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Posted by Christopher Voce on November 22, 2010
According to press releases here and here, Attachmate is acquiring Novell in a US $2.2 billion transaction. As an infrastructure and operations or security professional with investments in either company, when you see a headline like this, you'll wonder, "What does that mean to me?" Understanding the implications of acquisitions is a task that's getting harder and harder, particularly when the two players each have broad product portfolios with some overlap. I've gathered feedback and worked with my colleagues Eveline Oehrlich, Jean-Pierre Garbani, John Kindervag, Glenn O’Donnell, Jonathan Penn, and Galen Schreck to synthesize and discuss what this means to customers. Here's our take:
First, Novell brings with it about $1 billion in cash, so the net purchase price is roughly $1.2 billion, not $2.2 billion. Combine that with the ~$450 million from CPTN Holdings LLC, a consortium of tech companies organized by Microsoft, and there's far fewer actual dollars in play than it appears. Attachmate states that it intends to keep Novell and SUSE as two separate operating units. Forrester believes that in the long term, SUSE might be attractive to a number of vendors. IBM and HP are likely suitors, but we wouldn't rule out a dark horse like Cisco or Oracle. For more on this, check out Rich Fichera's blog post.
Microsoft's part in this is interesting, as well. It's approaching the end of its current interoperability partnership deal in 2011. Microsoft had some great insight into both technically (and litigiously) valuable elements as a result of the ongoing partnership. As of now, there isn't a lot of information about what was exchanged in this part of the deal — but it will be interesting to follow where that leads.
In the collaboration space, though Novell has been steadily improving GroupWise, it's faced a juggernaut in Microsoft's broader collaboration portfolio including Exchange, SharePoint, and Office — and that's led to a long-term erosion of market share. In addition, as vendors like Microsoft and IBM have transitioned their offerings to the cloud along with Google, Novell hasn't made significant progress.
So, the $2 billion question (or the ~$750 million question): Is Attachmate, with Thomas Bravo behind it, assembling a management powerhouse or acquiring piece parts and becoming a IT solution strip mall? Judging by how it's worked with NetIQ to date, it feels like the latter — but we'd love to see it otherwise. With NetIQ, the company has proven to be a decent steward of the technology but has not gone through any technology revolutions. There are good examples of where stronger collaboration could be beneficial. Managed Objects, which was one of the Novell acquisitions and transitioned into Novell Operations Manager, is potentially a compliment to NetIQ. Thomas Bravo also acquired LANDesk — a service desk solution that was owned by Avocent in the past. Novell has some more compelling pieces on the management side, including solutions targeted at virtualization management, asset management, and data center management, among others. Thomas Bravo has the parts to create a formidable vendor reminiscent of a similar approach employed by Quest Software — but there is overlap that would need to be addressed. While not a management megavendor, Quest Software is a successful company.
As a customer, does this mean you should cut short- and long-term investments in Novell? No; that would be shortsighted and potentially expensive. Novell has some good products, and Attachmate has equally good history with stabilizing and growing NetIQ. However, watch for overlapping products between the two. In the short term, you're likely to be ok to grow organically with ZENworks, SUSE, and others, but new and longer-term investments in areas where there is overlap or pieces that don't fit with the others carry more risk.
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