Editing Novell (section)

===Rise to networking dominance===
==== A new company ====
{{plain image with caption|File:Novell teeth logo.svg|Novell's so-called "shark's teeth" logo, used from the late 1980s to 1996<ref name="Politis_1996"/>}}
On January 25, 1983, the company was incorporated under the shortened name of Novell, Inc.<ref name="10K_1993"/> In April 1983, the appointment of Noorda as president and CEO of Novell, Inc. was publicly announced.<ref name="DH_Noorda_1983"/> Noorda was a veteran executive of [[General Electric]] and the past CEO of several other companies and had garnered a reputation as a turn-around expert.<ref name="SLT_success_1986"/> Messman was chairman of the board and continued to represent the interests of Safeguard Scientifics, which was still majority owner in the new Novell.<ref name="DH_Noorda_1983"/>

The new Novell started with around 15 employees.<ref name="IW_expansion_1990"/><ref name="SLT_success_1986"/><ref name="ST_Noorda_obit"/> Noorda emphasized that the file server product acquired from Novell Data Systems would be the heart of what the new Novell would be doing.<ref name="DH_Noorda_1983"/> Later that same year, the company introduced its most significant product, the multi-[[System platform|platform]] [[network operating system]] (NOS), [[Novell NetWare]].

Funding for the new company was still an issue, and Musser contacted two Safeguard investors and brokers, Barry Rubenstein and Fred Dolan, who were with the Cleveland brokerage house Prescott, Ball and Turben, in these efforts.<ref name="OH_Musser_2019"/> Rubenstein and Dolan eventually came up with the idea of a [[rights offering]] to Safeguard shareholders.<ref name="OH_Musser_2019"/> Accordingly, in January 1985, Safeguard Scientifics made an initial offering of shares in Novell, Inc. to its own shareholders, at $2.50 a share.<ref name="PHI_shares_1985"/> The sale brought Safeguard more than $5 million in cash,<ref name="PHI_shares_1985_2"/> and Safeguard's ownership in Novell went from 51 percent down to 24 percent.<ref name="PHI_shares_1985"/> Novell, Inc. began trading as an [[Over-the-counter (finance)|over-the-counter stock]].<ref name="BG_shares_1985"/>

==== NetWare ====
{{main|NetWare}}
[[Image:Novell_NetWare_2.2_floppies.jpg|thumb|left|upright=0.85|Floppy disks for NetWare 2.2]]
The first Novell product was a proprietary hardware server based on the [[Motorola 68000]] processor and using a [[star topology]].<ref name="Causey_chapter_1997"/> This, with the [[network operating system]] (NOS) on it, was known as [[Novell S-Net]], or ShareNet,<ref name="Causey_chapter_1997"/> and it achieved some visibility; by April 1983, advertisements were seen in trade publications for third-party software products which stated they were compatible with Novell ShareNet.<ref name="PCM_advert_1983"/>

The company realized that making a proprietary solution in this sense was disadvantageous and looked instead to the [[IBM PC]] as an alternative platform.<ref name="Causey_chapter_1997"/> Now called NetWare, the network operating system was ported to run on an [[IBM PC XT]] with an [[Intel 8086]] processor and supported centralized, multitasking file and print services.<ref name="Causey_chapter_1997"/> By March 1984, Novell was putting out announcements about third-party products that worked with Novell NetWare.<ref name="CW_listing_1984"/>

NetWare came on the computing scene just as the IBM PC was emerging as a market force and applications such as the [[VisiCalc]] spreadsheet for the [[Apple II]] were showing what microcomputers could do for businesses.<ref name="Age_forsale_2000"/> There was an immediate demand for [[local area network]]ing that could make files and printers available across many PCs.<ref name="NYT_Noorda_1992"/><ref name="Age_forsale_2000"/> In addition, the advent of the PC caused organizational changes within companies and enterprises and allowed Novell to find entryways into individual departments or regional facilities rather than having to convince upper management of the value of networking.<ref name="Fortune_battle_1993"/> Thus, Novell's timing was spot on.<ref name="BW_Knell_1996"/> As the ''[[New York Times]]'' subsequently wrote, "Novell, in one of those instances of serendipity and visionary thinking that are the stuff of personal computer legend, found itself in the right place at the right time."<ref name="NYT_Noorda_1992"/>

Partly in consequence of its design of running at kernel level [[ring 0 (computer security)|ring 0]] without regard for separate or protected address spaces, and thus not having the properties of a [[general-purpose operating system]], NetWare was known for being very fast in operation.<ref name="Byte_cover_1995"/> This trend continued into 1987 with the Advanced NetWare/286 release, which was well received within the industry.<ref name="PCM_nominee_1987"/> NetWare also excelled with respect to [[computer security]] considerations, supporting user- and group-based roles and volume- and file-level access restrictions, thus making it attractive to systems administrators.<ref name="Causey_chapter_1997"/>

