Throughout Novell's history, its international operations have played a smaller role in company politics and direction than their annual contributions to revenue might suggest. Since 1983, international operations have accounted for an average 30 percent of total company revenues. Indeed, in the early years, Novell might not have survived at all had it not been for international sales. Yet for most of Novell's history, the international staff has been relegated to the bench, compelled to look on from the sidelines as the real players clashed on the field.
Novell's assault on international markets was in many ways more challenging than the growth of its U.S. business. Abroad, the company faced the same obstacles it did at home: market confusion over disk server versus file server technology; customer fears about the reliability of LANs; aggressive competition from other LAN vendors; a shortage of software applications; and so on. But the global market presented new problems as well: language differences; different engineering standards; the logistics of product shipping; a smaller pool of qualified candidates for LAN support jobs. And like Novell's U.S. field offices, International faced a challenge that at times seemed insurmountable: dealing with headquarters.
In 1981 and '82, Reid Clark and Craig Burton had perambulated through Europe and the Middle East on behalf of Novell Data Systems. Indeed, one of the first sales of a Novell LAN was to a company in Cairo; when Clark revisited the company a year later, the LAN was still functioning, though it had been operating under rather primitive conditions. Although NDSI was hemorrhaging badly in 1982, at least 40 percent of its income that year derived from international sales. Manufacturing and shipping problems plagued international orders as well as domestic orders. By the time Noorda took over, Novell was known to a number of distributors internationally, but its reputation abroad was as bad or worse as its reputation in the U.S.
In July 1983, Ray sent Jonathan Whiteley to Europe to turn this situation around. Whiteley arrived in Dusseldorf with his wife, Maureen. For the first six months, Whiteley worked out of his home, with his wife serving as receptionist.
Whiteley's job was first to interest distributors in carrying Netware, then to make sure they were getting the support they needed to sell it.
Although the office locations changed several times over the years, Dusseldorf remained the major center of Novell's European operations. In December 1983 Whiteley obtained Noorda's permission to rent office space. Two years later, in June 1985, Whiteley moved into larger (200 square meter) offices on Niederkasseler Lohweg, and in June 1986, he opened a new European Netware Center which included 400 square meters of office space and 560 square meters of warehouse space.
The Dusseldorf office at first covered all of Europe, the Middle East, and Africa, providing sales, training, and technical support to European distributors. In 1985, an additional tech support office was opened in Frankfurt, and a sales and tech support office was opened in Maidenhead, about 30 miles west of London. Andrew Zoltowski joined Novell in 1985 as general manager of Novell UK In 1986, Zoltowski moved his offices from Maidenhead to nearby Slough and began to stock inventory, thus creating the U.K. Netware Center.
In some respects, Germany was an odd choice for Novell's first European office. At the time, the United Kingdom had the most developed market after the United States. The U.K. had about 50 percent of all PCs in Europe, while Germany and France were still heavily dominated by minicomputers.
Some important successes were scored by the U.K. team in 1985. Among Novell's top customers for September 1985 were the British Railway Board and a distributor, Novell Data Systems, Ltd. By the end of 1986, British Railway had the largest Netware in the world: over 2,000 workstations networked on 170 S-Net LANs. (A year later, the number of S-Net systems had almost doubled to more than 300.)
From the beginning, European sales contributed significantly to Novell's revenues. In 1983 and 1984, international sales -- most of which were from European distributors -- contributed 30 percent ($1.2 million) and 21 percent ($2.45 million) to total revenues, respectively. In 1985, Europe alone contributed almost 18 percent ($6 million). By the end of 1984, Novell had about 15 active foreign distributors, mostly European. A year later, 41 international distributors were buying from the company, about 20 of which were based in Europe. By March 1986, the number of European distributors had grown to more than 30.
1986 was an important year for Novell's European operations. Until this time, Novell had relied heavily on its European distributors for marketing, sales, and technical support. After three years of this approach, Ray felt ready to increase Novell's investment and presence in this key market. In 1986, he allowed Judith Clarke to spend one-fourth (roughly $1 million) of her corporate communications budget on European promotions. Most of this money was spent on trade shows and conferences.
