TechEd:Novell claims to be the main financial beneficiary from Microsoft deal

Novell used the Microsoft’s TechEd 2007 conference to insist that it was the major beneficiary of its licensing deal with company.


Novell used the Microsoft’s TechEd 2007 conference to insist that it was the major beneficiary of its licensing deal with company.

As part of a multifaceted arrangement forged last November, the two companies agreed not to sue each other's customers over IP issues. Included in this understanding was a series of payments going between them.

It might be expected that Microsoft would be gain more money from the deal, after its recent complaints that open source and Linux violate 235 Microsoft patents. But that is not the case, according to Justin Steinman, director product marketing for Linux and Open Platform Solutions at Novell.

"Actually, Novell gets more money," Steinman claimed. He said that even when discounting Microsoft payments to Novell for access to the latter’s Suse Linux, Novell still gets more.

Steinman attributed the disparity to Microsoft simply having more customers than Novell: "They're paying for coverage for more customers." He said he was not aware of the exact difference in the amount of money changing hands.

Steinman recited the oft-repeated mantra that the deal with Microsoft was what customers wanted, and added that they wished for the IP issue to go away and to have Linux interoperability with Windows.

In a statement, Microsoft said the financial amount of the arrangement will vary, adding: "Both Microsoft and Novell have patent portfolios, and as part of the patent agreement, each is paying the other for access to these patents. There is an upfront payment from Microsoft to Novell."

The statement continued: "Novell will pay Microsoft on an ongoing basis. The total dollar amount depends on how big certain Novell businesses grow over time. It is impossible to say how all payments will net out until Novell's business performance over the next several years is factored in."

Under the agreement, Microsoft is selling Suse Linux subscriptions certificates to its own customers wanting Linux. The companies are also working to support virtualisation of each other's operating systems, and aligning on standards-based systems management and directory and identity interoperability. Additionally, there will be document formatting compatibility between Microsoft Office and Novell OpenOffice documents.

Al Gillen, research vice president at IDC, said the contract makes sense in that customers would not want Microsoft suing them over IP issues: "In that context, from a customer's perspective it's good. [But] I realise the [open source] community dislikes it."

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