On July 17, 1991, Novell bought Digital Research for $80 million, a merger of a pioneer in desktop computer networking with a pioneer in desktop computer operating systems. Novell saw Microsoft coming after its business on multiple fronts, and saw the acquisition of Digital Research as a defensive move to counter it.
Who was Digital Research?
Digital Research first rose to fame as the publisher of CP/M, the de facto standard for 8-bit operating systems. Digital Research famously lost its bid to provide an operating system to IBM for the IBM PC released in 1981, but PC DOS was architecturally very similar to CP/M. Over time, Digital Research turned CP/M into a DOS clone that it marketed as DR DOS.
At its peak around 1983, Digital Research had $44 million in annual revenue and employed 500 people. After some lean years, Digital Research grew its revenue back up to $36 million in fiscal year 1989 and $40 million in fiscal 1990. It had 273 employees in 1991.
DR DOS 6.0 was in development at the time of the announcement. It was released two months later, in September 1991. After the deal closed, Novell continued to sell DR DOS 6.0, with added branding stating that it was backed by Novell. DR DOS 6 included advanced memory management and disk compression, similar to the not-yet-released MS-DOS 6.
Why Novell acquired Digital Research
Novell Netware was the leading PC network operating system in 1991. But Microsoft had ambitions beyond the desktop. Microsoft had plans to add networking to MS-DOS and to release its own fully 32-bit network operating system called Windows NT. Novell hoped that releasing an advanced DOS of its own that integrated smoothly with Netware and offered additional advanced capabilities beyond what Microsoft offered could help counter the Windows NT threat.
The July 29, 1991 issue of Infoworld stated that Steve Ballmer said the merger gave Microsoft cause for concern.
Novell and Digital Research had been cooperating on building networking capability into DR DOS, so the acquisition was a natural outgrowth of the partnership.
The result of Novell’s acquisition of Digital Research
The $80 million deal to acquire Digital Research made Digital Research founder Gary Kildall very wealthy, but unhappy. He grew bitter that Microsoft cofounder Bill Gates overshadowed him in a field that he essentially created, having proven that the Intel 8080 was capable of running a real computer. His alcoholism worsened, and two years and 51 weeks later, he was dead at age 52.
With Novell’s backing, DR DOS grew to version 7, released as Novell DOS 7 to compete with MS-DOS 6.0. Internally it was very similar to MS-DOS 6 and maintained a high degree of compatibility. But Novell was unable to secure many OEM deals. Microsoft’s licensing to OEMs generally had all-or-nothing requirements, meaning they had to license it for every PC they sold. This made it impractical to ship some PCs with MS-DOS preloaded and some with Novell DOS preloaded. It also made it impractical to ship PCs with Novell DOS preloaded alongside Microsoft Windows.
Microsoft notoriously included code in Windows 3.1 to give confusing messages when running under DR DOS. The messages were disabled in production Win3.1 but the damage was done.
Ultimately, Windows NT proved successful and Netware faded away, with its final release coming in May 2009. Microsoft’s anticompetitive behavior was one of the factors in the DOJ suing Microsoft, and Novell suing Microsoft by proxy through Caldera and later on its own. The legal remedies came too late though and Novell faded away along with Netware, selling off most of its software acquisitions like DR DOS and Wordperfect to other companies. Novell itself was acquired by The Attachmate Group in 2011.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.