by Roger White, copyright 2003
Building Marketing Channels and Courting Software developers
Getting Finances and Personnel in place
The Technology Pieces fall in place: Advanced Netware
Building a company mission and Comdex 84
Surfing the high tech wave home (more chapters)
In January 1984, after a year of Noorda management, Novell had still to overcome some major obstacles to growth. These obstacles -- differentiating the product, creating hardware independence, establishing sales channels, winning support from independent software application developers, and obtaining capital -- had loomed large before Novell since the earliest days. To recall an image from the old West, the job was like that faced by the Central Pacific Railroad in the early 1860s, as the company blasted tunnels through the granite peaks of the Sierra Nevadas, clearing the way for the west half of the nation's first transcontinental railway. Compared to their compatriots of the Union Pacific, who were building across flat prairie, their progress looked glacial, but it was just as real. Ray and his team had been chipping away at the barriers for a year, with some effect, and would continue to do so through 1984 and well into 1985, when the proverbial light appeared at the end of the tunnel. Until the obstacles were cleared, the whole project remained too dicey for all but the most adventurous speculators.
One of the biggest obstacles was communicating how NetWare differed from the other LAN solutions in the marketplace -- and why that difference made NetWare better. There were perhaps 20 companies selling LAN systems besides Novell.
The key to differentiating NetWare was a semantic and conceptual distinction that Novell worked hard to get the marketplace to accept: file server vs. disk server. NetWare used a file server approach, Novell's people said, while other LANs used a disk server approach. The file server approach was the superior technology and the wave of the future, Novell maintained, while the more traditional disk server solution contained inherent flaws that would ultimately make dinosaurs of LAN systems that utilized it.
A disk server chops up a shared hard disk into separate volumes, so that each PC on the network has its own piece of the hard disk. Each PC manages its own directories and files in its volume. Some of the flaws in disk server approach are:
Although disk server technology developed to the point where some of these flaws were overcome or compensated for, Novell argued that it was still an inherently inferior solution to the problem of managing LANs.
By contrast, NetWare's file server technology relieved the networked PCs of all hard disk management responsibilities. The file server provided central control of data file management, improving security and the ability of different PCs on the LAN to share information in the same directory without interfering with each other. The file server approach, Novell maintained, was the more sophisticated approach, the more elegant solution. It was, Novell claimed, a distinct technological advance -- the first "milestone" in the history of local area networks. (In the earliest childhood of the company, Novell employees had a sense they were making history.)
The problem was getting the marketplace to buy this distinction. Novell's competitors claimed that their disk servers were file servers. If confronted with the technological differences, the competition claimed that their disk servers were simpler, more cost-effective, and more reliable than Novell's file servers, and that in actual practice, most businesses would never need the advanced data sharing capabilities that NetWare claimed it could support.
Although Superset had articulated this distinction between disk server and file server -- indeed, they had invented it -- as early as 1982, two years later, they were still fighting to have the concept understood and accepted.
Why did Novell develop File Server technology?Two "historical accidents" allowed Novell to be the first on the block with file server technology. The first was the long gestation period for the OS that happened while Novell was undergoing the trauma of the Time of Six Presidents. During these times, as much as it wanted to, Novell was not in a position to launch the LAN quickly, so the Superset people had a chance promote the merits of the file server concept within Novell before the OS design was frozen. The second was that the Novell file server was equipped with the Motorola 6800-family processor rather than an Intel 80xx-family processor which was being used in most competitive machines. The Motorola chips of that era had more horsepower than comparabile Intel chips, so the server had more horsepower. File server technology required more processing power than disk server technology, so the early Marketing department was behind this as another way of differentiating the Novell product. |
The second obstacle was the lack of standard hardware and software in the PC and LAN marketplace: Amidst the petty fiefdoms of an immature marketplace, how would tiny Novell rise to a position of leadership? The strategy for overcoming this, hardware independence, was a noble if somewhat chancey vision, and it would require enormous energy to implement.
Another barrier to growth was the lack of sales channels to bring NetWare to the customers who would ultimately buy and use the LAN. Opening channels was a huge task. Besides direct sales to major end users and sales to distributors, resellers, and systems integrators, Ray was working on deals with retail computer stores and with original equipment manufacturers (OEMs).
The fourth major obstacle to Novell's growth was the dearth of software application programs -- word processing, data bases, accounting spreadsheet programs, and so on -- that worked well in the NetWare LAN environment. In the early 80s, most PC applications were designed for use on individual PCs, and some were copy-protected. Some of the simpler applications for single users, for example word processing and spreadsheet programs, could be used without too much trouble on a network. But the "high end" applications, such as databases and programming tools, needed to be customized for multi-users, because data would be corrupted if more than one user on a network tried to use the application. There were also questions of cost, licensing, and convenience. LAN users wanted to install one LAN version of the application on the file server that all PCs on the network could access. Until software programs specifically customized for NetWare LANs became widely available, users were limited in the kinds of things they could do with their Novell networks.
Finally, money was a problem. Like every growing business, Novell had an ongoing need for capital infusions. Cash was needed to pay for parts and overhead necessary to fill ever-growing orders. This cash could be tied up for months before payment was received for the shipments. Until Novell attained a "critical mass" of orders, it would need regular additions of capital from outside sources.
It was not as though Ray and his team had started, in 1983, with a careful plan to overcome their marketing, development, and financing problems. The employees just threw themselves at the job of moving product with all the energy and enthusiasm of amateurs -- that's why Ray had picked them. The mission of growing Novell and the industry was clear, but little else was in the way of strategy or tactics. They were all grunts, coolies -- if the day's progress was measured by inches instead of by miles, that was all right. They didn't know how impossible their task was.
Judy Clark reflected on the early days: "We were just naive enough to know that we had a good product. I wasn't afraid of the competition. I wasn't afraid of IBM or Microsoft or 3Com. Who were they? They're just people. You know, they had a lot of money, but so what? If we were telling the truth and we had a really good product and people needed it, then I could communicate it to them."
The years from 1983 to 1985 were the years of steady, dogged labor when the groundwork was laid for Novell's future growth. The first year was a year of transition from NDSI to the new Ray Noorda company. In the second year, 1984, the patterns of work crystallized into policies, programs, more formal initiatives. In 1985, Ray and his people could see the results of their efforts, and the company was primed for a sales explosion.
To overcome Obstacle 1, differentiating NetWare from its competitors, Novell tried to educate the marketplace -- as opposed to merely advertising in the marketplace. Superset and Craig Burton were the principal sources of educational information. They would explain file server vs. disk server to distributors, resellers, and direct customers. They would explain it to software developers. They would explain it to other computer companies who were possible strategic partners. They would explain it to the press. But for all their efforts, the industry as whole still did not acknowledge the superiority of the file server approach.
Building Marketing Channels and Courting Software developers
Getting Finances and Personnel in place
The Technology Pieces fall in place: Advanced Netware
Building a company mission and Comdex 84
Surfing the high tech wave home (more chapters)