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Noorda and Novell Ray NoordaIMG_2431

 

 

Ray Noorda was the CEO of Novell. He had bought into failing Novell Data System and had turned it around. He ditched all the proprietary hardware and software and focused on Network Operating System software and  file server software on standard PC hardware.  He shipped complete systems by OEMing hardware for servers and NIC (network boards) from third parties. Under his leadership Novell grew rapidly and emerged as the market leader.

Starting at roughly the same point in 1984, Novell by 1989 had gone three times as far as Excelan as far as revenue was concerned. It was even farther ahead in profits. Even though, I was very proud of what we had achieved at Excelan, it all paled when compared to Novel. This was very educational for me as I was very contemptuous of Novell’s low spending on R&D, only 3% of the revenue; Excelan was spending almost 20% on R&D . Excelan was very proud of its technology prowess. Excelan could network PCs, both Apple and IBM variety to UNIX machines of all types; it could also connect them to DEC minicomputers and IBM mainframes. All this using industry standards of TCP and Ethernet. Excelan was seen by its customers as a savior as they had been buying all sorts of computers for various jobs. Novel, however, was a big innovator in Sales and Marketing. Novell practically invented the tiered VAR channel (Authorized, Gold and Platinum). It developed a third party product certification program (Novell Labs); it developed an education program to train and certify Network Engineers (CNEs); it had its own trade show (Network World) and its own trade magazine (LAN Times). Novell did not give a damn about standards; it just focused on file sharing between the IBM PCs using a file servers using a proprietary protocols. As PC’s sales soared, so did the sales of NetWare.

Novell acquired Excelan in 1989. After the merger I joined Novell board and worked as EVP of Novell and its CTO. Right after the merger, Novell decided to get out of the hardware business all together. With a big infusion of technology from Excelan, Novell very quickly was able to position itself as an enterprise networking solution with its Netware 3.11; which provided file sharing between PCs, Mackintoshes, UNIX machines, DEC minicomputers and IBM mainframes. This was Nirvana for enterprises. By 1991, Novell sales, profits and stock prices were skyrocketing. Novell stock grew 10 fold in two years. Excelan shareholders and employees had done well. Merger was seen as made in heaven for them and I was seen as a genius by one and all.

I championed acquisition of UNIX from ATT and to sell binaries on the Standard hardware through Novell channels. Novell did acquire UNIX but company had always seen UNIX as an enemy. Even when it owned UNIX, it was not able to overcome its visceral hatred of the UNIX as UNIX effort was not Utah based. Ray was of two mind, he liked the idea of UNIX being commoditized but bowed to his NetWare troops.

At this juncture Novell toyed with an idea of merger with Microsoft. Several meetings took place and a deal was agreed to also. Microsoft’s acquisition of FoxPro database without talking to Ray first put a kibosh to it. Ray had always hated Bill Gates; used to call him Pearly Gates. But after merger was called off, this hatred only grew. Ray acquired DR DOS to go after DOS franchise, just when Microsoft was successfully transitioning to Windows. He also tried to merge with Lotus; acquired; Wordperfect and Quatropro from Borland to come up with alternate bundle to Microsoft’s Office. All this defocused Novell, which had done well being being a tightly focused company.

Meanwhile NetWare team decided to upgrade to NetWare 4 without being backward compatible and without offering the broad connectivity that NetWare 3.11 had offered. NetWare 4 was a big flop. Novell went into a steady decline. It hired Bob Frankenberg from HP as its new CEO to replace Noorda. Bob was not up to the job. I left soon after that.

I learnt many lessons during my six years at Novell. First and foremost was about the value of focus, especially in R & D. My 20% investment in R & D exposed the weakness; Excelan was getting only $5 of revenue for every dollar it put in to R &D. A whole lot of unproductive engineering effort! Novell was getting $33 for every dollar it put in R & D. Second lesson was that a business is never too big to fail. A CEO with two minds sends very destructive messages to the organization as it starts an internal war.

Ray Noorda was a brilliant but a flawed man. He was seen by his Utah minions as a traitor for expanding out of Utah and buying UNIX and rest of us saw him way over his head when it really mattered.

 

Nadir Godrej comes to SCID (Stanford Center for International Development) India conference every year. As a matter of fact he co-sponsors the conference along with me and Naushad Forbes of Forbes Marshall. It is always fun to have him present his thoughts in verse. As a matter of fact he is a prolific poet. Look at http://www.nadirgodrej.com/ for his works.