Novell based its [[network protocol]] on [[Xerox Network Systems]] (XNS),<ref name="Cisco_protocols_1999"/> and created its own standards which it named [[Internetwork Packet Exchange]] (IPX) and [[IPX/SPX|Sequenced Packet Exchange]] (SPX).<ref name="Causey_chapter_1997"/> These protocols were based on a [[client–server model]].<ref name="Cisco_protocols_1999"/> File and print services ran on the [[NetWare Core Protocol]] (NCP) over IPX, as did [[Routing Information Protocol]] (RIP) and [[Service Advertising Protocol]] (SAP).<ref name="PCM_Arch_1992"/>

Starting in 1987, Novell began selling its own [[Ethernet]]-based [[Network interface controller|network adapter cards]].<ref name="IW_cards_1987"/> These included the 8-bit [[NE1000]], and then in 1988, the 16-bit [[NE2000]].<ref name="NW_cards_1988"/> They priced them lower than cards from competitors such as [[3Com]], whose card Novell had previously been distributing.<ref name="IW_cards_1987"/> By 1989, Novell's cards were being sold at a rate of 20,000 per month, aggressively expanding Novell's market presence.<ref name="IW_cards_1989"/> At that point, Novell transferred the NE1000/NE2000 business to Anthem Electronics, the firm that had actually been making them, but the cards remained branded as Novell products.<ref name="IW_cards_1989"/>

As author James Causey would later write, "NetWare deserves the lion's share of the credit for elevating PC-based local area networks from being cute toys to providing powerful, reliable, and serious network services. NetWare was the first Intel-based network operating system to provide a serious alternative to mainframe-based server networks, providing critical reliability and security features needed in the modern enterprise."<ref name="Causey_chapter_1997"/>

Novell acquired [[Kanwal Rekhi]]'s company [[Excelan]] in 1989;<ref name="NYT_Excelan_1989"/> Excelan manufactured smart Ethernet cards and commercialized the Internet protocol [[TCP/IP]],<ref name="OH_Rekhi_2017"/> solidifying Novell's presence in these areas.  The acquisition combined Novell's $281 million in annual revenue with Excelan's $66 million.<ref name="NYT_Excelan_1989"/> Rekhi became a high-ranking Novell executive,<ref name="NYT_Excelan_1989"/> and played an influential strategic and managerial role with the company over the next several years.<ref name="OH_Rekhi_2017"/> Excelan was based in [[San Jose, California]], and they, along with a couple of prior Novell acquisitions, formed the basis for Novell's presence in [[Silicon Valley]] going forward.<ref name="IW_expansion_1990"/><ref name="OH_Rekhi_2017"/>

====NetWare 386====
By 1989 NetWare had an estimated 40-60% of the NOS market.<ref name="pc19891212">{{Cite magazine |last=Derfler |first=Frank J. Jr. |last2=Thompson |first2=M. Keith |date=1989-12-12 |title=Novell's NetWare 386 |url=https://books.google.com/books?id=5CmkZ3THZtwC&pg=PT206#v=onepage&q&f=true |access-date=2025-05-02 |magazine=PC Magazine |page=205 |volume=8 |issue=21}}</ref> That year<ref name=NovNetWareNYT89/> Novell released NetWare 386, also known as [[NetWare 3.0]], which gave NetWare more modern architectural qualities,<ref name="Byte_cover_1995"/> in conjunction with new capabilities in the [[Intel 386]] processor.<ref name="Causey_chapter_1997"/> NetWare maintained its character as a dedicated network operating system rather than containing network capabilities as part of a general-purpose operating system.<ref name="PCM_NetWare386_1989"/> The NetWare kernel's ability to dynamically load and unload drivers was greatly appreciated by users and the ability to write [[NetWare Loadable Module]]s (NLMs) in the [[C programming language]] was also a significant benefit.<ref name="Byte_cover_1995"/> NetWare 3 supported interactions with Apple's [[Mac (computer)|Macintosh]] computers as well as with [[Unix]]-based workstations, thus enabling NetWare to expand upon file and print sharing towards accessing business-critical data within companies.<ref name="NYT_Noorda_1992"/><ref name="Byte_cover_1995"/> This allowed NetWare to work with database products from companies such as [[Oracle Corporation]] and [[Sybase]].<ref name="Fortune_battle_1993"/>

