Now what, Novell?

There's nothing like starting a technical conference, like Novell's BrainShare, off with a bang. Or, in this case telling Elliot Associates' unwelcome offer of not quite $2-billion for the company that Novell has no interest in selling out, not for that little anyway.

I think this was a smart move by Novell's management. I think if Elliot Associates were to buy Novell it would end up killing the company and its Linux distributions: SUSE Linux and openSUSE.

Make no mistake about it. A cool $2-billion is a lot of money. But, to quote from the company's rejection note: "$5.75 per share in cash is inadequate and that it undervalues the Company's franchise and growth prospects." I'd agree with that. After all, Novell has almost a billion in the bank.

The more important question is where does Novell, as a business, go from here?

Oh, we know that when it comes to its technology where Novell is going. They're working on a real-time, Linux-based social networking/IM/groupware project called Pulse that will work hand in glove with Google Wave. I'd feel better about that particular plan if I had ever managed to figure out anything worth doing with Wave.

I find it far more encouraging that Novell doesn't plan on hosting Pulse itself. Instead, Novell will have its partners host the service for companies that want a corporate social network. This works to Novell's strength as a VAR (value added reseller) and system integrator partner.

Novell's SUSE Studio appliance plans also appear to be taking off. With SUSE Studio, Novell's partners or end-users can quickly whip up their own Linux distribution that addresses specific needs. The technology is neat. But, again, what's really important is that Novell is relying on its partners to do the customizing, selling, and first lines of support.

It's also clear that Novell is working hard with its other partners. In particular, Novell is making sure that IBM and HP are happy. Never forget that while Novell's SUSE Linux isn't as big a player in x86 servers as Red Hat, it's a major player when it comes to mainframes. And, despite what you may have read over and over again in the last twenty-years, the mainframe continues to do quite well for itself in serious data centers.

If this sounds familiar, it should. I see Novell as shifting back to its old partner-centric business model and that's a good thing. As a result I expect to see Novell continuing to grow slowly stronger. Its business plans may not be exciting, but they've been battle-proven over decades.

What will be exciting is that you can be sure that you haven't seen the last of Elliot Associates. I fully expect them to continue to try to take Novell over and then break it up to squeeze every last dollar out of the company that they can manage. I predict interesting times ahead for Novell for that reason alone and never mind that the eternal Novell vs. SCO fight has finally moved into the courtroom.