For a number of years conspiracy theorists have either forecasted the demise of Novell or the acquisition of Novell by another company. For nearly a decade the IBM acquisition of Novell rumor each August became a running joke within the halls of Novell.
But at Brainshare 2008, SAP AG took the corner sponsorship position of the conference, and announced a deeper partnership with Novell in the opening keynote. So conspirers are thinking that SAP has Novell in its acquisition targets. So would this be a good idea?
The argument for:
Oracle has been moving out beyond the database over the past few years: Peoplesoft, Oracle Enterprise Linux, etc. are examples of these moves. SAP needs to offer soup to nuts solutions as well. A Novell acquisition would give SAP a Linux distribution, virtualization, data center and desktop management tools, and most importantly, identity and security tools. SAP would gain access to Novell's partner channels (a point that SAP took advantage of in their keynote Novell partnership announcement - any Novell partner can sign up to get 5% of any SAP revenue generated through a bundled product sale.) Furthermore, tighter integration and common support for application plus operating system could help with IT management costs.
The argument against:
Novell has been the talk of acquisition for years, but the deal breaker is Novell's $1.8 billion cash in the bank. Novell would cost just over $4.5 billion (rough calculation of 3x revenues plus cash on hand.) Additionally, what Novell partners would SAP anger through an acquisition? Would an acquisition improve SAP's reach and competitiveness, or would maintaining a tight partnership with Novell yield more product and revenue growth for SAP?
Interested to hear what others have to say.
[Posted by Richard Jones]