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Welcome to virtuallinux.org. You are currently reading the article "Linux Deal: Too Good to Last?". All articles on virtuallinux.org pertain to the ongoing assult on the worlds greatest Operating system. Continue on reading about "Linux Deal: Too Good to Last?"
Linux Deal: Too Good to Last?
Posted on Thursday, December 21 2006 @ 20:56:36 EST by linuxwiz |
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It was a shocker of a reconciliation --
Microsoft Corp. teaming with Novell Inc. on a Linux deal. But Steve
Ballmer couldn't let things stand. Within days after the two companies
announced the historical agreement, Microsoft's CEO started talking
about what it meant for intellectual property, and the resulting furor
left the newly strategic partners issuing dueling statements on each of
its Web sites.
Within a month of the agreement, announced in early November,
partners were left scratching their heads. Should they study the
Microsoft-Novell agreement to map out a business strategy leveraging
the new alliance, or head to the Microsoft Partner Portal for the old
documents on competitive selling against Netware, Groupwise, Novell's
directory and Linux?
The most contentious portion of the
five-year deal is an agreement between Novell and Microsoft to provide
patent protection from each other to each company's mutual paying
customers. On the Linux side, the arrangement applies only to Novell's
SuSE Linux Enterprise, theoretically strengthening that distribution's
market strength.
Other terms include about $450 million in payments from Microsoft to
Novell for the rights to at least 350,000 SuSE Linux Enterprise
subscriptions, joint marketing and advertising, a joint sales force and
a patent-agreement payment. Novell will pay Microsoft at least $40
million before the deal expires on Jan. 1, 2012. The companies are also
supposed to work together on Windows-Linux interoperability in such
areas as virtualization, Web services management and document
translation, according to summaries of the deal.
Jupiter Research analyst Joe Wilcox offered a succinct summary on
his Microsoft Monitor blog for what the deal does for the two
companies: "The arrangement is a makeshift way for the two companies to
work around their oil-and-water licensing models."
Then Ballmer threw down a glove during a Q&A session after his
keynote speech at the Professional Association for SQL Server (PASS)
Community Summit in Seattle in mid-November. "The fact that [Linux]
uses our patented intellectual property is a problem for our
shareholders," Ballmer was quoted as saying. "You could say anybody who
has got Linux in their data center today sort of has an undisclosed
balance sheet liability."
Suddenly Ballmer was making it look like the deal meant that Novell
was paying protection money on behalf of the Linux community.
Novell CEO Ron Hovsepian fired back in an open letter on Novell's
Web site. "Importantly, our agreement with Microsoft is in no way an
acknowledgment that Linux infringes upon any Microsoft intellectual
property. When we entered the patent cooperation agreement with
Microsoft, Novell did not agree or admit that Linux or any other Novell
offering violates Microsoft patents," Hovsepian wrote.
To Al Gillen, an analyst with Framingham, Mass.-based research firm
IDC, the episode brings back some bad memories. "We went through a
period of time when the hype machine at Microsoft was generating
[messages that] 'open source is bad, Linux is bad, it's destroying IP.'
Steve Ballmer was beating this drum about six years ago," Gillen says.
"They've moved away from that message very dramatically. They shifted
to competing on operating costs and business value rather than on fear,
uncertainty and doubt."
Now, Gillen says, Microsoft is once again "putting some uncertainty
about Linux in customers' minds. Ballmer's rhetoric now is similar to
what we had six years ago."
IDC's position is that cooperation between Microsoft and Novell on
Windows-Linux interoperability could be good for the industry, and
Novell is probably Microsoft's best partner for such a project. "Red
Hat believes that the only good code is open source code. Novell takes
the idea that there's value in open source, there's value in
proprietary and there's value in making them both work together,"
Gillen says.
Microsoft Customer Landscape |
Following is a breakdown of Microsoft's global customer-company population:
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Characteristics |
Number worldwide |
SMALL BUSINESS |
Fewer than 25 PCs
1-49 employees |
40 million |
MIDMARKET |
25-500 PCs
50-1,000 employees |
1.2 million |
CORPORATE |
500-1,000 PCs
1,000-5,000 employees |
16,000 |
ENTERPRISE |
More than 1,000 PCs
More than 5,000 employees |
2,000 |
As a Microsoft partner, how seriously should you take this deal?
Analysts George Weiss and John Enck of Stamford, Conn.-based research
firm Gartner had some solid advice in a research note for IT that
applies equally well to partners. "Consider the publication and
execution of a joint Microsoft-Novell roadmap as the critical missing
piece of this agreement, with the potential to make or break its
long-term value," the pair wrote.
The companies promised a first roadmap in March. If there's no document by then, look elsewhere for your next opportunity.
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