Gartner: Attachmate's Acquisition of Novell
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www.gartner.com Gartner: Attachmate’s acquisition of Novell – impact for Novell customers by Earl Perkins, research vice-president, Gartner On 22 November 2010, Attachmate, a privately held software company based in Houston, announced that it had signed a definitive agreement to acquire the Waltham, Massachusetts-based technology provider Novell. The agreement calls for Attachmate to pay $6.10 in cash for all outstanding Novell shares, in a transaction valued at the time of the announcement at about $2.2bn. The transaction, which is subject to shareholder approval and customary closing conditions, is expected to be completed in the first quarter of 2011. The announcement marks an end to a company whose roots can be traced back to 1979. Novell gained a reputation in its early years as a competitor to Microsoft with the NetWare operating system, but that reputation did not last. While continuing to show innovation and technical leadership in several areas, Novell never regained the leadership and focus shown in earlier years against today’s formidable competitors. Attachmate’s base Parent company Attachmate is a privately held software company owned by an investment group made up of Francisco Partners, Golden Gate Capital, and Thoma Bravo, veterans to the IT infrastructure and security market. It manages two acquired brands as business units: Attachmate (emulation, legacy modernisation, managed file transfer and enterprise fraud management) and NetIQ (systems and security management solutions). With profit rather than growth as the primary goal, Attachmate has purchased companies with mature technology, reorganising such companies to remove overhead and establishing support and maintenance agreements that leverage product maturity. As the newest company in the Attachmate portfolio, Novell will be two business units: SUSE Linux Enterprise (ie Open Platform Solutions) and everything else Novell. This will result in a restructuring of products in the Novell offering, potentially combining elements of its datacentre and endpoint solutions under the SUSE brand. It will also result in a restructuring of maintenance and support pricing to be more consistent with past Attachmate acquisitions. These moves will change marketing and development priorities that users will learn more of after the acquisition closes. Novell’s datacentre solutions have at their heart the PlateSpin acquisition for virtualisation and workload management, as well as its SUSE Linux Enterprise Server solution. The company leads in the market for Linux on zSeries mainframes, and PlateSpin was recognised at the time of acquisition as a leader in virtualisation migration and capacity planning. Novell also acquired business service management vendor Managed Objects to focus on datacentre needs in that area. While not a stranger to the datacentre, these are new areas for Attachmate. Keeping key people in these areas during the acquisition will be a challenge, www.gartner.com since these products are part of a growing, dynamic market for enterprise Novell identity datacentres and cloud computing. Customers can expect Attachmate to focus on evolving and expanding the market opportunity for these solutions within and access the boundaries of its current R&D budget. management (IAM) Novell’s “intelligent workload management” initiative aimed at combining customers can different solutions from Novell’s portfolio to attract datacentre clients is likely expect Attachmate to continue as a marketing opportunity for Attachmate, though the technical coordination required between SUSE and Novell product sets to realise the to focus on evolving concept will be at risk once Attachmate splits the company into two divisions. and expanding the Novell identity and access management (IAM) customers can expect market opportunity Attachmate to focus on evolving and expanding the market opportunity for its core for its core products; future partnerships like Aveksa and feature sets that provide more advanced functionality may occur, but will be subordinate to the products excellent and established provisioning and Web access management products. Novell’s end-user computing solutions consist primarily of the collaboration solution GroupWise and ZENworks endpoint management. Both are mature products and are likely to receive particular attention by Attachmate as stable platforms with relatively large installed customer bases. Customers of GroupWise and ZENworks should expect stability in the products with minor feature growth, though regular upgrades to support interoperability will continue. With GroupWise, Attachmate will be under increasing pressure from Microsoft and IBM, as well as service-based providers like Google, and, as a result, it will continue to decline in market share. Although support will continue, GroupWise customers should consider long-term migration alternatives. More advanced projects in this area, such as Novell’s Vibe for enterprise team collaboration and its cloud services, represent advanced, early-market (albeit innovative) solutions, and are likely to be sold by Attachmate at some point. ZENworks customers can expect continued support with some feature updates and upgrades. ZENworks shares many of the same customers as Attachmate’s NetIQ products — some cooperation in new feature development is likely and will be valuable for NetIQ, Novell and SUSE customers. Future of alliances Throughout 2010, Novell leadership continued to develop partnerships with key industry players, such as SAP for IAM integration, SUSE for support and integration experience, Verizon for cloud-based IAM as a service, and VMware for Linux appliances. These and other alliances underscored Novell’s desire to remain relevant and competitive in the solution areas it served. Attachmate’s acquisition will not have an immediate effect on those relationships, so customers that are part of such alliances have no short-term issues to address. Novell has a virtualisation strategy based on the “perfect guest” (as opposed to strategically positioning a hypervisor [Xen and/or KVM] as the go-to- virtualisation strategy for datacentre Linux deployments). This strategy, along with Microsoft interoperability, may get a review and new strategic direction under new management. www.gartner.com While the technical expertise and elegance of many Novell solutions will For new Novell be preserved, industry-leading innovation is not a hallmark of acquisitions to date for Attachmate. Product and service support will continue across the customers, brand to encourage continued customer loyalty, but it will now be in direct ownership by proportion to a more disciplined short-term financial outlook for return on investment for that innovation. Attachmate means a more stable and Future for new customers For new Novell customers, ownership by Attachmate means a more stable focused future for and focused future for most of the Novell portfolio. Where there are most of the Novell exceptions, they are due primarily to the early market nature of the products instead of how significant competitive market pressure is marginalising that portfolio product — a most notable example of this is GroupWise. For the remaining products, Attachmate sees little overlap in function with its existing portfolio, and, therefore, will position the Novell and SUSE solutions for support and maintenance pricing consistent with a profit-driven strategy in a mature market. By the same token, new Novell customers must expect significant management changes in the Novell and SUSE organisations. As a privately held software company, Attachmate Corporation’s focus will initially be on extracting costs from its new acquisition, and will focus early energy in that effort. Innovation, new market opportunities and challenges, and the drive to integrate and orchestrate a SUSE Linux datacentre strategy of interest to CIOs will come later, as will competitive innovation in the identity, security and endpoint protection markets. Attachmate’s history is characterised by fostering mature, stable platforms, not necessarily leading the charge in new, leading-edge technology markets. Future customers must balance these views of Attachmate’s new acquisition to make an informed decision. This report is based on independent technology advisory research from Gartner, Inc. Gartner delivers the technology-related insight necessary for IT leaders to make the right decisions every day.