[FoRK] Microsoft and Novell: Fox marries chicken, both move into henhouse

Stephen D. Williams < sdw at lig.net > on > Thu Nov 2 20:17:26 PST 2006


Microsoft and Novell: Fox marries chicken, both move into henhouse
Posted by Dana Gardner @ 1:57 pm

The stunning news that Microsoft will partner with Novell to support 
SuSe Linux as an alternative deployment platform to Windows — and that 
they announce it on the cusp of the arrival of Windows Vista! — is one 
of the most intriguing events in IT in some time.

One has to surmise that the Oracle move on Unbreakable Linux must have 
played into the timing, if not the substance, of this Microsoft-Novell 
barn-burner. As I blogged just this week, Oracle has reshuffled the deck 
and forced the hand of all the players in the open source business. We 
look to IBM with tired eyes.

I have not yet heard the Steve Ballmer announcement at 5 p.m. ET today. 
But already I have some major questions:

–Is Microsoft in a sense in league with Oracle, perhaps in an 
uncoordinated way, to subvert the commercial Linux — and by extension 
open source — business models? If you can get Red Hat Enterprise Linux 
support from Oracle for $99 and up, and you can get SuSe Linux support 
from Microsoft (assuming at price parity to Oracle), then all bets are 
off for commercial Linux businesses. These moves take the oxygen from 
the other Linux vendors. Linux will be fine, I suppose, but given their 
sales forces, Oracle and Microsoft will soon dominate the Linux distro 
business, and use it to sell their own wares. That could mean they own 
and then snuff out the open source components that threaten them.

–Or is Microsoft in opposition to Oracle, not in principle but in 
practice? That is, if Oracle can make good business selling Linux 
support and moving up the stack for service support for both commercial 
and open source components — to complete with IBM, HP, Sun, and BEA — 
why shouldn't Microsoft, too? Both Microsoft and Oracle have deep 
pockets and highly profitable other product lines to keep the going as 
they hollow-out the lower-stack components business.

Wow, again the implications are staggering. More to come when I hear the 
Microsoft announcement.


Maybe it has more to do with virtualization as a weapon than subverting 
the business model through cheap support. Seems Novell gets to keep its 
support revenue, but what does Microsoft get? Take a look.

Here are the major points of the release:

Novell and Microsoft have signed three related agreements with the 
objective to enhance interoperability between Linux and Windows and give 
customers more flexibility in their IT environments.

1) Under a technical cooperation agreement, Novell and Microsoft will 
work together in three primary areas to deliver new solutions to 
customers: virtualization, web services management and document format 

2) Under a patent cooperation agreement, Microsoft and Novell provide 
patent coverage for their respective customers, giving customers peace 
of mind regarding intellectual property issues.

3) Under a business cooperation agreement, Novell and Microsoft are 
committing to dedicate marketing and sales resources to promote joint 

Here's the release:

Microsoft and Novell Announce Broad Collaboration on Windows and Linux 
Interoperability and Support

Companies also announce a patent agreement covering proprietary and open 
source products

REDMOND, Wash., and WALTHAM, Mass. – Nov. 2, 2006 – Microsoft and Novell 
today announced a set of broad business and technical collaboration 
agreements to build, market and support a series of new solutions to 
make Novell and Microsoft products work better together. The two 
companies also announced an agreement to provide each others’ customers 
with patent coverage for their respective products.

These agreements will be in place until at least 2012. Under this new 
model, customers will realize unprecedented choice and flexibility 
through improved interoperability and manageability between Windows and 

“They said it couldn’t be done. This is a new model and a true evolution 
of our relationship that we think customers will immediately find 
compelling because it delivers practical value by bringing two of their 
most important platform investments closer together,” said Steve 
Ballmer, president and CEO of Microsoft. “We’re excited to work with 
Novell, whose strengths include its heritage as a mixed source company. 
Resolving our patent issues enables a combined focus on virtualization 
and Web Services Management to create new opportunities for our 
companies and our customers.”

