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02.11.09

Large-Scale Novell Layoffs Imminent

Posted in Finance, Microsoft, Novell, Ron Hovsepian at 11:48 am by Dr. Roy Schestowitz

RON HOVSEPIAN never had the chance to know Microsoft for as long as Ray Noodra knew them. It’s not entirely clear though what Jack Messman would have done, either [1, 2]. But in any event, Hovsepian’s strategy appears to be failing because we hear that massive layoffs are coming to Novell very shortly (probably next week or maybe the week after). This was said to us privately by a source that can be relied upon. None of this is particularly surprising given recent posts like:

According to our source, who heard it ‘first hand’, the figure to be announced may be close to the figure in that last link, i.e. around 25% of the workforce. Gartner made a prediction of 100 employees (~2.5%), which is quite unrealistic amidst the economical crises. Besides, the Gartner Group is highly corruptible [1, 2, 3, 4] and therefore very wrong. They probably said “100 employees” simply because the word had leaked and whilst the real figure could not be divulged (maybe still a subject of discussion), the big announcement was deferred. According to Novell’s latest financial report, layoffs of the scale an order of magnitude higher would be needed to stop the company’s quarterly losses, taking into account some rough calculations.

“This may be high time that people pressure Novell’s management and protest against the patent deal which they must get out of.”We happen to know that Novell staff thinks that Novell should have never signed the deal with Microsoft. Quietly, some staff was fully against it, but opposition came in different forms.

That “this week is going to be big at Novell” is we’ve heard as “announcements will be made regarding layoffs. Most of the employers are not aware of it, [as the] only thing they do is sit behind their desk [...] They are like zombies working to get the standard dollars in their pockets.”

This may be high time that people pressure Novell’s management and protest against the patent deal which they must get out of. Novell is in a very bad position, based on expert polls.

Microsoft is not interested in rescuing Novell. It’s interested in exploiting Novell and obviously it’s easier to exploit that who is feeble, confused, scared, vulnerable and desperate.

Ron Hovsepian begs Ballmer

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20 Comments

  1. Ian said,

    February 11, 2009 at 12:41 pm

    Gravatar

    It’s a shame if 25% of the workforce got dumped. However, are you insinuating that the deal with Microsoft was the catalyst for what could possibly happen with the jobs or the sole reason?

  2. Roy Schestowitz said,

    February 11, 2009 at 1:12 pm

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    It was a miserable and redundant act of desperation. It was misguided. Novell has caused GNU/Linux a lot of damage in the past 2+ years and had it actually helped us fight against OOXML, XAML and .NET (yes, we should make Java stronger), we would all be better off.

    Additionally, bear in mind that it’s Novell which catalysed all those patent deals, public patent threats, extortions, etc. Microsoft used Novell to justify this, to broadcast the message, to sell patent vouchers, and to scare customers in general.

  3. Ian said,

    February 11, 2009 at 1:55 pm

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    I didn’t ask if it was an act of desperation. I didn’t ask if it caused damage to Linux. I didn’t ask if they caused whatever you think they caused as far as patents go. I also didn’t ask whether or not Microsoft uses Novell to justify whatever.

    Let’s try again; “are you insinuating that the deal with Microsoft was the catalyst for what could possibly happen with the jobs or the sole reason? “

  4. Roy Schestowitz said,

    February 11, 2009 at 1:59 pm

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    No, but it didn’t help either.

    A better route, as suggested by many including myself at the time, was a joining of forces with GNU/Linux vendors, not with Microsoft.

    In case someone wants to make suggestions: RHovsepian@novell.com

  5. Ian said,

    February 11, 2009 at 2:07 pm

    Gravatar

    No, but it didn’t help either.

    I buy that. My point is, however, I don’t understand why you felt the need to try to wedge statements about the Microsoft agreement in your post about possible Novell job loses if it’s not the major reason for those loses.

    Regardless of what anyone thinks of the deal, I personally believe it’s fairly irrelevant to Novell’s business as a whole and as an extension of that, internal job cuts.

  6. Ian said,

    February 11, 2009 at 2:08 pm

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    Losses, not loses. I speel gud.

  7. Roy Schestowitz said,

    February 11, 2009 at 2:16 pm

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    Novell was guarding business that Microsoft was ‘stealing’ from it (GroupWise, Netware, etc) and the deal prevented Novell from competing against Microsoft. Just watch how soft (or Soft) Novell has been since the deal was signed. it’s not just passiveness either, they actually helped (and still help) Microsoft impose its yet-unproven de facto standards upon the industry.

    Microsoft did to Novell what it did to Corel.

