Novell are expected to cut back up to 30% of the company's 5,500 jobs in order to stand any chance of any future growth. This cost-cutting move could be announced as early as next week, sources close to the company said.

Rumours have been circulating since Novell announced their financial results mid-August and stated that additional action may be required later in the year.

The latest developments are showing a make or break point for Novell, as it continues to struggle with its transition from that of a network developer to network services provider.

Novell are not abandoning Netware, but there will be changes in the way it will be perceived and how it will be going forward. Novell themselves are moving into a position whereby they will have less reliance on packaged software sales but will build a revenue generator around services, particularly the NDS eDirectory technology. The move will be towards electronic licenses and distribution over networks and usage-based sales from ASPs on down.

Novell announced earlier this week that the company have released their OnDemand Services, this will enable service providers to use fee-based application services, however, the take-up for this provision has happened more slowly than the company would have hoped for.