Under the agreement, Novell is establishing clear leadership among Linux 
platform and open source software providers on interoperability for 
mixed source environments. As a result, Microsoft will officially 
recommend SUSE Linux Enterprise for customers who want Windows-Linux 
solutions. Additionally, Microsoft will distribute coupons for SUSE 
Linux Enterprise Server maintenance and support, so that customers can 
benefit from the use of an interoperable version of Linux with patent 
coverage, as well as the collaborative work between the two companies. 
“Too often technology companies ask their customers to adapt to them.

Today we are adapting to our customers,” said Ron Hovsepian, president 
and CEO of Novell. “Microsoft and Novell are enabling customers to take 
advantage of each others’ products where it makes sense in their 
enterprise infrastructure. We jointly believe that our business and 
patent agreements make it possible to offer the highest level of 
interoperability with the assurance that both our companies stand behind 
these solutions.”

Agreement has broad scope

The two companies will create a joint research facility at which 
Microsoft and Novell technical experts will architect and test new 
software solutions and work with customers and the community to build 
and support these technologies. The agreement between Microsoft and 
Novell focuses on three technical areas that provide important value and 
choice to the market:

* Virtualization. Virtualization is one of the most important trends in 
the industry. Customers tell us that virtualization is one way they can 
consolidate and more easily manage rapidly growing server workloads and 
their large set of server applications. Microsoft and Novell will 
jointly develop the most compelling virtualization offering in the 
market for Linux and Windows.

* Web Services for managing physical and virtual servers. Web Services 
and service oriented architectures continue to be one of the defining 
ways software companies can deliver greater value to customers. 
Microsoft and Novell will undertake work to make it easier for customers 
to manage mixed Windows and SUSE Linux Enterprise environments and to 
make it easier for customers to federate Microsoft Active Directory with 
Novell eDirectory.

* Document Format Compatibility. Microsoft and Novell have been focusing 
on ways to improve interoperability between office productivity 
applications. The two companies will now work together on ways for 
OpenOffice and Microsoft Office users to best share documents and both 
will take steps to make translators available to improve 
interoperability between Open XML and OpenDocument Formats.

“As a result of this collaboration, customers will now be able to run 
virtualized Linux on Windows or virtualized Windows on Linux,” said Jeff 
Jaffe, executive vice president and chief technology officer at Novell. 
“Customers continually ask us how they can consolidate servers with 
multiple operating systems through virtualization. By working together, 
Novell and Microsoft enable customers to choose the operating system 
that best fits their application and business needs.”

The patent agreement enables Microsoft and Novell to address the patent 
issues between them, which will give customers assurance of protection 
against patent infringement claims. It gives customers confidence the 
technologies they use and deploy in their environments are compliant 
with the two companies’ patents.

As part of this agreement, Microsoft will provide a covenant not to 
assert its patent rights against customers who have purchased SUSE Linux 
Enterprise Server or other covered products from Novell, and Novell will 
provide an identical covenant to customers who have a licensed version 
of Windows or other covered products from Microsoft.

“Both companies had to think creatively about how to create an 
intellectual property bridge between the two worlds of open source and 
proprietary software,” said Brad Smith, senior vice president and 
general counsel of Microsoft. “This bridge is built on respect for the 
innovations of each company, the open source community, and a passion 
for what we can deliver for our customers together.”

Customer and partner reaction

Microsoft and Novell announced the new alliance at an event attended by 
several customers and partners.

"We applaud Novell and Microsoft in their efforts to provide greater 
Windows and Linux interoperability,” said Paul Otellini, president and 
chief executive officer of Intel Corporation. “Customers want solutions 
that meet their individual needs and higher levels of software 
interoperability gives them the ability to more easily make the best 

“This technology and business collaboration provides a model that allows 
Microsoft and Novell to develop new solutions to enable open source and 
proprietary software to work better together in a mixed source 
environment. We applaud these two companies for doing the hard work to 
build a bridge between Windows and Linux,” said Shane Robison, EVP, 
Chief Strategy & Technology Officer, Hewlett-Packard Company.

