Yesterday, we announced a significant incremental investment in our relationship with Microsoft that includes Microsoft’s purchase of at least $25 million and up to $100 million in certificates that customers can redeem for expanded support for SUSE Linux Enterprise Server. We also announced plans for new programs from Novell to provide tools, training and resources for customers seeking an enterprise-class Linux platform and specifically, the optimal Windows Server/SUSE Linux Enterprise Server interoperability solution.
By any measure the partnership has been a great success. When the five-year partnership was originally signed in November 2006, Microsoft purchased $240 million of certificates to sell to customers. In only the first 18 months since the deal was signed, we’ve invoiced more than $156 million in certificate revenues, or 65 percent of the original allotment. And in April 2008, we also announce an incremental expansion of the agreement to support the growing opportunity in China.
Since we signed the agreement, Novell has seen significant financial gains as well as increased SUSE Linux Enterprise market share, driven by strong organic growth as well as the momentum of the partnership. By taking a leading position in interoperability, Novell is becoming the preferred Linux choice for the integrated enterprise. In FY2007, SUSE Linux Enterprise invoice revenue grew 243 percent. In our most recent publicly reported quarter – Q2 2008 – SUSE Linux Enterprise invoicing was up 49 percent over Q2 2007. In addition, research firm IDC recently released a report titled, “Worldwide Linux Operating Environments 2008-2012 Forecast: Taking Linux to the Next Level,” noting that SUSE Linux Enterprise paid server operating environment (SOE) subscriptions increased by 38.6 percent from 2006 to 2007 and that Novell’s share of the paid SOE market increased from 26.1 percent in 2006 to 29 percent in 2007. IDC stated in the report, “That surge, thanks to the company’s partnership and interoperability efforts with Microsoft, led to a highly successful year for Novell in 2007.” Novell’s 2006-2007 growth rate was the highest of any paid or unpaid SOE distribution tracked by this study.
Since we made the original announcement in November 2006 the partnership has only become more important to the increasing number of businesses running mixed Windows and Linux environments. Accelerating demand for virtualization solutions that cut across Windows and Linux, and the recent ISO adoption of Microsoft’s OOXML standard document format, are just two examples of why interoperability is so vital and our partnership increasingly relevant.