On March 6, Judith Clarke and Promotions Manager Anita Reece helped Zoltowski launch the first annual United Kingdom Netware Affiliates Conference. Representatives from over 30 European software developers attended -- 16 of them newcomers to Novell and Netware. "The whole day was a tremendous success," said Zoltowski. "The entire concept of a manufacturer addressing software developers in this way is totally unique in this country. We were talking at their level and about things of relevance and interest to them. The overall reaction was one of great enthusiasm for this approach."
Clarke and Reece then proceeded to Germany to set up Novell's booth at the CeBIT Hanover Fair, the world's largest trade show for office, electronic, data, and communication technology. This was the first time Novell exhibited at the show, and its booth featured two LANs connected by an SNA Gateway: a 286A file server running Netware ARCNET on three workstations linked with a Netware 68B file server running S-Net on five workstations. The company also presented five seminars and played host at a dinner for distributors and another dinner for software developers.
One of the guests at the distributor dinner said, "The time is ripe for Novell to take the load in Europe. Novell's presence at the show, combined with the support offered to distributors and resellers here, indicates the company's total commitment to the European LAN market."
At both the U.K. conference and the Hanover Fair, representatives of the International Netware Users Group (INUG) made presentations. This group, like the user groups in the U.S., was organized with the help of Reid Clark in 1985. The group was important not only as a source of ideas and feedback to the Netware designers but also as a demonstration of Netware's acceptance by major customers. Speeches by INUG members were important, therefore, at gatherings of the independent software developers ("Netware Affiliates") whom Novell was trying to impress.
One result of the Hanover Fair was an OEM agreement between Novell and Bertelsmann AG of Hanover, where Bertelsmann translated both the manuals and screen text of Advanced Netware 2.0 and marketed a German language version of Advanced Netware for IBM PC networks. This was the first official foreign language version of Netware.
Novell's booth at Hanover Fair was followed by participation in two more European shows in 1986, both in London: the PC User Show in July and COMPEC in November. The booths featured two LANs linked by an SNA Gateway, similar to the demonstration at Hanover Fair. Netware Affiliates also exhibited their LAN applications in the booths. "Netware everyWhere" stickers and banners announced Novell's presence throughout the booths.
Novell also took its first steps into international advertising in 1986. The "Milestones Ahead" ad, released in May, appeared in translation in the various European markets. Although advertising was quite limited in 1986 -- it gradually expanded through 1987 and 1988 -- this was the first time the company had directly advertised its products to international end users. In 1986, the Netware Centers in Germany and the U.K. also hired their own public relations companies (Tom Burgess and Company in the U.K. and Henschel and Stinness in Germany) to issue press releases, handle media relations, and help with other PR activities.
In a LAN Times article,*[June/July 1986, p. 24], Joseph Wolf, an employee at the Dusseldorf Netware Center who gave technical training sessions for distributors and dealers, described the market in Europe:
". . . In Germany and France the computer industry has given local area networks (LANs) a lukewarm reception. The main interest there has been in minicomputers. Novell is meeting this challenge by showing that Netware, with its ability to communicate with a variety of hardware systems, can be a valuable asset to such companies.
"Spain, Italy and Great Britain, on the other hand, are eager for LANs, and Netware has incredible potential in those countries, according to Wolf.
"One of the areas of investigation is in utilizing Netware to run large automated machining and milling operations. Though still no more than an idea, the concept of adapting a PC to run a lathe or other device, for instance, appeals to German heavy industry.
"When you have to coordinate the activities of an entire factory, the use of a stripped-down PC attached to a Netware LAN to run one of the multimillion-dollar machines offers a very inexpensive and universal communication tool. Even when we have different types of machines from different countries, Netware can talk to all of them," said Wolf.
. . .
Wolf summarized by saying, "How many major computer firms do you have in the United States? Three? Four? In Europe, we have those same firms as well as three or four of our own, none of whose systems can talk with the others. Europe needs Netware."
From LAN Times, June/July 1986, p. 23:
While the London Netware Center is finding success with its new distributors, the European Netware Center is seeking distributors for Israel and Kuwait. Last year [1985], the number one distributors in Europe were Holland, Germany, and France, respectively. The Scandinavian countries were also large sellers, Whiteley said. He also pointed out that Spain and Italy are becoming more active.
