Home opinion-and-analysis Open Sauce Microsoft deal will hurt Novell

Microsoft deal will hurt Novell

If anything can raise the hackles of the free and open source software community it is the spectre of a big proprietary software company trying to muscle in and grab some of the action.

Make that Microsoft and the reaction is even more shrill. Not solely without reason though as we will shortly see.

When Novell cut a deal with the Redmond-based maker of Windows earlier this month, it obviously did so out of a sense of desperation. Novell's bid to try and shore up its falling revenues by selling Linux haven't exactly seen its bottomline rise a great deal. Its income from Netware, the technology which made it the king of networking in the 1980s, is more or less flat.

When the deal came about, it must have seemed like a lifeline. Going by what has been made public, Microsoft will pay Novell about $US348 million over five years. Around $US240 million of this is 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 Microsoftwhich has agreed not to raise patent claims against Novell's end-user Linux customers.

There's a few more dollars in the mix. Microsoft will dole out $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 Linux and Windows work together.

Is Microsoft afraid that Novell holds patents which it has infringed and which could turn out to be the subject of future lawsuits? Remember, Novell has already won two anti-trust lawsuits against Microsoft and a third, with WordPerfect being the subject, is ongoing.


There has been some talk that the deal violates the GPL, the license under which Linux is released. Long-time Linux advocate Nicholas Petrey quotes the attorney for the Free Software Foundation, Eben Moglen, as saying: "If you make an agreement which requires you to pay a royalty to anybody for the right to distribute GPL software, you may not distribute it under the GPL."

From all that has been made public, it appears to be a bid by Microsoft to isolate Novell from the rest of the Linux community; Novell will now be pushing its offerings as being free from likely patent problems, a subtle hint that other distributions (hint: Red Hat) may not be free from such encumbrances. There has been a bid by Microsoft to play this down by offering a similar deal to Red Hat but I'm sure that Bill Gates and Steve Ballmer were pretty sure that Red Hat wouldn't offer to play ball. However, by making such an offer, the two Harvard buddies have ensured that some doubts have already been sowed. This is typical Microsoft - the company has not always been known to play fair and square when it does business deals.

The interoperability lab will work to Microsoft's benefit; Novell has always produced better technology than the software factory at Redmond. And as the veteran tech writer Robert X. Cringely points out, this is not exactly a bad time for Microsoft to have an interoperability project going - the company has been given a deadline by the European Union about exactly such issues. Cringely also makes the point that it doesn't exactly hurt to be invoved in this effort with a company that is selling a Linux distribution which is well known in Europe. Until recently, SUSE was the best-selling distribution on the continent.

For a long time, Microsoft has been puzzling over the question - how do you wipe out a product that you can't undercut price-wise? It appears that the deal has been done to promote Novell, hit Red Hat's sales, and then pull the rug out from under Novell in the end. As Petreley points out, in the past, Microsoft has signed deals with Sybase, Symantec, Corel, Borland, and Citrix among others - and all of them were discarded once they were considered not to pose any serious competition.


But there's one factor in this whole mix which Microsoft is unable to comprehend. And that is the fervour and passion which the FOSS community, the real people behind the whole chaotic mix of technology that has made such an impact on the software world, bring to their work. The Samba team has already voiced its opposition and asked Novell to reconsider. Samba is probably one of the key projects which has brought about inter-operability between Linux and Windows; it implements sharing of UNIX resources on a heterogeneous network. Some Samba team members work for Novell.

It would be well to remember that the money which Microsoft has agreed to pay out is pocket change compared to the cash reserves it has. It is also good to bear in mind that Redmond has been trying for a long time to push Windows in the server space, the very same space in which Linux has proved to be impossible to dislodge. How do you undercut a product which has no price? Microsoft thinks it has found the way to do so.

Other factors which need to be borne in mind is that numerous companies have jumped on the Linux bandwagon in order to shore up falling revenues. Sun tried for a while and then apparently gave up; as a last-ditch effort to become relevant, Sun has released the Java source. Corel tried, accepted $US150 million from Microsoft and where is it today? Oracle is the latest to make the leap, selling Red Hat's own Linux minus the trademarks along with its Oracle database. Novell is just one more among the lot - at the beginning it did appear to be different but now it looks like it is just another one of the crowd.

While Novell may gain temporarily in terms of its bottomline, the deal will not be to its advantage in the long-term. History is simply against it.

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.