From: FZC@CU.NIH.GOV ("Jurassic Park Control Center")
Newsgroups: comp.os.vms
Subject: Novell to buy Unix for $350 Million
Date: 23 Dec 92 03:42:51 GMT
Reply-To: TDARCOS@MCIMAIL.COM
Distribution: world
Organization: The Internet

Novell to buy Unix System from AT&T
By John Burgess
Washington Post Staff Writer
(12/22/92 Page E1)

In the computer software industry, most every company worries
that its niche will draw a covetous glance from Microsoft Corp.,
the industry's titan.  Yesterday, No. 2-ranked Novell Inc.
announced a $350 million purchase widely seen as a gambit to
keep Microsoft at bay and perhaps drive it back a bit.

Novell agreed to buy a New Jersey-based operation named
Unix System Laboratories, where 600 people refine the venerable
family of software known as Unix.  The seller is AT&T.

Provo, Utah-based Novell holds about 60 percent of the world
market for software that links personal computer into data
networks.  But the company is rattled by plans that
Microsoft has for next year - a new version of Microsoft's
best-selling Windows software that has networking functions
built right in.

By integrating Unix into its software products, analysts said,
Novell would make them more attractive.  It also would raise
the possibility of Novell advancing a bit into Microsoft's
prime turf, "operating system" software that tells computers
how to carry out basic operations.

As more and more of the world's computers are wired together,
the companies are engaged in a race to provide one-stop
shopping for the complex programs that PCs use.

With sales last year of $2.8 billion, Microsoft dominates the
worlds's $1 billion-a-year market for operating systems--programs
such as DOS and Windows that users typically see first when
they flip on a machine.

In the industry, Novell, which has sales of about $1 billion a
year, is known as the one company that may have the swagger to
stand up to Microsoft.  Highly profitable and all but owning a
fast-growing sector of the market, its stock has soared from
the $3 range in 1990 to more than $30 this year.  Yesterday,
the stock dropped $1.50 to $27.25, apparently in reaction to
concerns over the cost of absorbing the new acquisition, the
latest in a line by Novell.

Novell already has tried to challenge Microsoft in the
Operating system market by purchasing a small company called
Digital Research Corp., which makes an operating system
called DR DOS, which is compatible with Microsoft's DOS but
has had little success in the market.

The Federal Trade Commission is looking at whether Microsoft's
pricing practices unfairly exclude companies such as Novell.
Computer trade journals have widely reported that Novell
has discussed with other companies the possibility of
bringing an antitrust suit against Microsoft.

"Every company keeps all options open but [now] I would
characterize us as not moving in that direction," said
Novell Executive Vice President John Edwards.

Now Novell has Unix, an advanced operating system developed
by AT&T's Bell Laboratories in the 1960s.  When AT&T got
permission to enter the computer market in 1984, many
people thought unix would be a major strength and find its
way into personal computers.  But Unix has remained largely
an engineer's tool, despite glowing reviews -- particularly
its compatibility with networks.  Many people find it too
hard to use, and it has split into a series of incompatible
versions clustered around two major factions in the
industry.

Wall Street analysts said that if any firm can make Unix
take off, it is probably Novell.  And Microsoft's presence
may bring the Unix industry together.

"The two Unix factions will be on much more friendly terms
now that the enemy is at the gate," said analyst David Wu
of S.G. Warburg & Co.