Developers, Developers, Developers
I think Novell actaully knew what it had to do to compete with LANManager, but was unable to do so due to the mess its development model had become. Microsoft made it easy for the developers with MSDN, while it became so hard to write code for Netware that even Novell could no longer do it. Novell was announcing good feature updates, but then was unable to deliver. The best engineers had moved on and those that replaced them just went round in circles slowly making things worse instead of better.