Microsoft (MSFT) CEO Steve Ballmer plans to exit the software giant within a year. The new CEO will need to manage a major acquisition (Nokia) -- essentially playing catch-up with market-trailing products. It sounds a lot like Novell around 1995. And that's alarming. Let The VAR Guy explain why.

During the early 1990s, Novell was the dominant provider of network operating systems. The company's NetWare had roughly 65 percent to 75 percent of the file server market. But CEO Ray Noorda, obsessed with countering Microsoft, embarked on a tragic M&A strategy.

Instead of focusing on next-generation markets, Noorda focused his time on maturing markets -- where standards and market leaders had already been determined. Noorda oversaw:

  • Novell's buyout of WordPerfect and the Borland Quattro Pro speadsheet. But Microsoft Office was already pulling away in the market. And the shift to Windows 95/Office 95 was coming. Ouch.
  • Novell's move into the Unix business. But fractured standards meant Novell's x86-based Unix could never really compete effectively against RISC Unix and another emerging Microsoft product -- Windows NT Server.
  • Novell's move into development tools with AppWare. But Microsoft development tools were firmly established. ISVs didn't have the time or money to write AppWare applications, which were supposed to unlock the full value of NetWare's network services.

At the time Novell was only a $2 billion company or so. By the time Noorda exited around 1994, his successor (Bob Frankenberg) was forced to unwind or shut down many of the acquisitions. Even more tragically, Novell's core business -- NetWare -- collapsed amid competition from NT.  Novell never really did position NetWare effectively for Internet services.

Now, let' apply that story to Microsoft and current CEO Steve Ballmer, who expects to exit within a year.

  • Ballmer is still busy competing against Google in the search market, where the standard has already been set. The VAR Guy loves Bing. But as Google ties more services (Google+) to search, our resident blogger doesn't see how Microsoft can stand out.
  • Microsoft is now buying Nokia's cellphone business. Here again the standard is already set -- Apple iOS and Google Android. Developers don't have the time or money to jump platforms -- essentially leaving Windows 8 smartphones out in the cold in many cases.
  • Microsoft has been busy protecting its core franchises (Windows,Office) much in the way that Novell attempted to protect NetWare. Not good.

Instead of competing at all costs on all fronts, The VAR Guy has a simple suggestion for Microsoft. Transform yourself from the world's largest software company into the world's largest ISV. That essentially means you become the biggest, best supplier of apps on Android, iOS and even Linux servers. 

Even more importantly, postion Windows Azure and Office 365 as the best cloud platforms for all endpoint devices -- smart phones, tablets, PCs and more.

Oh, and one other warning: Back at Novell, Noorda's successor Bob Frankenberg lastest only about two years. Consider that a warning to Nokia CEO Stephen Elop ot any other Ballmer successor: Time won't be on your side as you attempt to integrate Nokia's cellphone business with Microsoft. As the old saying goes: Fail fast -- or at least faster than Noorda and Frankenberg did with Novell in the 1990s...