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Microsoft and Novell Still Bosom Buddies

In November of 2006, Microsoft rocked the Linux world by signing a landmark patent and interoperability agreement with Novell. According to the two partners, it's an agreement that today, two and half years later is still paying off, even during the current recession.

Microsoft (NASDAQ: MSFT) and Novell (NASDAQ: NOVL) say they've added 100 new joint customers in the last six months. They also say that some of those customers have come as a result of a new Linux support program that offers migration assistance to users other Linux operating systems, particularly Red Hat Enterprise Linux. The real thrust of the Microsoft/Novell agreement originally revolved around interoperability and it's an area that is still the key focus, according to executives from the two companies.

"Our Microsoft partnership is clearly a very key and strategic part of our Linux business not only in terms of new customers but in terms of the innovation and work we do around interoperability between Windows and Linux," Susan Heystee, general manager for global strategic alliances at Novell, told InternetNews.com.

Customers however, are still a key metric in measuring the relative success of the Microsoft/Novell collaboration. Heystee said that in just the past six months, the two companies have signed more than 100 new customers, which is double the rate in the first two years of their relationship.

Adding additional momentum is the recent release of Novell's SUSE Linux Enterprise Server 11 (SLES) which came out in March of this year. Heystee noted that anytime there is a new release of the platform, it creates interest.

In 2006, when the initial partnership agreement was signed, Novell was shipping SLES 10. As part of the partnership agreement, Microsoft is reselling SLES subscriptions. According to Heystee, Novell handles the Linux renewals for their joint customers that might be moving to SLES 11.

During Novell's recent second quarter 2009 earnings call, the company reported it had invoiced $213 million, or 89 percent of the original $240 million agreement with Microsoft.

Support for Red Hat

According to Heystee, ten of the hundred new customers that Novell and Microsoft acquired during the last six months, came from their extended Linux support offering for users of other Linux operating systems.

As part of the program, Novell provides support for both RHEL (Red Hat Enterprise Linux)and CentOS for up to two years while the user migrates their installation over to SUSE Linux Enterprise.

"We're seeing good momentum around the offering in terms of customers to date," Ted MacLean, general manager of strategic partnerships and licensing at Microsoft, told InternetNews.com. "And we're seeing an increasing size of our opportunities pipeline as a result of the program."

While Microsoft might be targeting Red Hat customers for migration to Novell's Linux with the Linux support program – Microsoft during the last six months has also engaged with Red Hat in a partnership of sorts as well.

In February, Red Hat and Microsoft inked an interoperability pact around virtualization on each others operating systems.

MacLean commented that there are some major differences between what Microsoft is doing with Red Hat and what they do with Novell. For one, the Novell agreement includes patent rights that are not part of the Red Hat agreement. Microsoft has claimed that open source software infringes on its intellectual property. The deal with Novell provides a patent covenant for Novell users that protects joint customers against intellectual property infringement.

The Red Hat agreement also revolves around certification of virtualization technology, such that Red Hat's Enterprise Linux is certified to run on Microsoft's virtualization technology and vice versa.

Novell's Heystee noted that her company is engaged in joint engineering efforts with Microsoft to ensure better interoperability between Novell's Linux and Windows.

Among the interoperability efforts that Novell and Microsoft are currently engaged in is a cross platform accessibility framework. As well the two partners are working on systems management initiatives.

The partnership also is being leveraged by both Novell and Microsoft as an asset in the current economic downturn.

"The economy is tough and is hitting all of our customers in different ways," MacLean said. "Our partnership gives us a special opportunity to jointly go out and listen to customers. The more we listen to their needs in this economy the better we're able to align solutions to their needs."