Here is a sample:

http://www.nadirgodrej.com/ThemeDetails.aspx?tags=India+(Politics%2fEconomics)

India’s Knowledge Economy

Though India now is on the rise
It was not always so.
Our policies then were unwise
Our growth was very slow.

The Hindu rate it was then called,
A very narrow range.
The liberals were most appalled.
For years there was no change.

Our population grew so fast
That jobs were hard to find.
Of all the students that had passed
Large numbers were assigned

To jobs in other distant lands.
Our nation saw no gain.
And we bemoaned the broken strands
And coined the term brain drain.

When Rajiv Gandhi loosened things
The economy then rose.
But Bofors came and clipped his wings
And we were filled with woes.

And finally our gold was hocked
So money could be loaned.
The nation was extremely shocked,
The people moaned and groaned.

But IMF and World Bank could
Do what no Indian dared,
Cut all the socialist dead wood.
At first, we were quite scared.

As prisoners we celebrated
The loss of chains and balls
And yet perversely we still hated
The fall of protective walls.

The licences had been a pain,
We wanted them to go.
But prison had shown us some gain-
The competition’s low!

The walls came tumbling nonetheless,
We learnt how to compete.
At first it seemed a total mess
But soon we learnt to beat

Our rivals anywhere on earth.
Our quality now soared.
We cut the fat, reduced our girth,
Our fitness was restored.

Brazil relied on its vast land.
Our holdings were quite small.
In agriculture we can’t stand,
Against them we would fall
Now Russia has its ores and oil,

But India has much less.
The Chinese know they have to toil
Our labour law’s a mess.

Our infrastructure’s very weak
Shanghai is way ahead.
But telecom is not so bleak,
It can be safely said.

The hand we’re dealt is not so strong,
But still, has trumps and an ace.
Though there are cards, for which we long,
We still can join the race.

And now’s the time to gratefully thank

The men who made us strong.
Upon their foresight we now bank
And will do so for long.

Jawaharlal Nehru’s socialism
Has been the cause of slumps.
But he saved us from cataclysm
By providing us with trumps.

His vision was of a proud nation
Lead by technology.
He laid great store on education
And started IIT.

Now IIT and IIM

Have earned themselves a name
And we are justly proud of them.
They are trumps in the game.

Though many others made the case
Macaulay wrote the minute
And English proved to be our ace
Our brightest minds think in it.

For all these years, we were left out
But now the earth is flat.
On bumpy fields it was a rout
On a level field we bat.

In IT we are in the lead

We never seem to miss.
Large companies all seem to need
Wipro or Infosys.

Now some observers seem to think
That even TCS
Could someday be at the brink
In a deadly game of chess.

Now foreign firms can play the game
And hire all our brains,
They have deep pockets and a name
And surely they’ll make gains.

But Indian firms can soon strike back

And buy their rivals out.
Of cash reserves, they have no lack
Their market value’s stout.

In BPO as you all know,
India leads the way.
The industry can only grow
As more firms join the fray.

Now IT needs trained engineers,
Which are in short supply.
When other graduates need careers,
It’s BPO they try.

Call Centres were all you could see

In the early days.
Now accounting, radiology
Are amongst the ways.

But of course there are no limits.
The higher up you go
The better we can pit our wits.
The benefits just grow.

The bandwidth costs are coming down
Large files can be transmitted
To every little Indian town
Processed and resubmitted.

But Knowledge is more than IT

Or even BPO.
Our Generic Pharma industry
Puts on the greatest show.

And drug discovery will grow,
As will our Biotech.
And contract R&D will flow.
Some just collect a cheque,

While others go and buy abroad
And spread their wings world wide.
Now many more can well afford
This route that’s true and tried.

Our Ayurveda could be used

To cure the world at large.

With modern science it could be fused
To lead another charge.

Now China’s labour cost is low.
On cost we can’t compete.
But still our industry can grow
We need some other feat.

Our engineers are very good
They help to optimize.
And using them we surely could
Win the industrial prize.

In auto parts we can compete,
In chemicals as well.
In fact in fields which are replete
With knowledge we can sell.

Our private sector’s very large,
In China it’s the State.
Our companies will lead the charge
And storm the global gate.

In services we do excel
But manufacturing too,
Wherever knowledge can propel,
Is something we can do.

So knowledge is the solid base
On which we’ll have to build.
And if that is indeed the case,
The bank must be refilled.

Our institutes are very good
But the world is on the move.
It has to be well understood
They must always improve.

In many parts of our great nation
The teachers have decamped.
Our primary education
Just has to be revamped.

In education we must invest
And build our knowledge base.
And if we pass this final test
We will have won the race.