  8. Ian said,

    February 11, 2009 at 3:08 pm

    Gravatar

    Novell’s core businesses have been taking a beating since NT 4.0 was released. Novell’s losses in their traditionally strong market segments are not new and certainly not as a result of their deal with Microsoft. Conversely, Novell has not stopped developing their core products as a result of the Microsoft deal. Since the deal with Microsoft, Novell has released a major revision for OES, GroupWise, and Zenworks(ZCM). To say they have been prevented from competing due to the deal is incorrect at worst, misguided at best.

    As far as Novell’s bottom line is concerned, I highly doubt all of the issues you might have with it amount to much revenue, gained or lost. Mono doesn’t make money for Novell, Moonlight doesn’t make money for Novell, OOXML doesn’t make money for Novell.

    Novell’s core business problems, from an outsider’s(mine) prospective anyway, are not entirely technical. It seems to me that they can’t get certain people to buy into why they should run Novell’s software over Microsoft’s software, or to put it another way, they’re not showing the value added over Microsoft’s offerings.

  9. Roy Schestowitz said,

    February 11, 2009 at 3:26 pm

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    Novell’s core businesses have been taking a beating since NT 4.0 was released. Novell’s losses in their traditionally strong market segments are not new and certainly not as a result of their deal with Microsoft.

    Agreed to an extent. On the marketing front, Novell has refrained from disparaging Microsoft.

    Conversely, Novell has not stopped developing their core products as a result of the Microsoft deal. Since the deal with Microsoft, Novell has released a major revision for OES, GroupWise, and Zenworks(ZCM). To say they have been prevented from competing due to the deal is incorrect at worst, misguided at best.

    These are not the areas I was referring to as far as competition abatement goes.

    As far as Novell’s bottom line is concerned, I highly doubt all of the issues you might have with it amount to much revenue, gained or lost. Mono doesn’t make money for Novell, Moonlight doesn’t make money for Novell, OOXML doesn’t make money for Novell.

    It’s not about revenue, it’s about control. Remember why Microsoft let people ‘steal’ its software for many years. There is also the aspect of rewards from a strategic ally.

  10. Roy Bixler said,

    February 11, 2009 at 3:57 pm

    Gravatar

    @Ian

    Novell’s core business problems, from an outsider’s(mine) prospective anyway, are not entirely technical. It seems to me that they can’t get certain people to buy into why they should run Novell’s software over Microsoft’s software, or to put it another way, they’re not showing the value added over Microsoft’s offerings.

    To be fair to Novell, that’s largely not their fault. Microsoft leveraged their position as the dominant OS vendor to give their own product teams preferential access to the necessary APIs. As a result, Microsoft’s products always looked better since they were better integrated to the operating system. I have heard numerous stories over the years of Novell’s battles to get API information, which was either not forthcoming or only made available to them at a late date. With this in mind, it’s especially ironic that Novell is cooperating to such a large extent with the company that they should still consider as their biggest competitor, Microsoft.

    @Roy S.

    It’s not about revenue, it’s about control. Remember why Microsoft let people ’steal’ its software for many years. There is also the aspect of rewards from a strategic ally.

    I understand the first two sentences but I don’t see what you mean by the 3rd sentence. Could you elaborate on it?

  11. Roy Schestowitz said,

    February 11, 2009 at 4:02 pm

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    Microsoft fuels Novell to spread Microsoft APIs/formats/mindshare.

  12. Ian said,

    February 11, 2009 at 4:08 pm

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    Agreed to an extent. On the marketing front, Novell has refrained from disparaging Microsoft.

    Novell marketing? Never heard of it.

    These are not the areas I was referring to as far as competition abatement goes.

    I understand, but they are the main cogs to competing with Microsoft in the data center/server room, which is where Novell’s business is traditionally staked.

    It’s not about revenue, it’s about control. Remember why Microsoft let people ’steal’ its software for many years. There is also the aspect of rewards from a strategic ally.

    When it comes to cutting jobs, which was the premise of your original post, revenue absolutely matters. The loss of revenue can generally equate to a deterioration of the bottom line. When that happens, jobs go.

    Is control an issue? Maybe. But that isn’t directly relevant to the issue of job losses. The unbalanced loss of traditional customers(netware, groupwise, whatever) compared to the influx of new customers(linux, OES Linux, whatever) in conjunction with the general state of the economy is by far the bigger issue to Novell than OOXML or Mono. It’s a hard time for a company to try and change their identity. It’s even harder when that company seems to rely on guerrilla marketing.

