Novell finding its way back in competitive, fast-paced tech business

Published: Monday, May 9 2011 4:18 p.m. MDT

Novell in Provo has laid off several hundred employees Monday, May 2, 2011.

Scott G. Winterton, Scott G. Winterton, Deseret News

PROVO — In 1979, a startup firm called Novell Inc. began operations in Utah County and was instrumental in making the Utah Valley a focus for technology and software development.

The company's technology contributed to the emergence of local area networks, which displaced the dominant mainframe computing model of that era. At one time, Novell was valued at around $8 billion, and was the world's second-largest software company behind Microsoft.

But in the fast-paced, ever-changing world of technology, companies that fail to innovate and stay ahead of competitors will soon find themselves irrelevant, victims of the same forces that propelled them to the top.

At Novell's peak in the ’90s, 70 percent of the world's computer networks were run with its system management software. More recently, the company's fortunes have faded under pressure from Microsoft and other Web-based competitors — prompting Novell to try to reinvent itself as a distributor of the free Linux operating system.

Just last week, Novell announced the layoff of hundreds of employees from its once bustling Provo campus, only days after the company was sold. The Attachmate Group, based in Houston, announced that it had completed a $2.2 billion acquisition of Novell and the company's headquarters was being relocated back to Utah County from Waltham, Mass. — where it had moved in 2004.

While Novell would not offer specific numbers, an employee said approximately 800 people companywide would lose their jobs — with most of those reductions in Provo.

In 2000, Novell employed more than 6,000 workers worldwide, including 2,000 in Utah County. Today, the number has fallen dramatically to approximately 3,000 around the globe, though the company would not specify how many Utah workers would remain following the recent layoffs.

"Out of respect for those affected, we are not disclosing specific figures on layoffs," said Ian Bruce, Novell director or public relations in an email. "The restructuring affected offices worldwide, not just Utah."

Inevitably with these kinds of complex acquisitions, there will be some workforce reductions, he added.

As a result of the merger, Novell stock stopped trading publicly and the company was selling patents to Microsoft consortium CPTN Holdings LLC for $450 million.

Despite the layoffs, Attachmate and Novell are putting a positive spin on the layoffs, announcing that Novell would be coming "back to its roots and moving the headquarters back to Provo and back to Utah."

"This will become the center for the Novell business going forward," Bruce said.

Utah will again be the center for Novell operations, including management, marketing, engineering and research and development, Bruce said.

He acknowledged that while the job losses are "regrettable, we are confident that as part of The Attachmate Group, Novell will continue to innovate and prosper."

A news release stated that Attachmate planned to operate Novell as two separate business units under the Novell and SUSE brand names.

"We think that The Attachmate Group’s acquisition of Novell provides a unique opportunity to further deliver significant value to customers and partners worldwide through innovative solutions, quality products, and exceptional service," Bruce said. "At this scale, we will be able to bring to bear richer solutions, more talent and expertise, a larger product portfolio, and an expanded field presence to customers and partners worldwide."

A former top executive with Novell said that the once great software firm lost its competitive edge because it was unable to match the marketing savvy of leaders like Microsoft.

David Bradford, a senior vice president and general council for Novell from 1985 to 2000, said his company did not make the adjustments necessary to keep up with other top software firms. In 1985, every company in the world needed what Novell sold, he said.

"What the company probably should have done is to remain focused on its core success with the network operating system," he said. "Continue to optimize that and continue to do things … in the open source market to be more successful."

Bradford also said Novell was slow to "capture and understand better" the importance of the Internet, which was another contributor to the company's inability to stay competitive.

Still, he said he has "high hopes" for the future of Novell in the wake of its acquisition by The Attachmate Group.

"They've got to find the right niches to go after to be successful and to leverage their core strengths and move into adjacent, (broad) and fast-growing markets," Bradford said. "That's the challenge that Novell (and) Attachmate have in the future." 

E-mail: jlee@desnews.com

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