Tuesday, 23 November 2010 13:34

Microsoft buys insurance from Novell


Microsoft has done so well out of the Novell sale that I wouldn't be surprised to find out some months down the line that the whole deal was planned and packaged in Redmond.

Novell was bought by a private software company Attachmate Corporation yesterday.

There are several plus points for Microsoft.

First, the sale has removed the spectre of VMWare ever being in control of Novell. This would have been a nightmare scenario for Microsoft's Windows Server business given that VMWare is the virtual computing company.

Second, Microsoft's acquisition of 882 patents for a bargain basement price of $US450 million will enable it to continue with its Novell agreement.

Thirdly, it indicates to all and sundry that Microsoft knows that it cannot compete effectively in markets where big competitors - Google and Apple - have established beachheads.

Microsoft has never been an innovative company but was loath to accept this in public; by purchasing Novell's patents en bloc, it has now made a public confession that it is looking to make money from licensing deals, not new products.

Changes in Novell are unlikely to take place for the next three months. After that, it is very likely that the SUSE Linux business will be sold - but only after the term of the Novell deal with Microsoft runs out in November 2011.

Over the last two years, there have often been times when Microsoft has made noises about patents that it claims are being infringed by Linux; these growlings have resulted in a host of smaller companies which lack the financial and legal muscle to engage Microsoft in a patent battle signing licensing deals with the Redmond giant.

The signing of such deals will accelerate in 2011. No patent cases are likely to be fought in court, not until two of the bigger technology companies find that a little money (from their perspective) cannot settle the dust and keep the profits rolling in.

The gains for Novell are minimal. The sale price was only marginally more than what it was offered by hedge fund Elliott Associates eight months ago.

In fact, some lawyers are already "investigating possible breaches of fiduciary duty and other violations of law by members of the Board of Directors of Novell... arising from the proposed sale of Novell to Attachmate Corporation".

There is likely to be a cleaning out in Novell early in the new year with staff numbers being cut to boost the bottom line.

And Novell's contribution to open source projects will definitely drop dramatically as 2011 progresses.

In the end, it's a happy Christmas for Microsoft and those in the upper echelons of Novell.

For the rest, it will be pink slips and the prospect of looking for a job in a US economy that is stuck in reverse gear and likely to move backwards in the new year.


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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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