Novell and Microsoft Collaborate
November 2, 2006 1 Comment
As if the recent Oracle Red Hat talk wasn't interesting enough, Novell today announced that they will be collaborating with Microsoft. While some people seem to think this may have been a reaction to the Oracle announcement, I can't see any way this was thrown together that fast. I'd guess talks on this were ongoing even as the Oracle rumors were starting. The open letter is missing financial details as you may have guessed, but it does include some brief information on the 3 deals that were part of this arrangement. From the FAQ:
Q. What are you announcing?
Novell and Microsoft are announcing an historic bridging of the divide between open source and proprietary software. They have signed three related agreements which, taken together, will greatly enhance interoperability between Linux and Windows and give customers greater flexibility in their IT environments. 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 compatibility. Under a patent cooperation agreement, Microsoft and Novell provide patent coverage for each others customers, giving customers peace of mind regarding patent issues. Finally, under a business cooperation agreement, Novell and Microsoft are committing to dedicate marketing and sales resources to promote joint solutions.
The agreement would seem to be a tacit acknowledgment by Microsoft that Linux is the real deal, has changed the rules of the game and is here to stay. As to what was actually gained by both sides. For Novell they are getting some increased exposure, which they desperately need right now. They are getting a resale deal for SLES (Microsoft will distribute as part of a resale arrangement approximately 70,000 coupons for SUSE Linux Enterprise Server maintenance and support per year) along with the recommendation of SLES by Microsoft if you are interested in running Linux in a Windows environment (For customers who have a significant Windows investment and want to add Linux to their IT infrastructure, Microsoft will recommend SUSE Linux Enterprise for Windows-Linux solutions). Additionally, their customers get patent protection for Samba, Mono and OpenOffice. Microsoft gets increased exposure for .NET through Mono, which should serve to help them compete better with Java in the enterprise space, and broader acceptance of the OpenXML document format, which could help them keep some of the Government contracts they may lose if OpenXML isn't broadly accepted. The companies will be working together on Virtualization, which looks to be a huge market going forward and have also built a “Collaboration Framework” which will allow them to work together more easily moving forward.
Shares of NOVL spiked almost 15% on the news, but are down about 1% in after hours trading. RHAT dropped about 2% on the news, with an additional 3% dip in after hours. The news had almost zero impact on MSFT. It should be interesting to see how both Red Hat and Sun react to this in the coming days. It will also be interesting to see how the Open Source community reacts to the news over the next 48 hours. It's a group that can be fickle at times and certainly one that isn't overly trusting of Microsoft. It's something I'll keep you updated on.
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