Case | HBS Case Collection | September 1999 (Revised April 2000)

Novell: World's Largest Network Software Company

by Richard L. Nolan

Abstract

After phenomenal growth and market leadership in networking, founder and CEO Ray Noorda made a frontal assault on Microsoft's core strengths. In 1994, Noorda spend over $1.5 billion acquiring companies such as WordPerfect to combat Microsoft Word, products such as Borland's Quattro Pro to combat Microsoft Excel, and a PC operating system to combat Microsoft MS-DOS. Novell's stock reached a high of $35 1/4 in March 1993 before beginning to slide downward as head-to-head competition with Microsoft was seen as a questionable strategy. Robert Frankenberg, an executive at Hewlett-Packard brought in to replace Ray Noorda, reversed course and sold many of the acquired companies. But time was running out for Novell. Microsoft had not only already won the head-to-head competition, but had mounted a counterattack with its NT server product that was fast eroding Novell's stronghold in Network Operating Systems (NOSs). Coming from an only 2 percent market share in 1993, by 1997 Microsoft's NT Server operating license unit sales were 997 million growing at 36 percent, compared to Novell's NetWare server operating license unit sales of 744 million growing at 13 percent. In early 1997, Novell's stock price had dropped to $7.

Keywords: Technology Networks; Software; Competition; Internet; Strategic Planning; Corporate Strategy; Information Technology Industry;

Citation:

Nolan, Richard L. "Novell: World's Largest Network Software Company." Harvard Business School Case 300-038, September 1999. (Revised April 2000.)