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Linux Still a Fraction of Novell's Sales, But Growing

Commercial Linux distributor Novell has announced its fiscal 2004 fourth quarter and year end results, which show that Linux is a small but growing portion of its business. That said, Novell has a long way to go before it recoups its $210 million acquisition of the former SuSE.

Novell finished its fourth quarter on October 31, and reported total sales of $301 million, up 5 percent from the $287 million in sales the company had a year ago. During the quarter, SuSE Linux licenses and services relating to Linux accounted for $12 million, with $7 million coming from subscriptions to Linux Enterprise Server (up 68 percent from a year ago). Novell said that it had booked 21,000 Linux support license sales in the quarter, not counting three very large enterprise-wide licenses for three Fortune 100 companies who will deploy somewhere between 4,000 and 6,000 licenses in the short term and may eventually install as many as 25,000 licenses across all three.

Because of its dwindling NetWare installed base, Novell's software license sales are still trending downward, and Linux has not yet filled in the gap. Novell booked $64.7 million in new license sales in the fourth quarter, down 8 percent. Novell made up the gap with maintenance and services sales, which came to $236 million in the quarter, up 9 percent. Novell brought $13.3 million of profit, or 3 cents a share, to the bottom line, which was considerably better than the $109 million loss it booked this time last year thanks to big tax bill it had to pay after increasing a valuation for net deferred tax assets. For the full year, Novell had software sales of $238.4 million, down 10 percent, while maintenance and services sales climbed to $927.5 million, up 10 percent. Sales were up a tiny bit to $1.165 billion for fiscal 2004, and the company booked a profit of $31.1 million, compared to a loss of $161.9 million in fiscal 2003. Say what you will, but buying SuSE is helping Novell stabilize itself. The question now is can it grow Linux faster than NetWare shrinks. Novell has $1.2 billion in the bank, has just inked a $536 million settlement with Microsoft to settle an antitrust lawsuit that will add another $438 million to its cash. Novell also has $374 million in deferred revenue, too. If 2005 is going to be a year of rebuilding for Novell, it clearly has the resources to take on that task.

Stratus, Scalix Join OSDL

Fault-tolerant server maker Stratus Technologies and email and collaboration software maker Scalix have both announced that they have joined Open Source Development Labs, the consortium that is shaping the development of Linux.

Scalix, which is based in San Mateo, California, has licensed Hewlett-Packard's OpenMail software as the core of its product. (HP stopped selling OpenMail in 2001, even though it has a huge installed base on its HP-UX Unix servers.) Scalix supports its groupware on Linux, Unix, and Windows. The company says that it will participate in the Data Center Linux and Desktop Linux working groups at OSDL.

Stratus is one of the earlier proponents of the idea of fault-tolerant server clusters from way back in the 1980s, and was the main rival of Tandem Computers, which is now part of HP. These machines are still used by telecommunications and financial services firms that cannot afford any downtime; over the years, Stratus has moved from Unix-based fault-tolerant servers to similar systems based on the Windows and Linux platforms. Stratus is joining the Carrier Grade Linux and Data Center Linux working groups.

Penguin Computing Gets $10 Million in Venture Dough

Penguin Computing, the San Francisco maker of Linux-based servers and high performance clusters, has announced that it has received $10 million in venture capital funding as it focuses down on its HPC business and moves away from the general purpose Linux server racket. In June 2003, Penguin acquired Scyld Software, which has created a commercialized version of the open source Beowulf clustering software for Linux servers.

The $10 million funding, which was lead by London Merchant Securities Capital, gives the managing director of LMS, Scott Potter, a seat on Penguin's board. Convergence Partners, Weber Capital Management, Sunrise Venture Capital, and other existing investors in Penguin also kicked in to the kitty.

World Community Grid Established by IBM

IBM last week threw some seed systems and its weight behind a grid computing project called the World Community Grid, through which the company and its backers in the project will foster the notion of donating excess computing capacity to help researchers in the fields of medicine and weather prediction.

IBM donated a bunch of pSeries 630 Unix clusters and some xSeries 345 Linux clusters to the cause, as well as its Shark disk arrays and DB2 relational database for Unix and Linux. United Devices, the grid middleware software maker behind Gateway's attempt to harness the computing capacity in its ill-fated retail stores and rent it out of profit, has joined IBM as the software partner on the World Community Grid project. The two companies worked on a similar grid a few years ago that lashed together computing cycles on desktops from over two million volunteers to help researchers look for a cure for smallpox. IBM says that with the proved track record of projects like SETI@Home and some 650 million PCs in the world using very little of their peak capacity, the World Community Grid could go a long way to helping cure Alzheimer's disease or AIDS, or predicting shifts in the global weather patterns that affect the lives of millions of people. The World Community Grid expects to host several projects a year.

The Institute for Systems Biology in Seattle, working in conjunction with IBM, United Devices, and the University of Washington, will be the first organization to make use of the grid. Specifically, the grid will host the Human Proteome Folding Project, which will seek to understand the protein folding patterns of the 30,000 proteins that the human genome (which has been decoded) controls the production of.

IBM's p5 575 Uses Four Chips, Not an MCM

A few weeks ago, we told you about IBM's forthcoming p5 575 eight-way server, designed specifically for the high performance computing (HPC) market. At the time, we said that IBM could have designed this using one of the top-end multichip modules (MCMs) that are used in the new 64-way p5 595 servers, but that seems not to be the case. From the picture IBM distributed after the announcement, it looks like the p5 575 has four of the dual-core Power5 processors on its main board, rather than a single MCM with four chips on a single substrate. The difference in the way the p5 575 is built is not a big deal, but the MCMs have tighter integration between processor cores, external caches, and each other, which can boost performance a bit on some workloads.

IDC Says Services Spending to Grow Steadily

If you think that the IT services business has been dampened by continued sluggishness in the economies of the world, you'll be glad to learn that recent data from IDC would seem to indicate otherwise. IDC expects companies and governments the world over to spend $553 billion on services that are external to their own organizations, according to a recent report. The researcher also expects that the IT services market will do reasonably well compared with the overall IT market in the next four years, with a compound annual growth rate of 6.9 percent. IDC says that utility computing and subscription-based pricing models, offshoring, and business process outsourcing are helping to redefine the IT services business, and says that it expects consolidation in the services business (particularly in Europe) and that global players will, despite any political pressures, continue to build up their offshoring capabilities.

META Group Says IT Salaries Will Be Up 10% to 15% Through 2007

Being a human resources manager or an IT manager is rarely an easy job. In bad economic times, you have to lay off people and deal with tight budgets, and in the good times you have to cope with fast-rising salaries and employee turnover. The analysts at IT consultancy META Group say that they expect IT salaries to increase by 10 to 15 percent in the next three years, and will represent approximately 55 percent of the typical IT budget by 2007.

META says the economy is going to pick up in the next year, and IT shops will be hard-pressed to keep their best talent from seeking out "greener pastures" where they can get better pay and new challenges. META suggests that now is the time to add performance-based compensation packages, as well as implement employee morale, recruitment, and retention programs (including key things like flex time and telecommuting options). Application developers, security specialists, and network administrators are the hardest IT employees to hold on to, according to META.