UPDATED: Microsoft is the mortal enemy of Linux, right? Not necessarily.

In a surprise announcement, Microsoft CEO Steve Ballmer and Novell CEO Ron Hovsepian took the stage at a San Francisco hotel this afternoon to provide details on a partnership that will forever change the Linux landscape.

Microsoft is partnering with Novell on Linux. No that's not a typo. It's not a joke. It's official.

The two key components of the agreement revolve around interoperability and patents. The deal is not with Linux in general but specifically with Novell's SUSE Linux offerings. Financial terms of the deal were not disclosed.

The Microsoft Novell agreements are set to be in place until at least 2012 and do involve a flow of cash from one partner to the other on the use of patent and for joint interoperability work. As part of the deal, Microsoft will also be buying as many as 70,000 units of Novell's SUSE Linux enterprise server.

Novell and Microsoft will also create a joint research facility that focuses on interoperability between Linux and Windows. The key elements of interoperability covered by the agreement are virtualization, virtualization management, and inter-office suite (Office to OpenOffice) interoperability.

The two partners will also now collaborate on sales and marketing for both companies' interoperable solutions.

The agreement does not mean the Microsoft will now support Linux instead of Windows.

"We're still competitors but we'll be friendly whenever we're together," Ballmer said. "I'll still push Windows, and Ron [Hovsepian, Novell CEO] will still push Linux."

Ballmer explained that he sees Novell as a proxy for dealing with the open source community. Microsoft cannot engage the open source community directly according to Ballmer on intellectual and patent issues.

"We don't license our intellectual property to Linux," Ballmer said. "That's not a possibility."

Instead Novell and Microsoft have come to a patent understanding such that Microsoft will not pursue patent claims against users of Novell's SUSE Linux distributions. Ballmer went so far as to endorse Novell SUSE Linux as the version of Linux that provides business and technology piece of mind. Microsoft has also pledged not to pursue patent claims against individual open source developers or non-commercial efforts, as well.

Other Linux vendors, however, are another story and still have much to worry about.

"This patent deal does not apply to any other forms of Linux other than Novell SUSE Linux," Ballmer declared. "Others will still have issue."

Both Ballmer and Novell's Hovsepian repeatedly noted over the course of their press conference that customers were what drove them towards making the deal.

Ballmer noted that customer have told him that they run Linux but still want to run Windows.

"We care enough about the issue and we want to make clear to the market that interoperability and the IP bridge is an important thing," Ballmer said.

Both CEOs agreed that the deal provides patent peace of mind and technical interoperability that customers have been demanding.