Microsoft, Novell in Windows-Linux tie-up

Mumbai: Microsoft Corporation and Novell Inc has announced a broad business and technical collaboration agreement to build, market and support a series of new solutions to make Novell and Microsoft products work better together. The two companies also agreed to provide each other's customers with patent coverage for their respective products. These agreements will be in place until at least 2012.

Under the agreement, customers will get choice and flexibility through improved interoperability and manageability between Windows and Linux.

"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, 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 virtualisation and Web services management to create new opportunities for our companies and our customers."

While Novell will gain clear leadership among Linux platform and open source software providers on interoperability for mixed-source environments, Microsoft will officially recommend SUSE Linux Enterprise for customers who want Windows and Linux solutions.

Microsoft will also 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 other's 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."

To set up joint research facility
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 joint research facility will pursue new software solutions for virtualisation, management and document format compatibility.

Under the patent cooperation agreement, both companies will make upfront payments in exchange for a release from any potential liability for use of each other's 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.

Under the business collaboration agreement, the companies will pursue a variety of joint marketing activities to promote the adoption of the technologies they are collaborating on. Microsoft will also purchase a quantity of coupons from Novell that entitle the recipient to a one-year subscription for maintenance and updates to SUSE Linux Enterprise Server.

Microsoft will annually make available approximately 70,000 of these coupons to customers, with a mix of priority and standard support services. By providing its customers with these coupons, Microsoft is enabling companies 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 intellectual property rights.

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

Good news for industry: Butler Group research head
According to Tim Jennings, head of research, Butler Group, “This is good news for the industry, as it improves the ability for enterprise customers to deliver value from mixed environments. The deal is certainly good for Novell – it has been playing second fiddle to Red Hat in the enterprise Linux market (and very bad for Red Hat, coming on the back of its Oracle issues of last week).

"For Microsoft, it puts it in a stronger position to support large heterogeneous environments and strengthens both its enterprise play and its positioning re open source (part of a longer term trend, following deals with XenSource, SugarCRM, Zend).

"I think this is also a smart move, in that it makes it easier for Microsoft to defend its market position against Oracle, IBM, and Sun, by partnering with a credible player that is not a top-tier competitor.