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Created by Chris Cox on November 23, 2006, at 07:40 AM

Novell enters into a partnership with Microsoft. As a part of that partnership there are some agreements that are made to protect the customer, both Novell's and Microsoft's. The agreements are that Novell will covenant not to sue Microsoft customers that might infringe on Novell's IP (patents) and that Microsoft will covenant not to sue Novell (e.g. SUSE Enterprise) customers that might infringe on Microsoft's IP (patents). As a part of the partnership, Novell will receive payment from Microsoft for a fixed number of SUSE Enterprise licenses and Microsoft will use these as needed when a customer solution requires Linux. Thus SUSE Enterprise becomes Microsoft's choice of preferred Linux. However, Novell is not buying some number of fixed licenses of Microsoft product, but instead, will pay a percentage of the sale of SUSE Enterprise to Microsoft. And that's what has caused most of the problems with this partnership. A large scale migraine for Novell. Possibly life threatening.

I truly believe that Novell thought it was in their own best interest. First and foremost, I believe that Novell really, really needed the money. Now, Novell is a much, much larger company than say... Red Hat, but the "new" Novell is finding it to be a struggle to compete against Red Hat which is pretty entrenched in many enterprises. However, those current deployments are generally not of an "enterprise" nature. Early adopters of "enterprise" Linux use it for simple (yet important) tasks like file and printer sharing, web and mail services. Some niche players use Linux for scientific tasks, but those instances generally are not the primary customer of Novell or Red Hat. So Novell needs the money because they "play second fiddle" to Red Hat? No. I think Novell was and is still prepared to compete with Red Hat financially. I believe the money is due to the problem affecting most companies right now. The way measurement dates and stock options were handled. This is forcing many companies to restate profits... and the end result is not pretty.

Personally, I disagree with Bruce Perens and Nicholas Petreley, both of which say that SUSE Enterprise (and Novell) must die because of the deal. Both of these individuals are dealing only with hard absolutes. The problem with man-made absolutes is that we are NOT the true source of absolute truth.

As a result of delaying their SEC earnings report, NASDAQ issued a de-listing notice to Novell. Which is not necessarily a problem. What is a problem now is that Wells Fargo is saying that Novell is in default under terms of an indenture of $600 million due in 2024.

Because of these two things, primarily the first, I believe Novell is needing something "good" on the books for the next few quarters to offset the "bad" that they (and many other companies) are having to report. Let's face it, IBM has already helped Novell... and Microsoft is another company with very deep pockets. Making the deal with Microsoft makes "good" business sense.

However, the end result may not be determined by balance sheets and inter-corporate deals. The ultimate controlling factor is the perception of Novell's market. And right now, that perception appears to be leaning heavily away from Novell. Many leaders in the free software movement have already spoke out against the Novell and Microsoft deal basically from the viewpoint that the deal is unfair to other Linux distributions (which effectively means Red Hat, though most of the remarks are being made by non-"enterprise" users of Linux). Several letters have been crafted. The latest being one by Bruce Perens (often times too outspoken critic of many things). That letter, http://techp.org/petition/show/1 is simply a vicious attack against Novell, a promise to never ever use SUSE and it is an online petition allowing others to vent against Novell as they swear off the use of SUSE.

The enemy of Novell suddenly has ceased to be Microsoft and SCO and now is the very community of developers that have helped to make SUSE Enterprise a strong Linux distribution. Novell has attempted to take a very defensive stance against the mass rebellion by issuing their own response, http://www.novell.com/linux/microsoft/community_open_letter.html. And so verbally, Novell is trying to make it very clear that they are behind free software 100%, the bad news is that many "leaders" in the free software community are taking absolute stands against Novell and will not be swayed until Novell dies. Most of them "say" that forgiveness will be given if Novell simply backs out of the Microsoft deal entirely, and some to a much, much lesser extent "say" they'll be satisfied as long as all Linux distributions are covered by Microsoft's "covenant not to sue." Ultimately, however, Novell has crossed a line in their eyes and for them, it means that Novell must die, regardless of what Novell does at this point. And that might be Novell's saving grace. By taking such strong sides against SUSE and Novell, these "witch hunt" movements might actually fail so suade.

Novell has unwittingly dug a large pit. It will be very interesting to see how all of this plays out. The really sad story is that the ultimate loser is really the customer. SUSE and SUSE Enterprise are excellent Linux distributions. If "we" decide to take out Novell (for whatever reason), we are also killing off the "good" as well. Back to Site Blogs

Novell And Microsoft