Update: IBM, HP sign agreements with Novell on Suse Linux

Hardware companies to offer Suse Linux on servers, PCs

Novell Inc. has signed agreements with IBM Corp. and Hewlett-Packard Co. (HP) to expand support for its Suse Linux operating system on their servers and PCs, respectively.

IBM can now preload Suse Linux Enterprise Server across its full range of servers, including eServer iSeries, pSeries, xSeries and zSeries, and its eServer BladeCenter systems, Novell said on Wednesday. Novell will continue its development and support of Suse Linux on IBM's servers, it said.

Previously, IBM was able to provide Suse Linux on a CD along with its servers, but was not allowed to preload the operating system, IBM spokesman Mike Darcy said.

IBM works with both Red Hat Inc.'s Linux and Novell's Suse Linux, said Scott Handy, IBM's vice president of Linux strategy and market development. If a customer decides to use Linux, IBM will provide them with the free operating system from Red Hat or Novell's Suse Linux, depending on what the customer wants.

"We are distribution agnostic, and we leave it to the customer to decide. They choose one or other for a variety of reasons," Handy said.

A customer using an IBM server running Suse Linux can license the software through IBM, a reseller or directly from Novell, Handy said.

Also on Wednesday, HP announced plans to begin certifying and supporting a desktop version of Novell's Suse Linux software, called Suse Linux Professional, by the second half of the year. HP already supports Suse Linux on its server products, and, in certain regions, sells desktop systems with Linux from a variety of Linux vendors, including MandrakeSoft SA and Turbolinux Inc. Under the terms of the new agreement, however, Suse Linux will become HP's standard worldwide Linux distribution across its line of business desktop and notebook PCs.

The arrangement will make the Linux desktop more appealing for enterprise customers, some of whom have begun asking about Linux on the desktop, said Martin Fink, HP's vice president for Linux during a press conference on Wednesday.

Fink declined to say whether HP's Linux desktop offerings would cost less than its Windows products, because pricing will ultimately depend on how exactly HP chooses to support the Suse Linux. "There are a variety of different ways we can deliver this," Fink said.

Service for the desktop could be provided by either Novell or by HP, for example, and the Linux desktop could even be available as one of HP's managed desktop services, Fink said.

Novell bought Suse Linux AG of Nuremburg, Germany, in November 2003 for $210 million in cash.

At the same time as Novell announced its acquisition of Suse, it also announced that IBM Corp. planned to make a $50 million investment in Novell convertible preferred stock. The two companies have finally signed a definitive agreement on this, Novell said Wednesday. IBM will buy Novell Series B convertible preferred shares that are convertible into 8 million shares of Novell common stock for $6.25 each, Novell said. Due to the increase in Novell's common stock price since the agreement was made, a non-cash charge relating to this deal will reduce its earnings per share by $0.08 per share for the current quarter, Novell said.

Wednesday's decision should reassure IBM's customers that there will be strong, continued support across IBM's product range, it said.

(Robert McMillan in San Francisco contributed to this report.)

Copyright © 2004 IDG Communications, Inc.