What Ray Knew

Sure, Novell benefited from the PC boom, columnist Eric Hall says. But the inverse is also true--without Novell and specifically Ray Noorda, the PC industry as a whole would have almost certainly evolved down a different path.

Eric Hall, Contributor

November 10, 2006

10 Min Read

Ray Noorda passed away on October 9, after suffering a long battle with Alzheimer's disease. Unfortunately, most of the obituaries I've read seem to have taken a "by-the-way" approach to his passing, and almost all of them have utterly failed to convey the tremendous impact he had on our industry. At a very minimum, this is a lost opportunity to revisit some of the lessons he taught.

Ray Noorda was born in Ogden, Utah in 1924, the son of Dutch immigrants. During World War II, Mr. Noorda joined the Navy as a radar technician, and then earned a degree in engineering from the University of Utah in 1949. From there, he went to work as an engineer for General Electric, where he remained for 21 years in various roles, including stints in marketing and management. After leaving GE, Mr. Noorda worked for a variety of California companies, plying his technical and management skills to become a successful turnaround artist for troubled technology firms.

In mid-1983, Mr. Noorda joined Novell as president and CEO. At the time, the company was one of a handful of providers of hardware-based PC networking equipment, and was struggling to make money in a nascent and ill-defined market. But Novell had a secret weapon: a handful of student contractors were secretly developing a software-based networking platform. Mr. Noorda pushed this technology into packaged form by the end of the year, and it subsequently became known as NetWare.

Although the initial product releases didn't exactly set the industry on fire, the package was eventually ported to common PC hardware, and within a few years NetWare 286 was positioned to the lead the PC networking industry into a new era.

Many people don't really remember, but prior to NetWare, "PC networking" mostly consisted of buying a custom box that was little more than a specialty hard drive with multiple connectors, to which you would attach your PCs. Moreover, most of the computing industry as a whole was still pushing vertical solutions, especially mid-range computers and multi-user systems, and that was the model people understood for early PC networking as well.

A software-based solution using PC hardware was considered to be a radical proposition at the time, and many people dismissed the proposition outright.

As we all know by now though, software can be compelling. Not only is it more flexible and therefore ultimately more powerful than fixed-in-time hardware architectures, software's independence from hardware lock-in also put the buyer in charge of their own future. You could build your own systems to suit your specific needs, usually for less money than you could buy an ill-fitting vertical system, and without having to commit your entire enterprise to a vendor's architecture.

If a vendor's system didn't work as a NetWare server, you could just swap it out for another one and still keep all your data and other assets intact, a promise that was unmatched in any other sector of the industry at the time. This seems obvious today, but it was practically unheard of back then.

In fact, given that a large part of the early PC success story came from networks that were pieced together beneath the corporate IT radar, Novell is arguably responsible for much of the PC industry's early success, since it was the principal technology that actually allowed people to move away from vertical architectures towards distributed PC computing architectures en masse. Sure, Novell benefited from the PC boom, but the inverse is also true--without Novell and specifically Ray Noorda, the PC boom itself would have almost certainly evolved down a different path.

Providing the software catalyst for this change was significant, but it was not enough to move the entire industry, and Mr. Noorda's true genius shows through in the secondary work that he undertook to ensure success. For example, Mr. Noorda recognized early on that one of the hindrances for wide-scale adoption was the relative high price of PC networking hardware, such as Ethernet adapters.

So the company borrowed a reference design for a cheap Ethernet card from National Semiconductor, and had it manufactured for sale at a low cost. This simple act drove down the cost of building a NetWare network and helped drive sales of NetWare.

But it also had the secondary effect of making Novell a leader in the Ethernet hardware space, as the company's low-cost cards were picked up for use by other markets as well. As a present-day observation of the significance of this simple act, many of the network cards that are sold today still claim to be "NE2000 compatible" so that they will continue to work with the broadest set of platforms.

Mr. Noorda is also widely credited for developing "the channel" distribution system on which our industry currently depends. Software certification for technology "engineers" is another marketing technique that was pioneered by Novell under Mr. Noorda's leadership, and is still heavily used by Novell's competitors today.

Mr. Noorda also enunciated and advanced the concept of "coopetition" whereby competitors could cooperate long enough to build the industry, while still competing for customer dollars in the larger market. All of this contributed greatly to the success of Novell and NetWare, and within a decade of release, the company was doing a billion dollars in business per quarter, with NetWare retaining 70% of a booming PC network market.

Novell did not reach its pinnacle without notice or competition, and NetWare was attacked from multiple angles throughout the latter 1980s and early 1990s. Vendors such as LANtastic tried to undercut it at the low-end, while companies like IBM, 3Com, and Microsoft tried to squeeze Novell out at the high-end.