  13. Roy Schestowitz said,

    February 11, 2009 at 4:12 pm

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    Regarding control, Novell hands over control to Microsoft in exchange for cash injections like that $100m boost from 2008.

  14. Chrysantine said,

    February 11, 2009 at 4:17 pm

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    No Roy, Novell hasn’t caused damage to FOSS – you have.

    Not to mention the permanent damage you’ve managed to bring on to your own reputation. Incidentally have fun trying to get a job when you graduate – people tend to Google about their applicants nowadays and sociopaths tend not to score so highly in the recruiment evaluations.

  15. Ian said,

    February 11, 2009 at 4:20 pm

    Gravatar

    RoyB,

    To be fair to Novell, that’s largely not their fault. Microsoft leveraged their position as the dominant OS vendor to give their own product teams preferential access to the necessary APIs. As a result, Microsoft’s products always looked better since they were better integrated to the operating system. I have heard numerous stories over the years of Novell’s battles to get API information, which was either not forthcoming or only made available to them at a late date. With this in mind, it’s especially ironic that Novell is cooperating to such a large extent with the company that they should still consider as their biggest competitor, Microsoft.

    I’m not entirely sure to what extent that damaged Novell’s ability to compete. It certainly didn’t help. But, Novell is responsible for it’s own products. From a technical perspective, their offerings in the server, groupware, management, and identity manage spaces can compete with anything Microsoft has on many levels. So I don’t completely buy the API issue. Ultimately, I think Novell’s lack of visibility in the market is a large issue. In addition to that, Novell’s own lack of proper APIs for GroupWise which limits third party integration is a large problem. Groupware integration is attractive to companies. Exchange apparently excels(no pun) in third party integrations. Exhange means windows servers and active directory. Exchange and Windows and Active Directory means some manager or director will ask, “why are we paying for Microsoft and Novell licensing, can’t we cut something?”. You can see where I’m going.

    Again, the API issue doesn’t help, but I don’t think it’s as bad as other factors.

  16. Ian said,

    February 11, 2009 at 4:22 pm

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    Carp. The first paragraph above should be quoted. How do you quote here?

    Regarding control, Novell hands over control to Microsoft in exchange for cash injections like that $100m boost from 2008.

    Come again? Hands control over to what?

  17. Roy Schestowitz said,

    February 11, 2009 at 4:24 pm

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    He who controls the API…

  18. mike said,

    February 11, 2009 at 4:51 pm

    Gravatar

    The MS deal was more of a symptom of their problems, not the cause. But it doesn’t take much of a leap to speculate that they’re going to be worse off in the long term. It might be wrong, but it isn’t an unreasonable opinion.

    But back to now, the economy is fucked – everyone will lay people off. The weak will lay more off. Novell are not in the strong position they once were. But they haven’t been for ages either.

    The linux strategy was confusing for their long-time customers, who by definition were pretty conservative technology users – even if by their measure they were using a good product. Then just when they were getting into the linuxy swing of things they switched tack again, realising they weren’t making enough money for their shareholders, and rather than treating it as a long term investment, or because they couldn’t afford it, went for short term gains. The MS deal was one of those.

    That must have had a retardant effect on their building linux momentum, it just had to have. Europe, where suse is big, has a particularly healthy distrust of anything MS (and us companies in general, i..e novell) , so you can’t say that the deal didn’t have a material affect on some potential customers. Whether they gained additional revenue through other customers who ill-considered the secret deal a value-added bonus is up for debate (simply as it is secret, how can they know?), and I would suggest it wouldn’t be as much as they’d have had anyway. Even if in short-term monetary terms they’re in front.

    The main differentiator they have is ‘interoperability’. But who seriously buys that? – the single most important application for windows interoperability is Samba, and that had nothing whatsoever to do with their deal. And even mid-level managers can work that out. And the promise not to sue customers is worthless and really quite offensive anywhere where software patents are illegal – and that’s a lot of places.

    It’s a real pity that their employees will suffer, and indeed resources allocated to the free software world may suffer, whatever the root cause of the problem. The economy is definitely to blame, but poor management never helps either (how are redhat doing eh?).

  19. Mark W said,

    April 24, 2009 at 11:24 am

    Gravatar

    How are those massive layoffs coming along? Must be any minute now.

    Novell agreed not to compete with Microsoft under the deal?

    Then shhhh, don’t tell Microsoft about the GroupWise competitive upgrade promotion running for the rest of the year.

    If you’re anti-FUD, it would help if you practiced what you preach.

    Roy Schestowitz Reply:

    My source was verifiable and close to the company. Novell is just buying more time (deferral) and Novell’s CFO admitted there would be cuts.

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