Microsoft investment shows all is not well at Novell

By Sam Varghese
Friday, 29 August 2008 04:06

Opinion and Analysis

A little more than a week ago, Microsoft announced it would invest an additional $US100 million in Novell for the purchase of certificates which customers can redeem for SUSE Linux service and support.

From what is publicly known about the deal that the two companies signed in November 2006 - the $US100 million is an extension of this deal - Microsoft has agreed to pay Novell around $US240 million for SUSE Linux Enterprise Server "certificates" that Microsoft can resell, distribute or use.

The two companies have signed a deal on patents under which Novell will get $US108 million from Microsoft for use of Novell's patents. Novell will fork out something in the region of $US40 million annually for five years to Microsoft which has agreed not to raise patent claims against Novell's end-user GNU/Linux customers.

The remainder of the terms made public say Microsoft will spend $US60 million on joint Linux/Windows marketing, mostly for pushing virtualisation. Redmond is paying $US34 million to push the joint Linux/Windows offering. An interoperability lab is also part of the deal - a group that works to improve the way GNU/Linux and Windows work together.

The extension of the deal indicates one thing - all the money which has been pumped into Novell so far is not yielding the returns which either company hoped for and it is now time to further subsidise SUSE Linux.

Yes, subsidise SUSE Linux. That is the main game from Microsoft's perspective - the subsidising of a GNU/Linux distribution which Microsoft is slowly infiltrating and trying to control. All this talk about interoperability is so much window (pun intended) dressing.