Novell, Microsoft Ink Linux Partnership

In a surprise move that left many jaws on the floor, Microsoft and Novell held a joint press conference Thursday afternoon announcing a broad partnership to make sure Windows interoperates with SUSE Linux, and includes promises not to sue over patents.

The agreement endures until 2012 and includes joint development, marketing and support of solutions to make Windows and Linux work better together. Essentially, Novell's SUSE Linux will become the Linux distribution recommended by Microsoft to seamlessly work with Windows and not be subject to any patent claims from the Redmond company.

"I recognize that Linux plays an important role in the IT infrastructure for a number of our customers, and will continue to play an important role," Microsoft CEO Steve Ballmer told members of the press in San Francisco. "The technical aspects of this agreement will result in higher levels of interop between Microsoft Windows and Novell's SUSE Linux."

The two companies are focusing on three technical areas for collaboration: virtualization, Web services for managing physical and virtual servers, and document format compatibility. Novell and Microsoft will jointly develop a virtualization solution for both platforms, as well as federating Microsoft Active Directory with Novell eDirectory.

OpenOffice will also play a role in the agreement. Microsoft and Novell will work to ensure documents created in the free productivity suite can seamlessly work in Office 2007, and vice versa. Translators will be made available to improve interoperability between Open XML and OpenDocument formats.

Intellectual property has become a major point of contention in the open source world, and a concern for enterprises looking to adopt the software. Because it has millions of different contributors and evolved over decades, Linux has come under scrutiny by companies such as SCO for utilizing code without a proper license.

In turn, as part of the agreement, Microsoft is providing a covenant not to assert its patent rights against customers of SUSE Linux, and Novell will do the same for customers of Windows. However, Novell's pledge is largely symbolic, as Microsoft already protects its customers from such claims.

Microsoft will also purchase 70,000 "coupons" from Novell that offer the recipient a one-year subscription for maintenance and updates to SUSE Linux Enterprise Server. The company will distribute the coupons to customers as a way to convince them to choose Novell's Linux rather than that offered by a rival such as Red Hat.

So why was Microsoft so receptive when Novell approached it about such a deal in April of this year, and when the two companies sat down to discuss options in May? The answer may lie in a point quietly announced at the end of the press conference: Novell will make ongoing royalty payments to Microsoft for all open source products it ships.

Financial terms of the deal were not disclosed, but Microsoft did say that because it ships more products than Novell, the open source firm will be on the receiving end of the net balance payment. In turn, Novell will pay royalties based on the revenue it earns from the sale of open source software and solutions.

Even with the newfound partnership and planned collaboration, both Microsoft CEO Steve Ballmer and Novell CEO Ron Hovsepian emphasized the companies remained fierce competitors. Ballmer said he will continue trying to convince customers to switch entirely to Microsoft products, but acknowledges they may not always listen when he yells, "Windows, Windows, Windows!"

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