What is Profitability Ratios

Novell, Inc. was a leading network operating system provider in the 1980s and early 1990s. However, in the mid-1990s, Novell lost market share in the network operating system market. To counter this loss of market share, Novell made a strategic decision to go open (i.e., to make use of open standards and open source business strategies). Novell employs a subscription strategy, selling subscriptions to its Linux desktop operating system called SuSE. Novell has subsequently successfully handled the changeover from being a proprietary network operating system provider to being a leader in Linux and open source solutions. For example, a comparison of the financial results of Novell’s fourth quarters of 2004 and 2005 shows an increase of 418% in Linux revenue to US$61 million. Novell has demonstrated that open source business strategies are feasible and profitable.