Microsoft, Novell expand controversial interop pact

Extending 2006 deal, Microsoft commits to purchasing up to $100 million in certificates that customers can redeem for Novell's support of Suse Linux Enterprise Server

Microsoft on Wednesday is expanding its agreement to supply Linux support certificates from Novell, which originally was part of a controversial arrangement set in late 2006.

Through the updated arrangement, Microsoft is committing to an additional purchase of as much as $100 million in certificates that its customers can redeem for Novell to support Suse Linux Enterprise Server. The investment will take effect November 1.

As part of a five-year interoperability partnership forged in November 2006, Microsoft purchased $240 million of these certificates. Within 18 months, Novell has invoiced more than $157 million in certificate revenues, 65 percent of the original allotment, the companies said. Customers taking advantage of this arrangement so far have included companies such as HSBC Holdings, BMW, and Southwest Airlines, Microsoft and Novell representatives said on Tuesday.

That arrangement also included a provision that the two companies agree not to sue each other's customers over any alleged IP infringements. Microsoft around that time made claims that Linux violated Microsoft patents. Also, the two companies exchanged monies under the agreement in return for covenants not to sue.

Microsoft and Novell representatives celebrated the announcement as a continuation of the successful existing relationship.

"We've done a lot of work over the past 18 months" in this partnership, said Susan Heystee, vice president and general manager for global strategic alliances at Novell.

"Clearly, customers have embraced this agreement and given us strong feedback and completely support the approach we've taken," said Susan Hauser, general manager for strategic partnerships and licensing at Microsoft.

Customers have sought IP assurance from the two companies. "They just wanted Microsoft and Novell to provide what we call a covenant not to sue," so they would have IP peace of mind, Hauser said.

The arrangement also has included interoperability investments in areas such as virtualization, Active Directory, and document management, said Hauser. Further interop efforts have included Moonlight, providing a Linux client version of Microsoft's Silverlight rich Internet application technology, she said. .

The initial arrangement in 2006 drew criticisms such as an August 2007 claim by a Red Hat executive that the arrangement amounted to Microsoft taxing Linux.

The agreement to be unveiled Wednesday also focuses on Novell providing tools, support, training, and resources to customers seeking an enterprise-class Linux platform and interoperability between Microsoft Windows Server and the Suse Linux platform.

Copyright © 2008 IDG Communications, Inc.

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