Given Novell is serious about attacking the enterprise Linux market space, where does it expect to establish its beach head? According to Hovsepian, in the businesses dominated by beancounters.

“We think the good basic commercial user is a very logical target for us and then we can look at it by vertical industry,” says Hovsepian. “Who are the people that put the most value on top of a good economic return? The public sector does a very strong job there and so is a very logical segment. The financial services sector also pays a lot of attention to the cost per transaction in their business so I think they’ll be an interested party. Manufacturing is also a very important segment as they look at what they need to do. Anything that is very value or cost sensitive, such as retail, is also a candidate. Those are four of the industry segments vertically that we’re looking at and obviously education is a huge one. We have already won a contract back in the US with the state of Indiana for 500,000 student desktops. Right now we’ve rolled out about 3500 in the contract and we’re going to continue rolling out until we get them all.”

Hovsepian also believes that the big end of town in the corporate world can be won over from the top down, starting at the server side of the technology chain.

“Across the board, not just at the desktop, we are seeing a lot of momentum building in financial services for us. Big companies like Bear Sterns and Wachovia have made the transition over to Linux. Right now that’s just in servers. Where we’re seeing a lot of desktop activity, however, is at the point of service in retail. In retail, we’re seeing some of the big chains like Circuit City and others use our Linux point of sale or desktop inside their small speciality retail chains.”

Novell has had a turbulent two years since it embarked on its Linux course and some believe declining profits, revenues and mass layoffs may well have taken their toll. However, Hovsepian claims that the payoff for all the pain has already occurred. “If you look at Q1 as an example, Wall Street was expecting a performance of about 2 cents per share on earnings and we actually delivered 4 cents per share on a non-GAAP basis. So we’re starting to see those returns come through. However, I think the most important part of the momentum that I’m seeing is the penetration we’re getting inside of large accounts.”{moscomment}