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November 4, 2006

Microsoft Novell deal analysis

Posted by David Hunter at 9:29 AM ET.

The seemingly startling nature of the Microsoft Novell Linux alliance deal announced on Thursday was bound to produce a variety of reactions. Below is a selection of those I found most relevant. Readers will recall my own assessment that the deal basically amounted to Microsoft buying some useful PR from an increasingly feeble Novell.

Bill Snyder at TheStreet:

I don’t always agree with Rick Sherlund, but Goldman’s high-profile software analyst had the best headline I’ve seen on a sell-side note in some time. Speaking of Thursday’s surprise announcement of an alliance between Microsoft and Novell, he wrote: “Calm Down, Not That Big a Deal.”

Microsoft Unlikely To Sue Over Linux Patents Despite Bluster: Experts:

Novell is acting as a proxy for its customers, and only its customers,” Ballmer said. “If they [businesses] want patent peace and interoperability, then they’ll have to look to Suse Linux.”

Observers, however, said companies don’t need peace of mind, since there’s virtually no chance Microsoft would sue potential customers, and highly unlikely it would go after a Linux distributor.

“It’s more of a competitive positioning statement than a true threat,” John Enck, analyst for Gartner, said of Ballmer’s chest pounding.

By the way, Mary Jo Foley points to this blog posting by Jason Matusow, Microsoft’s Director of Corporate Standards which explains succinctly what the patent agreement covers. And speaking of Foley:

As I said before: The crux of the deal revolves around patents and IP licensing. It sounds like Microsoft had been discussing the feasibility of forging some kind of agreement with other Linux vendors, too, but Novell was the first to bite.

In a nutshell, like Microsoft’s other recent interoperability agreements with JBoss, MySQL, SugarCRM and Zend, Microsoft’s Novell agreement has some interesting elements, but not any kind of far-reaching implications for the company’s development, marketing or deployment strategies that I can see.

Daniel Lyons at Forbes:

Microsoft has done this many times before, so often that Redmond has a name for the technique: embrace, extend and exterminate. And yet people keep doing these deals. Usually, it’s weak, struggling, desperate companies with declining market share and little hope of turning things around. In other words, just like Novell.

On Thursday night, I asked Jeff Jaffe, Novell’s chief technology officer, if he could think of a company that had partnered with Microsoft and done really well as a result. Which Microsoft alliance, I asked him, would he cite as the model that he’d like to emulate?

His response: “I think this partnership is breaking new ground.”

GrokLaw has a roundup of responses from the hardcore Open Source crowd which are expectedly apoplectic over the patent issue. One response I particularly liked was that of Simon Phipps:

Well, well. I’m sure in a few days some folk will wake up in Utah wondering what happened to them. The word on the street is that Novell had some deep patent dirt on Microsoft and went proudly to demand their bounty. Negotiations proceeded over several months, and the result (hurriedly rescheduled to respond to Oracle) was today’s shindig in San Francisco.

So how was it that at the end of the day they ended up affirming software patents (something Microsoft wants and Free software people hate), set a precedent that open source distributors owe Microsoft money, slandered GNU/Linux as derivative and encumbered, and much more? Novell is now safe in the shade of a patent exchange and gets to talk about interoperability, a few private developers have a protection they hadn’t been worrying about much and everyone else is left wondering if this means they are next for the visit from the Redmond enforcement department (AKA “BSA”). What happened? Drugs in the soda?

I suspect it has more to do with a drowning man not being too particular about who throws him the life ring.



Filed under Alliances, Coopetition, Linux, Microsoft, Novell, Open Source, Patent Lawsuits, Patents

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2 Responses to “Microsoft Novell deal analysis”

  1. Microsoft Novell deal financial details revealed -- Microsoft News Tracker Says:

    [...] Today, Novell provided a press release describing the financial details of their big deal with Microsoft announced last Thursday as well as trying to put out the fire they started in the open source community. Here are the financial details bulletized: [...]

  2. Dell joins Microsoft-Novell Linux deal -- Microsoft News Tracker Says:

    [...] As odd as it may seem for a company that just announced it would offer the Ubuntu Linux distribution on selected consumer PCs, the server side of the house at Dell has climbed on board with the controversial Microsoft-Novell Linux deal of last November. Here’s the press release: Microsoft Corp. and Novell Inc. today announced that Dell Inc. is the first major systems provider to join the business collaboration that was formed by Microsoft and Novell in response to customer demand for greater interoperability and intellectual property (IP) assurance. As part of the agreement, Dell will purchase SUSE Linux Enterprise Server certificates from Microsoft and establish a services and marketing program to migrate existing Linux users who are not Dell Linux customers to SUSE Linux Enterprise Server. [...]

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