Still, as the software market heated up, Novell made sure that NetWare was always the most functional, with the fastest performance and the most features including fault-tolerance, cross-platform connectivity, and eventually directory services. The company also courted and counted the broadest reseller base and a hoard of fanatically loyal customers, thereby retaining the majority market position.

Before it was over, IBM was selling NetWare in a blue box, 3Com had effectively abandoned the networking software market, and Microsoft had to bundle its networking code into Windows NT to get any significant market share.

In short, Mr. Noorda retained Novell's leadership position throughout the first decade of PC networking by always ensuring that the company was driving the industry--first with the move from hardware to software, and then later with service and features.

But Novell was not prepared for the market's transition to networking as a commodity service, especially one with a greater emphasis on cost than value. Simply put, general-purpose operating systems from Microsoft, Apple and *NIX vendors began including free networking services in their base OS offerings, and the need for a dedicated "network operating system" began to diminish. By the late-1990s, the end of the line for NetWare as a mainstream commercial product had become plain to most people.

To Mr. Noorda's credit, he tried to react to this shift by realigning Novell at the end of his tenure. For example, Mr. Noorda oversaw the initial development of UnixWare, a general-purpose UNIX operating system for Intel-based PC hardware that was quite stunning for its time, then acquired Unix Systems Laboratory (USL) and all rights to UNIX in 1993. He then settled long-standing licensing disputes between USL and BSDI so as to strengthen the position of UNIX as a whole.

As one of his last acts in office, Mr. Noorda also acquired GroupWise, WordPerfect, Quattro Pro, and a variety of other productivity applications in June 1994 in an effort to diminish Microsoft's budding dominance in that part of the market. Mr. Noorda arguably made some mistakes in his zeal to attack Microsoft, such as pursuing Digital Research's DR-DOS as a lawsuit vehicle against Microsoft, and sinking development into GEM as an alternative graphical environment to Windows. But in terms of overall strategy, he was demonstrably correct to pursue diversification, and many of his initial steps have since been mimicked by other vendors.

But by 1993, Mr. Noorda had already begun to suffer early symptoms of Alzheimer's, and his days at the company were already numbered, even while he was driving the realignment. According to historical SEC filings, Mr. Noorda resigned as president and CEO in April 1994, resigned as chairman of the board in August 1994, and then was forced to leave the board entirely in November 1994.

Over the next three years, subsequent management teams at Novell abandoned Mr. Noorda's diversification projects--first by selling off UnixWare to SCO in 1995, then by selling off WordPerfect to Corel in 1996).

This left the company with just a handful of significant products, a declining share of a collapsing NOS market, and few significant opportunities for growth. The company has made recent moves to correct some of these mistakes--mostly by replaying Mr. Noorda's previous strategies including the acquisition of SUSE Linux in 2003 and porting the bulk of its networking products and technology to run on Linux.

It's reasonable to believe that the intervening ten years of pain and misery for the company could have been avoided if it had simply stuck with Mr. Noorda's original vision.

After his exile from Novell, Mr. Noorda directed his efforts into a venture capital firm called Canopy Group that he had started in 1992 with the intention of investing in Utah technology firms. One of its better-known investments was in a company known as Caldera Systems, which was launched with the purpose of building a commercial version of Linux. (According to Ransom Love, co-founder of Caldera and SCO Group, Caldera had also been started as a back-room project at Novell, but was killed by the post-Noorda management team, and then resurrected as an independent venture by Noorda at Canopy.)

Caldera initially met with some success in the industryNetwork Computing awarded Caldera OpenLinux 1.3 the NOS of the year award in 1999, beating out NetWare and Windows NT alike. At the time it appeared that Mr. Noorda had managed to replay his winning formula, driving the development of a cheaper and better technology, and changed the industry along the way. But eventually this effort would also fall apart. A few years later, Caldera renamed itself The SCO Group and launched a series of lawsuits claiming violations against its Linux-related intellectual property.

Other professional setbacks occurred. In 2004, Mr. Noorda's daughter led an ouster of Canopy Group CEO Ralph Yarrow and two other associates, claiming they had taken advantage of Mr. Noorda's declining mental state to pilfer $20 million from Canopy Group.

In a last-minute settlement, the Canopy Group traded their shares of Caldera to Mr. Yarrow and his associates in exchange for their interest in the Canopy Group, effectively buying him out of the venture firm.

Recently things had begun to improve for Mr. Noorda. Most notably, his two sons currently maintain board positions in the Canopy Group, which has since returned to its mission of investing in Utah startups. Meanwhile Linux and UNIX in general have come into their own as viable broad-scale PC-based alternatives to Microsoft Windows largely due to Mr. Noorda's influential efforts with UnixWare and Linux.

As for the rest of us, we all work in an industry that was largely defined by Mr. Noorda during the early years of Novell. For these and other reasons, we should all be grateful for his contributions.

If you would like to share your own memories and recognitions of Mr. Noorda, feel free to

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