Several years ago I was at Novell while the company struggled with a difficult dilemma: How to grow revenues with its then-primary cash cow (NetWare) was declining at an 11% annual clip, a rate that was accelerating. The company responded to this decline by acquiring SUSE as a way to hold down NetWare losses, porting NetWare services to SUSE Linux (Open Enterprise Server), and shift to the Linux growth engine to replace NetWare.
The strategy has worked, though not as fast as Novell would have liked. That is due, in part, to waiting until the last minute to make the switch. (It's difficult to cannibalize oneself, so I'm not being critical when I say that.) It's also in part because open source was still in its commercial infancy when Novell made the move, making it harder to monetize the acquisition.
Even so, I believe that Novell's SUSE acquisition points the way to how proprietary software companies can hedge their current strategies with a bet on open source's future:… Read more