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Novell Says its Price is Right

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 […]

Written By

CB

Clint Boulton

Sep 3, 2002

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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 internetnews.com 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.