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Chapter Seven
Corporate Decisions


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% 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 US 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, and a smaller pool of qualified candidates for LAN support jobs.

And like Novell’s US field offices, International faced a challenge that at times seemed insurmountable: Dealing with headquarters.

The Beginnings of International

In 1981 and ’82, Reid and Craig 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 Reid 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% of its income that year derived from international sales. Manufacturing and shipping problems plagued international orders as well as domestic orders. By the time Ray took over, Novell was known to a number of distributors internationally, but its reputation abroad was as bad as or worse than its reputation in the US.

In July 1983, Ray sent Jonathan Whiteley to Europe to turn this situation around. Jonathan arrived in Düsseldorf with his wife, Maureen. For the first six months, he worked out of his home, with his wife serving as receptionist.

Jonathan’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, Düsseldorf remained the major center of Novell’s European operations. In December 1983 Jonathan obtained Ray’s permission to rent office space. Two years later, in June 1985, he moved into larger 200-square-meter offices on Niederkasseler Lohweg, and in June 1986, Jonathan opened a new European NetWare Center which included 400 square meters of office space and 560 square meters of warehouse space.

The Düsseldorf office at first covered all of Europe, the Middle East, and Africa, providing sales, training, and technical support to distributors abroad. 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, Andrew moved his offices from Maidenhead to nearby Slough and began to stock inventory, thus creating the UK NetWare Center.

In some respects, Germany was an odd choice for Novell’s first European office, probably involving personal connections. At the time, the United Kingdom had the most developed market after the United States. The UK had about 50% of all PCs in Europe, while Germany and France were still heavily dominated by minicomputers.

Some important successes were scored by the UK 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 network in the world: Over 2,000 workstations networked on 170 S-Net LANs. A year later, the number of S-Net systems had grown to more than 300.

From the beginning, European sales contributed significantly to Novell’s revenues. International sales—most of which were from European distributors—contributed 30% ($1.2 million) in 1983 and 21% ($2.45 million) in 1984 to total revenues. In 1985, Europe alone contributed almost 18% ($6 million).

By the end of 1984, Novell had about 15 active foreign distributors, mostly European. A year later 41 international distributors, about 20 of which were based in Europe, were buying from the company. By March 1986, the number of European distributors had grown to more than 30.

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