It's a safe bet that to bankers, Novell Inc. is not the most glamorous of technology suppliers.

Yet in its niche - software that ties personal computers into networks - the Provo, Utah-based company is a force to be reckoned with.

Novell already is the dominant PC network vendor to banks, running more than two-thirds of these systems installed in financial institutions.

What's more Novell is girding for battle with other industry heavyweights, such as Microsoft Corp. and International Business Machines Corp., for control of a nascent technology called client-server computing.

Experts say client-server systems will radically change how banks operate because the technology allows tens or hundreds of low-cost PCs to be tightly linked together to perform the work that once demanded a multimillion-dollar mainframe computer.

Beyond Simple Networks

The banking community "probably thinks of Novell as the guys who hook the PCs together," said Louis Giglio, a vice president and stock analyst at Bear, Stearns & Co. in New York. "That was true three years ago, but it goes way beyond that now."

Novell's current generation of PC networking software, called Netware, gives PCs basic communications capabilities, such as linking many desktop computers to a single printer, sending electronic mail, and sharing basic office-automation software like word processing or spreadsheet programs.

In this area of banking, the market share of Novell's PC network dwarfs that of rivals IBM, privately held Banyan Systems Inc., and Microsoft, according to the American Banker/Ernst & Young 1993 Survey of Technology in Banking.

The shift to client-server computing is widely seen as holding great promise for slashing computing costs and boosting productivity.

Nevertheless, bankers have been reluctant to move very fast in this direction because of the technical limitations of PCs and the software operating systems that control their basic functions.

Microsoft and IBM covet Novell's leadership role in the PC networking market. And both are working hard to overtake Novell with the newest operating systems technology.

The biggest splash is being made by Microsoft, which is actively promoting its new Windows NT software, a sophisticated version of Microsoft's popular Windows operating system, due for official release in a few weeks.

Not surprisingly, a version of Windows NT called Advanced Server is targeted directly at Netware users. And Microsoft officials are crowing that Advanced Server will make Netware obsolete.

"You don't need a buggy whip if you have a car," said Michael Nash, Windows NT product manager, when asked how Netware stacks up against NT Advanced Server.

While seeking to replace Netware, Windows NT also competes with other operating systems seeking to control the computer "servers" that will do most of the number-crunching for the PC "clients."

These include the Unix operating system that Novell acquired from American Telephone and Telegraph Co. last month in a stock swap worth $332 million, and IBM's OS/2, which is already being used by many banks.

Evaluating Time for Clients

Bankers are still trying to figure out which of the new server operating systems they will hang their hats on.

"We're essentially in the early stages of evaluating what is going to be our standard," said Rusty Transou, technology research manager for First Union Corp., in Charlotte, N.C.

Mr. Transou said that Netware is the bank's standard network operating system for more than 3,000 PCs the institution has hooked into dozens of networks.

Mr. Transou added that, as a result, the bank counts Novell as one of three "strategic" technology suppliers, along with IBM and Microsoft. But Novell's enviable status could change if Novell's rivals are able to overtake the company with the newer technology.

Fight for Market Share

"I think for the next three or four years Novell is very much going to be part of our organization," Mr. Transou said. "But I have a bit of trepidation over Novell's ability to withstand an IBM and Microsoft onslaught over the long term."

In the face of this intense competition, Novell, which expects to break a billion dollars in revenues this year for the first time, is working hard on two fronts.

On one hand, Novell is upgrading Netware to compete with the newest networking software in ways that are important to banks.

PC Backing Up Pc

In March, for example, Novell started shipping new software that enables PCs running Netware to back each other up with the same level of fault tolerance historically found only on sophisticated "fault tolerant' computers sold by such companies as Stratus Computer Inc. and Tandem Computers Inc.

Gerry Machi, a Novell vice president and general manager of communications products, said that this software will make it possible for banks for the first time to use networks of PCs to handle electronic funds transfers chores normally handled on Stratus and Tandem machines, without sacrificing security.

Mr. Machi added that the benefit of using PC networks is that they would cost thousands of dollars less than Stratus or Tandem hardware.

This week, Novell also announced that it was leading a team of major technology companies, including software firm Computer Associates International Inc. and AT&T Co., to develop a new set of technologies, called Trusted Network Computing Environment.

The technology is intended to make networks of PCs running Netware as secure as mainframes. Poor data security over PC networks has been a common complaint of bank technologists.

One banker that endorsed the move was Stash Jarocki, vice president and audit director at Citibank, who said the bank's management is committed to "standardizing on Netware." But he added that if Novell did not offer better data security in the future, the bank would be forced to back off its commitment to Netware.

Teaming Up with Unix

The other part of Novell's strategy is to become a client-server leader with Unix, now mostly popular in engineering and academic circles.

The Unix operating system already has many of the technical features that Microsoft spent $150 million building into Windows NT, and that IBM has put into OS/2. But the difference is that Unix historically has been difficult for most computer users to master, and criticized for its security holes.

And while Unix runs on a variety of computers, from mainframes to powerful workstations, it has not been widely used on PCs equipped with the Intel Corp. microprocessor - the dominant make of PC around and the one in which Microsofts DOS operating system dominates.

Seen as Key to Firm's Future

While Unix has not yet been widely embraced by banks, Raymond Noorda, Novell's chairman, sees his purchase of the operating system from AT&T as key to his company's future.

"We are bringing Novell into a strengthened position in banks and other enterprises," he said.

Now that it owns Unix, Novell plans to incorporate some of the best features of the operating system into Netware, Mr. Noorda said. The deal will also give Novell sole control of a bold new effort to bring Unix into the mainstream of PC networks.

This venture, a company called Univel Inc. of San Jose, Calif., started selling a version of the Unix operating system this year that runs on Intel-based PCs, and that sports many of the ease-of-use features now found in most PC software.

Bankers said the Univel venture appeared to be a competitive necessity for Novell.

"Ray Noorda can't just wait for [Microsoft chairman] Bill Gates and IBM to build an operating system" that makes Netware obsolete, said Robert H. Spicer 2d, senior vice president and chief information officer at Chevy Chase Federal Savings Bank, in Maryland. "He needs to compete at the server level, and now he can, with Unix."

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