Babysitter Tapped For Novell-Microsoft Pact

With the loyalty of customers riding on the intricate relationship between
Novell  and Microsoft , it makes
sense to have someone step up and oversee the crucial pact.

Novell today said it has appointed Susan Heystee, vice president and general
manager for global strategic partners, to nurture the business and technical
cooperation efforts in the Novell-Microsoft agreement to make Linux and
Windows products work better together.

The agreement, announced by Novell CEO Ron Hovsepian and Microsoft CEO Steve Ballmer earlier this
month in San Francisco, calls for each company to exchange millions of
dollars over the next five years, covering technology, patent licensing and
marketing costs.

The companies will offer customers looking to run Linux and Windows side by
side in a virtualized environment Novell’s SUSE Linux Enterprise Server
(SLES) and a subscription for SLES support along with Microsoft Windows
Server, Microsoft Virtual Server and Microsoft Viridian.

Heystee, who also manages Novell’s relationships with IBM, HP and Dell, will
oversee the companies’ work on virtualization, Web services management and
document compatibility, the business relationship around Microsoft
distribution of SUSE Linux Enterprise Server subscriptions, and joint
marketing and sales cooperation, according to a Novell statement.

“We know customers, partners and the community are looking for concrete
results from this agreement, and I’m excited to help deliver those results,”
said Heystee, who was promoted to president of sales for Novell Americas in
August 2005.

The deal is complicated without even getting into the patent covenant, an
area Microsoft and Novell still characterize quite differently.

Novell will receive $240 million from Microsoft for roughly 70,000 SUSE
Linux Enterprise Server (SLES) “certificates” that Microsoft may use itself,
distribute or resell.

The certificates provide the bearer with a subscription support for Novell’s
SLES server Linux distribution.

Under the terms of the patent covenant agreement between Novell and
Microsoft, Novell will receive a payment from Microsoft of $108 million for
use of Novell’s patents.

Novell has agreed to pay at least $40 million a year for five years for a
total of $200 million to Microsoft as part of the patent covenant.

Microsoft, which is pumping $60 million into joint Linux-Windows marketing
and $34 million for a dedicated sales force to push the joint Linux-Windows
offering, has agreed not to assert its patents against Novell’s end-user
Linux customers.

The patent covenant is a touchy subject; some feel Linux infringes on
Microsoft’s intellectual property, and Ballmer has said publicly that Linux
“owes” Microsoft.

Hovsepian disagreed in an open letter last week. Microsoft responded that the companies have “agreed to
disagree” on the matter.

Novell’s deal comes on the same day Microsoft is launching
its latest multi-billion-dollar babies: the corporate versions of the
Windows Vista operating system, along with 2007 Office system, and Exchange
Server 2007.

Novell launched some software of its own today.

The company unveiled Open Enterprise Server 2, which will provide workgroup
services on SUSE Linux Enterprise and include virtualization, storage and
file management perks when it ships in 2007.

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