Novell told delegates that Netware 7 would be renamed and combined with the SuSE Linux Enterprise Server in one package.
The new product will give users the option of using either Netware or Linux to control their networks, and includes Linux networking services that support both environments.
Novell chief executive Jack Messman said the Open Enterprise Server would start shipping by the end of the year.
Al Gillen, an analyst at IDC, said, "Novell's installed base represents a large, loyal group of customers who are prime prospects to deploy SuSE Linux alongside their Netware systems." He described Open Enterprise Server as "customer-friendly".
Netware will not be made open source, according to Novell vice-chairman Chris Stone. He acknowledged that the company's strategy over the past year was to push open source computing and networking - illustrated by the big acquisitions of SuSE Linux and Ximian - but he said it is "vital" the company does not relinquish its main proprietary software development.
Stone called for the "peaceful coexistence of proprietary and open-source products" in the enterprise market.
l Novell's Linux strategy was given a boost after it received backing from two of the world's biggest manufacturers of desktop PCs and servers.
Hewlett-Packard and IBM announced at Brainshare that they would ship products using Novell's SuSE Linux operating system. IBM said it would give users the choice of having SuSE Linux Enterprise Server preloaded onto any of its main server line.
IBM said it would also allow users the option of loading Red Hat's Linux onto its servers.
In another boon for Novell, Hewlett-Packard said it was extending its support for the SuSE platform on its servers, to providing the operating system on its desktop PCs too.
Next for Novell
The next version of Novell's Netware network operating system will be combined with SuSE Linux Enterprise Server
Novell's Zenworks products will be combined with Ximian's Red Carpet Enterprise Linux-based management system
Novell's Yast (Yet Another Set-up Tool) will be made open source
The Novell iFolder personal storage and filing software will become open source
Open source Linux software from Novell will be loaded onto desktops and servers from Hewlett-Packard and IBM.
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