In 1986, Novell's international operations, like the rest of the company, were reorganized to incorporate the Netware Center concept. As mentioned above, two Netware Centers were established in Europe: Slough and Dusseldorf. Suddenly these offices no longer confined their activities to sales and technical support; they became stocking distributors of Netware and other products as well. An article in the LAN Times reported that the U.K. center was even "looking at the possibility of buying disk drives inside the United Kingdom; the center would then supply U.K. and perhaps other European customers with the disk drives."[LT, June/July 1986, p. 23] [Effect of Netware Center strategy on European distributors and resellers.]
By mid 1986, Novell had lined up an impressive array of European and other international distributors, and the focus of activity had shifted to the ongoing business of training and supporting resellers and end users. Although 120 German dealers were selling Netware by the summer of 1986, only four of these were authorized dealers who met the company's training requirements and demonstration capabilities.
The other major focus of activity for Novell Europe in 1986 was the development of the International Netware Affiliates group. By the summer, over 900 independent software vendors (ISVs) belonged to the group worldwide. The Dusseldorf Netware Center sponsored a series of five seminars in various European capitals during the fall of 1986.
By the end of 1986, Novell was estimated to control at least 30 percent of the European LAN market -- at least twice as much as its closest competitors. U.K. Rivals -- Torus, Apricot, Research, and others -- trailed far behind the company from Utah. By mid 1988, Novell's share of the European market was estimated at 50 percent. [SOURCE: LT, Sep 88, p.20]
By 1988, Novell's European operations (including the Middle East and Africa) accounted for about 75 percent of all international revenues, which, in turn, accounted for about 30 percent of all company revenues. Other world markets did not receive the same attention as Europe. Yet progress was made in these areas.
John Harris was a key player in all international operations. He joined Novell in 1984 and by 1986 was working as "international distributor manager," a job which took him around the world. By 1987 he was serving as "director of international sales," and by 1988 he was responsible for all Novell sales in Canada, Asia, and South America. In June 1987, Clifton Ashley was named director of regional sales for Latin America.
Another key player in the growth of Novell's Asian and Pacific Rim market was Andrew Lai, who joined Novell in May 1984. Lai undertook the unenviable task of developing Novell business in Asia -- from company headquarters in Orem! Noorda would not authorize a Asian office for Novell until 1987, when Lai opened the regional headquarters in Hong Kong in July. Lai's region included 15 different countries about 10,000 miles from Utah, with a time difference of 14 to 15 hours.
Yet Lai accomplished a great deal during the three years he was based in Utah. Like his counterparts in Europe, he relied heavily on distributors for customer training, sales and tech support, and sponsorship of seminars. For example, a seminar held in May 1985, dubbed "Brainstorm '85," was hosted by Advanced Computing Resources, Novell's Hong Kong distributor. Lai put together a program of three other American speakers and attracted about 100 end users to the event. In October 1986, he put together a two-day Pacific Region Distributor conference in Hong Kong, again with sponsorship by a Novell distributor, and he delivered none other than Ray Noorda as the keynote speaker.
By the end of 1985, Lai had signed up 11 distributors in the Pacific region. With the opening of the Hong Kong office in July 1987, Lai was able to increase his sales and technical support, educational offerings, trade show presence, advertising, and other local promotions. By the end of 1988, four years after Lai started, Novell commanded an estimated 90 percent of the LAN operating systems market in Taiwan and at least 70 percent of the market in the rest of the Pacific region.
In an interview at the end of 1988, Lai recalled, "We spent most of that first year just finding resellers and doing very little business. I am still looking for good resellers, but we have certainly developed the business."
In many areas of the world where Novell has decided it cannot afford to maintain a large corporate presence, the distributors become the principal company representatives. This is still the case in the Pacific region. "Most of our distributors look at themselves almost as being Novell, and they are the source of everything from top to bottom," said Lai. "Novell doesn't sell anything direct in this region so our bare-bones headquarters operation has the role of support."
For all of Novell's success in the Pacific region, Japan remained virtually closed to Netware through the 1980s.