An analyst for [[Dataquest]] said that NetWare 386 "is truly a blow-away-the-competition type product".<ref name=NovNetWareNYT89/> Overall, NetWare 3 was the most significant rewrite that the product would ever get, and proved very successful.<ref name="Proven_2013"/> By 1990, Novell had an almost [[monopoly|monopolistic]] position in NOS for any business requiring a network.<ref name="Wired_network_1997"/><ref name="Age_forsale_2000"/>

There were competitor companies in the same space, such as [[Corvus Systems]], [[Banyan Systems]], and [[LANtastic]], but none of them made much of a dent in Novell's business.<ref name="Age_forsale_2000"/> Microsoft tried on two early occasions to take on Novell in networking, first with the [[MS-NET]] product and then with [[LAN Manager]], but both failed badly.<ref name="Guardian_Frankenberg_1994"/><ref name="BW_Knell_1996"/> IBM similarly had limited success in this area.<ref name="BW_Knell_1996"/><ref name="Age_forsale_2000"/> From 1988 to 1992, Novell's revenues rose almost three-fold, to $933 million a year,<ref name="Fortune_battle_1993"/> with about half of Novell's sales coming from North America and half from overseas.<ref name="NYT_Noorda_1992"/> Earnings also rose to $249 million a year.<ref name="Fortune_battle_1993"/> From 1986 to 1991, Novell's stock price climbed twelve-fold.<ref name="BW_Noorda_1991"/>

With this market leadership, Novell began to acquire and build services on top of its NetWare operating platform. These services extended NetWare's capabilities with such products as NetWare for SAA and Novell multi-protocol router.

However, Novell was also diversifying, moving away from its smaller users to target large corporations and [[wide area network]]s.<ref name="BW_Noorda_1991"/> A marketing and development alliance with IBM announced in 1991 was part of this initiative.<ref name="BW_Noorda_1991"/> The company did later attempt to refocus with NetWare for Small Business. It reduced investment in research and was slow to improve the product administration tools, although it was helped by the fact its products typically needed little "tweaking"&nbsp;– they just ran.

====Corporate ethos and "coopetition"====
[[Image:Novell Building F in Provo 1994.jpg|thumb|right|Novell's Building F in Provo in 1994, part of a large complex of Novell buildings once there, with the Wasatch Range in the background]]

By early 1985, Novell was rapidly expanding, but many people were still unaware of either it or the role that local area networks could play, and consequently Noorda referred to Novell as "the most misunderstood company in the world."<ref name="DH_Orem_1995"/> Nonetheless, in 1986 ''[[The Salt Lake Tribune]]'' was hailing Novell as another Utah success story in technology, likely to follow in the footsteps of [[Evans & Sutherland]] and [[Iomega]].<ref name="SLT_success_1986"/> Novell was quickly outgrowing its original site in Orem, with some employees forced to work in trailers.<ref name="DH_Orem_1995"/> A new, much larger site for the company was found in nearby [[Provo, Utah]] and construction was begun; by late 1986, employees were moving into the first building there while work on a second building was already underway.<ref name="DH_Provo_1996"/> Eventually between 1986 and 1993 six buildings would be constructed for Novell's use there.<ref name="SLT_buildings_2012"/>

{{Quote box
 |quote  = We don't even have an industry; we have to build an industry.
 |author = Ray Noorda, 1985
 |source = <ref name="Book_Noorda_quote"/>
 |align  = left
}}

Under Noorda, Novell embraced the notion of "[[coopetition]]", or cooperative competition.<ref name="Fortune_battle_1993"/> The central idea was that whatever was good for networking in general would be good for Novell and took the form of encouraging the growth of an ecosystem composed of hundreds of suppliers of hardware and software networking products, even if some of those suppliers had products that competed with Novell's.<ref name="NYT_Noorda_1992"/><ref name="Fortune_battle_1993"/> [[3Com]], who had been an early competitor of Novell's,<ref name="NYT_Noorda_1992"/> sold more instances of their [[Ethernet]] networking cards for use in conjunction with NetWare than they did for use with their own [[3+Share]] network operating systems, and a similar situation existed for IBM and their [[Token Ring]] cards.<ref name="PCM_NetWare386_1989"/> It was due to this kind of industry vision that Noorda would become known as the "Father of Network Computing".<ref name="ST_Noorda_obit"/>

From the first years of the new Novell's success, Noorda was credited in the press with forging that path.<ref name="SLT_success_1986"/> The company reflected aspects of Noorda's personal background, such as his [[LDS Church|Mormon religion]], which brought about what was termed "the Mormon work ethic" at Novell.<ref name="NYT_Noorda_1992"/> As one account later put it, Novell was "reputedly staffed with lots of hard-selling but soft-drinking Mormons."<ref name="Reg_Peaked_2013"/> Noorda himself was famous for his frugal ways and for working from a plain, small office.<ref name="BW_Noorda_1991"/><ref name="NYT_Noorda_1992"/>

