Novell Unveils Cloud Manager - Analyst Blog

Enterprise software developer Novell Inc. (NOVL) announced the launch of Novell Cloud Manager. This new solution enables users to create and manage cloud computing environment more efficiently as compared with proprietary technology stacks.

With the official launch of Cloud Manager, Novell continues to proceed on the path of cloud computing, which includes its WorkloadIQ product roadmap, a series of products catering to the needs of intelligent workload management (IWM). Novell's Cloud Manager facilitates customers to build and keep tabs on their private cloud computing environments as an extension of existing data center resources.

WorkloadIQ aids in integrating identity and security into information technology (IT) workloads, thereby enabling customers to deliver IT services to end users across physical, virtual and cloud environments.

Novell Cloud Manager helps clients speed up their IT services. Novell Cloud Manager automatically creates and deploys workloads into the virtual environment based on some pre-defined workload templates. This shortens workload provisioning time span, making the entire process faster and smoother.

Novell Cloud Manager also enhances flexibility of its users as it allows them to create and manage private clouds on all leading hypervisors, operating systems and hardware platforms.

Novell Cloud Manager currently supports multiple hypervisors such as VMware Inc.'s (VMW) vSphere, Microsoft Corp.'s (MSFT) Hyper-V and open source Xen. The solution also supports operating systems such as SUSE Linux Enterprise Server, Microsoft Windows Server and Red Hat Inc's (RHT) Enterprise Linux.

This flexibility allows clients to select only what they really need, thereby reducing unnecessary hardware and software costs. Moreover, the Cloud Manager ensures security and privacy to the cloud. A built in connector to Novell Sentinel allows security managers to correlate events from Novell Cloud Manager with other events detected in the cloud or any other location.

Cloud computing is growing at a much faster rate than previously expected. Worldwide revenues from public IT cloud services exceeded $16.0 billion in 2009 and are estimated to reach $55.5 billion in 2014, representing a compound annual growth rate (CAGR) of 27.4%, according to the research firm IDC. This rapid growth rate is over five times the projected growth rate for traditional IT products.

We believe Novell continues to execute well over its strategy of competing in the IWM market. Following its December 2009 announcement to compete in the IWM market, Novell has shipped seven WorkloadIQ products, till date, and plans to ship five additional products before the end of December 2010.

We remain optimistic about the new Cloud Manager going forward. Although the solution is expected to face stiff competition from VMware Lifecycle Mnager, DynamicOPS VRM, BMC Software Inc.'s Cloud Lifecycle Manager and Hewlett Packard Co.'s (HPQ) Insight Orchestration, flexible costing model and heterogeneous platform support will drive growth going forward, in our view.

In our view, Novell is well positioned to gain market share in the IWM market and will become a significant part of top-line growth over the long term.

However, Novell remains undervalued, primarily due to lack of visibility over management's long-term strategy, and hence remains a potential acquisition candidate.

We maintain a Neutral rating on a long-term basis (6-12 months). Novell has a Zacks #3 Rank, which implies a Hold rating on a short-term basis (1-3 months).