"IBM is encouraged to see more industry endorsement of mixed source 
solutions that promote open standards and offer assurances to customers 
and open communities," said Steve Mills, Senior Vice President and Group 
Executive, IBM Software. "We are particularly glad to see Microsoft 
supporting interoperability with the industry standard Open Document 
Format. Open Documents give customers choice and help unlock broad 
industry creativity, allowing access to a new generation of innovative 
applications. Our view continues to be that interoperability and choice 
are key values that customers demand and deserve."

“SAP has been the first enterprise application vendor to run our apps on 
Linux, while we have more Windows based deployments than any other 
platform,” said Shai Agassi, President Product and Technology at SAP. 
“Today's announcement means that customers can now choose their 
preferred operating system for each part of their SAP implementation 
with the confidence that the systems will have strong interoperability 
and be supported by SAP, Novell and Microsoft - both companies being 
strong SAP partners”

"One of the key challenges in government is IT interoperability. We 
commend Microsoft and Novell for their collaboration and their efforts 
to build bridges in the interoperability area, which will help 
government to better serve our customers, our business community and our 
citizens," said Thomas Jarrett, Secretary of the Department of 
Technology/CIO, State of Delaware.

Good for the open source community

Novell officials noted that one of their priorities in working toward 
the agreement with Microsoft was making sure that the agreement made 
sense for the open source community. As part of today's agreement, 
Novell and Microsoft are announcing three important commitments. First, 
Microsoft will work with Novell and actively contribute to several open 
source software projects, including projects focused on office file 
formats and web services management. Second, Microsoft will not assert 
its patents against individual non-commercial open source developers and 
users. And third, Microsoft is promising not to assert its patents 
against individual contributors to openSUSE.org whose code is included 
in the SUSE Linux Enterprise platform, including SUSE Linux Enterprise 
Server and SUSE Linux Enterprise Desktop.

"Today's announcement by Microsoft and Novell marks a significant 
milestone in the adoption of Linux," said Stuart Cohen, CEO, Open Source 
Development Labs. "By choosing a course of co-opetition, Microsoft 
acknowledges the critical role that open source plays today in 
enterprise IT infrastructure. We appreciate the role Novell is playing 
to help bridge the gap between Microsoft and the open source community. 
We are glad to see these two companies collaborating to further diminish 
the legal threat posed to developers and customers by patent assertions. 
This is good for customer confidence in Linux, good for the open source 
community, and the broader IT ecosystem."

Additional announcement details

Like many commercial transactions, the financial terms of the agreement 
are not being disclosed at this time.

Under the technical collaboration agreement, the companies will create a 
joint research facility and pursue new software solutions for 
virtualization, management, and document format compatibility. These are 
potentially huge markets – IDC projects the overall market for virtual 
machine software to be $1.8 billion by 2010, and the overall market for 
distributed system management software to be $10.2 billion by 2010 – and 
the companies believe their investment in interoperability will make 
their respective products more attractive to customers.

Under the business collaboration agreement, the companies will pursue a 
variety of joint marketing activities. In addition, Microsoft will 
annually purchase as part of a resale arrangement approximately 70,000 
coupons, with a mix of priority and standard support, for SUSE Linux 
Enterprise Server maintenance subscriptions. This program enables 
customers to benefit from the use of the new software solutions 
developed through the collaborative research effort, as well as a 
version of Linux that is covered with respect to Microsoft’s IP rights.

Under the patent agreement, both companies will make up-front payments 
in exchange for a release from any potential liability for use of each 
others patented intellectual property, with a net balancing payment from 
Microsoft to Novell reflecting the larger applicable volume of 
Microsoft’s product shipments. Novell will also make running royalty 
payments based on a percentage of its revenues from open source products.

The parties are assessing the accounting treatment for the agreements 
and will provide information as required in the course of their filings 
with the SEC.

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