RealTime IT News

Novell-Microsoft: After The Deal

It has been seven weeks since Novell and Microsoft announced their interoperability and patent protection deal. This week the companies revealed the first fruits of that pact and with them the first big-name staff defection.

Credit Suisse, Deutsche Bank and AIG Technologies will be receiving SUSE Linux Enterprise subscription certificates from Microsoft. As part of the deal, Microsoft acquired 70,000 certificates for SUSE Linux Enterprise.

As revealed in a November SEC filing made by Novell the value of those certificates to Novell totals $240 million. To date, Novell claims that more than 16,000 certificates for SUSE Linux Enterprise have been activated.

"For us, interoperability is key," said Tom Sanzone, CIO of Credit Suisse, in a statement. "We see both Windows and SUSE Linux as strategic platforms going forward, and we're very pleased to see Microsoft and Novell, who support these platforms, step up and work on interoperability. This is a great model because it provides a bridge to connect the open source and proprietary software to benefit customers."

But the reactions to the deal haven't been all positive despite the fact that a Novell-Microsoft-sponsored study of 201 IT professionals found, not surprisingly, that over 90 percent approved of the deal.

For starters, the open source community greeted it with much skepticism and animosity from the beginning, with one of the loudest voices of protest coming from within Novell's own Samba developer ranks. Samba is an open source component of most Linux distributions that enables file and printer sharing between Windows and Linux hosts. Its use is explicitly covered and protected under the terms of the Microsoft-Novell pact.

Samba developers, including Novell employee Jeremy Allison, issued an open letter denouncing the Novell-Microsoft patent agreement as being divisive. Allison is now resigning from Novell in protest and heading to work for Google in 2007. Allison is also well known in the Linux community for being the host of the annual Golden Penguin Bowl at the LinuxWorld conference.

And Red Hat , Novell's main competitor in the Linux space, remains unfazed by Novell's claims.

Yesterday Red Hat reported third-quarter earnings that beat the consensus analysis estimates with earnings of 14 cents a share and showing new subscription growth in the quarter. Red Hat reported that it had signed up 12,000 new customers in the quarter for a total of 32,000 net new customers years to date.

In an after-market conference call, Red Hat CEO Matthew Szulik applauded the loyalty that Red Hat customers have shown Red Hat, especially in the face of competitive threats from Novell and Oracle.

In response to a question, Szulik knocked the Novell-Microsoft announcement of the three customer wins.

"Those were existing accounts," Szulik said in regards to Novell's announcement about wins with Credit Suisse, Deutsche Bank and AIG Technologies. "They were older engagements and we were not involved in competitive situations."

Novell released its SUSE Linux Enterprise 10 distribution earlier this year and isn't expected to update it until 2007. Red Hat, however, didn't release a version update to its Red Hat Enterprise Linux in 2006 but is expected to release RHEL 5 in early 2007. RHEL 5 is currently in beta.