In 1989 senior executives Craig Burton and Judith Clarke, whom many credited for much of Novell's past success, left Novell.<ref name="IW_craigjudith_1989"/> Burton had been seen as Noorda's most likely successor while Judith Clarke had been instrumental in marketing and positioning Novell.<ref name="IW_craigjudith_1989"/><ref name="Searls_2012"/>

In April 1990, Novell and [[Lotus Development Corporation]] announced merger of equals based on a $1.5-billion [[stock swap]] that would have been the largest deal in the software industry to that time.<ref name="LAT_Lotus_1990"/> But it collapsed the following month: when Lotus head [[Jim Manzi]] refused to give Novell an equal number of seats on the new board,<ref name="LAT_Lotus_1990"/> Noorda pulled out shortly before the deal would have been completed.<ref name="BW_Noorda_1991"/>

At its high point around 1993, NetWare had a roughly two-thirds share of the market for network operating systems;<ref name="Fortune_battle_1993"/><ref name="Age_forsale_2000"/> one analysis put the figure at 63 percent.<ref name="Proven_2013"/> There were over half a million NetWare-based networks installed worldwide<ref name="CCIE_2003"/> and some 55 million NetWare users on those networks.<ref name="NYT_Frankenberg_1996"/><!-- I've seen higher figures for the number of networks, but the "Fortune_battle_1993" source places the market size at 10s M users and 100s K networks, so these figures would seem to fit --> And networking itself was the fastest-growing segment of the computer market,<ref name="NYT_Noorda_1992"/> increasing by 30 percent a year and reaching a $10 billion figure by 1993.<ref name="Fortune_battle_1993"/> Novell was the second largest maker of software for personal computers, trailing only Microsoft.<ref name="NYT_Readies_1995"/> Novell's employee base, which had been around 15 when Noorda joined, had risen to 4,335 by the end of 1993.<ref name="10K_1993"/> Besides Utah, Novell continued to grow in San Jose,<ref name="DN_Provo_1998"/> where many of the sales, marketing, product management, and executive functions were located.

====Sales and channel practices====
[[Image:Novell BrainShare letters display forward 1995.jpg|thumb|right|The annual [[Novell BrainShare]] conference, seen here with its entrance letters in 1995, helped spread the word about how developers and partners could make use of NetWare]]

Equally important as technological factors to NetWare's growth was that Novell did not try to hire a large sales force to do direct sales of the product, but instead sold it through a broad channel of some 13,000 [[value-added reseller]]s.<ref name="NYT_Noorda_1992"/> Such resellers provided network education, installation, and subsequent maintenance, and included [[CompUSA]] and [[Egghead Software]] for very small businesses all the way up to sophisticated systems integrators like [[Andersen Consulting]] and [[Electronic Data Systems]] for enterprise-level projects.<ref name="NYT_Noorda_1992"/> In this way Novell constructed a local area network franchise in literal terms, as Novell Authorized Education Centers were set up on a [[franchising]] basis.<ref name="NYT_Noorda_1992"/> Credentialization programs were in place, such that becoming a [[Certified NetWare Engineer]] was an important step, one that could be furthered with levels such as [[Master Certified NetWare Engineer]].<ref name="Reg_Peaked_2013"/> As one industry analyst said, "They've done a wonderful job of farming distribution out. They train people who go out and train other people, and every time somebody gets trained, they get another Netware bigot, and make another dollar. They are getting paid to have people go out and be evangelists."<ref name="NYT_Noorda_1992"/> The partnering approach also worked well in overseas markets, such as in Japan where Novell set up a subsidiary that major Japanese electronics firms invested in, or in South America and Eastern Europe where Novell set up authorized distributors.<ref name="NYT_Noorda_1992"/>

Under Ray Noorda's leadership, Novell provided upgrades to resellers and customers in the same packaging as a newly purchased copy of NetWare, but at one third the cost, which created a [[gray market]] that allowed NetWare resellers to sell upgrades as newly purchased NetWare versions at full price periodically, which Novell intentionally did not track. Noorda commented to several analysts that he devised this strategy to allow front line resellers to "punch through" the distributors like Tech Data and Ingram and acquire NetWare versions at a discounted rate, as Novell "looked the other way"; this helped fund the salaries of Novell Field Support Technicians, who for the most part were employees who worked for the front line resellers as Novell CNE (Certified NetWare Engineers).
Noorda commented that this strategy was one he learned as an executive at [[General Electric]] when competing against imported home appliances: allow the resellers to "make more money off your product than someone else's".