Novell Says its Price is Right

UPDATE: With Web services afire with positive press and much potential, Novell looks to win over customers from rivals.
Posted September 3, 2002

Clint Boulton

While Microsoft's and Oracle's pricing plans have attracted much controversy and heated debate around the software industry, some competitors are seizing the opportunity to extend an olive branch to the customer community.

Provo, Utah's Novell took such steps Tuesday when it unleashed a new pricing plan that is supposed to help businesses better deliver Web services to their customers.

Novell's self-proclaimed novel approach is to tailor pricing to the specific type of end-user. To do this, it has devised discounted business-to-consumer (B2C) and government-to-citizen (G2C) user license pricing so organizations may offer customers and citizens access to services and information such as bank accounts or government records. This goes beyond the company's usual employee and supplier pricing structure, which will remain the standard.

The new pricing scheme creates two new categories of discounted user licenses to make Web services available to large user bases. The company claims the B2C user license price is only 25 percent of the standard user license and the G2C user license is only 10 percent of the standard price.

Moreover, rather than charging based on the number of computers connected to the network, Novell will charge based on the number of individual users of a software service. In a clear reference to competitors such as Microsoft, Novell claims its approach "avoids the steep license penalties assessed by some other major vendors when they require a license for each computer or PDA used to access a software service."

Novell supplied exmaples of the new pricing. Under the new terms, suppose the U.S. Department of Social Security wanted to offer iChain, the outfit's single authentication process, to 10 million citizens. The cost would be a dollar per license those 10 million users, with a 25-cent per license maintenance fee.

"Expensive software licensing models have prevented organizations from affordably extending services to customers across the Web," said Chris Stone, vice chairman, office of the CEO, Novell. "Other major vendors have licensing plans that make Internet solutions impractical because license fees are the same for both employee and customer use of a software service, despite vastly different levels of usage and benefits."

Dan Kusnetzky, vice president of system software research for analyst firm IDC, told the move is certainly, in part, a move to differentiate itself from Microsoft.

"Organizations are looking for system software pricing which is both equitable and simple for them to understand," said Kusnetzky. "To be equitable, pricing guidelines must recognize that Web-based systems have many different types of users. Organizations don't think that it's either fair or equitable when suppliers expect them to pay the same license fee for a potential customer merely glancing at an online catalog as they do for software supporting a dedicated, full-time employee."

Kusnetzky also noted that, with these licensing schemes, Novell is looking to disassociate itself from its own NetWare Web services offering, while still reaping the revenues from the product.

Pricing plans have been at the center of numerous debates in recent months. Microsoft's and Oracle's licensing schemes have taken tremendous amounts of flak for not being clear and, in some cases, fair. Just last week, Oracle took steps to kiss and make up with its customers by releasing its pricing and licensing on the Web.

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