gravatar

    The one thing you have to remember is that open source leads to new things and concepts. Just ask Astrum Inc. http://www.astruminc.com what astrum did was to develop the first SUSE based Solution Stack using Novell technology. What they produced and what the independent testing reported was a beast of an appliance and Astrum published the reports on it’s website was the first ever Identity based encryption system that can target users who have access to critical data or compliant data and harden policies that are compliance mandated and lock them down in the appliance and integrate a eDirectory based HSM encryption card and develop a key management system that never exposes any part of the key. Hence this makes it the only solution to meet the up coming FIPS 3 compliance changes and make this appliance very unique in the market space.
    The problem:
    The concept was presented to Novell under NDA two years ago in 2006 and promises where made protection agreements signed and software groups worked with to ensure no competitive issues may arise. They did not! So Astrum shared with Novell executives the plan that at the end of the day would map 8 of the PCI requirements to the appliance and all Novell products could sit on top. What happened is Astrum became the first ever to develop and Novell based solution stack using SUSE enterprise in a appliance only to have it stolen from them!.. Hence the following links.
    http://sev.prnewswire.com/computer-electronics/20080416/AQW05816042008-1.html
    http://www.novell.com/linux2/appliance/
    Hence, who would expose there concept to a company who will steal it if it has enough market impact and that has ability to change a business direction for a major software company like Astrum did for Novell. Prior to 07 Novell couldn’t spell compliance much less understand an appliance?
    Develop for Novell on SUSE or jeOS, NO WAY!!!

  16. mass-carpone said,

    April 25, 2008 at 1:48 am

    Gravatar

    Sources?

    As I read it you only repeat your theoretical argument as to why Novell’s Linux businnes SHOULDN’T have grown.

    Where is anything new, where are sources that support you claim?

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