The higher question is whether Novell should survive, and whether the owners of the company are in charge or the managers of the company. Unfortunately the corporate governance system is not working properly and Novell managers are taking advantage of it. Essentially Novell failed in its mission several years ago and became an endangered species in the technology ecosystem.

Instead of doing the right thing, preserving assets and perpetuating value by moving the valuable pieces to an appropriate firm, Novell has engaged in a series of wealth destroying corporate actions beginning with the foolish WordPerfect deal and most recently with SuSE.

While wealth was being destroyed for Novell shareholders, you may notice that it was being created handsomely for a series of failed executive teams. These teams can be well considered as a gambler-parasite hybrid and have been able to move wealth to their own accounts while destroying shareholder wealth primarily because of a shareholder governance system which is stacked against shareholders, though shareholders bear some responsibility for passivity.

In the technology ecosystem, there was really no need for a new version of Linux to be developed and marketed under Novell's failed management team. Linux was doing just fine under leaner and meaner management systems, including the distributed Open Source development process itself.

The endgame is likely to be the same, as Novell will ultimately be acquired for the value that remains………but had the system worked properly it would have been done 5 years ago, investors would have received the same $7 the stock is at today and could have invested it in a diversified tech portfolio and had 50 to 75% more than that today.

Novell is unlikely to get anything close to that kind of premium today, and as more wealth that gets transferred to the management team the odds increase that turnover in the shareholder base will create more opportunity to extend the problem.

Novell's problem is a lack of proper incentives and insufficient concern for shareholders. As long as it can get away with not returning excess cash to shareholders, less-than-ethical management will find ways to transfer it elsewhere.

John.

"Ethics don’t enter into it ?"

This, IMO, gets close to the heart of the issue. Linux and OSS origins are a no-cost and open community, and it has a corresponding value system. As Linux matured, businesses were started to capitalize on the Linux value-proposition and growing ecosystem. The business models have been very challenging and are still comparatively immature, i.e., the notion of generating sustained revenue growth and profit from adding value around a core which still is "free." Along the way, the tension between the free egalitarian Linux and a profit-driven Linux has been growing for some time. And for that matter, there have even been splits within the Linux community between the free-software purists vs. those who endorse OSS primarily as a development model and are OK with commercial sales.

I am not suggesting that ethics are not important. However, the definition of "ethical behavior" will and does vary. Again, there have been strong words even within the community re what is proper and right, let alone between the community and businesses. I suspect that Novell considers itself to be quite ethical, in that it believes it is aligning itself with its customers' preferences. And that probably Novell was very surprised at the intensity of the community backlash; IMO this was naive, as the community's views and values are quite clear – let alone its intense animosity towards Microsoft, such that doing *any* deal with MS would have created suspicion and distrust.

This difference in values is clearly reflected by the emotions in most of the posts . . . along with, pardon me, a manifest lack of hi-tech industry mgmt experience and lack of knowledge re patent law. Novell can loudly proclaim to the world that Linux violates MS patents until the cows come home – sort of like SCO did. So what? Words don't matter; all that does is the code itself and a judge's finding on the merit of the patents. SCO has found that even with MS pulling strings and having Al Gore's lawyer in court, their case evaporated. That is why patent attorneys are saying that MS saber-rattling is a marketing ploy. Nor are investors worried; the stock market is not rushing to abandon RH and other Linux pure-plays. For that matter, Linus isn't worried, either. Viewing this as "giving a weapon" to the competition is an uninformed perspective, other than, as another post points out, how well the community has played into the hands of Ballmer.

As far as whether this is a "strategic" move by Novell, well certainly Novell thinks it was. That's why Novell made a big deal about it. You can fault Novell's logic if you wish, but clearly Novell thinks this is a strategic bet. All of us posting do not have knowledge of Novell's financials or customer lists or account relationships, and hence are not in a position to judge how and when Novell sees the payoff. But if the deal with MS lowers risk and barriers to Linux adoption for Novell's customers, resulting in Novell retaining and growing its customer base – Novell's stated intent – then it will have proved itself to be a "strategic" move, because that is the only way that Novell in its current form can survive. Can't get much more strategic than that.

Finally, as far as "hurting the whole open source market" . . . the problem is, again, not Novell's deal – either the MS patents have merit or they don't, either Linux violates them or it doesn't – and whatever Novell does won't change that. There is however huge problems with U.S. patent law, such that a monopoly like MS can use the *threat* of patent infringement to stifle competition and intimidate customers. MS doesn't need Novell is capitalize on this; it's unfortunately being done all the time now in U.S. courts. The short-term solution to this is indemnification, as IBM & HP have chosen to do. The long-term solution is legal reform.

However this plays out, there will be continued conflict between what businesses perceive they must/should do to satisfy shareholders vs what the FOSS community believes and wants.

Too bad for you.
Yeah RH is not stupid and thats why they are looking at long-term growth of the target market (OLPC desktop for example).
Rather than "damaging their competitiors" which are actually allies for that global matter.

Not speaking about giving a weapon in hands of their real competitors like Novell did.

"However, these kinds of strategic moves *are* understood by executives that run large companies and have to make hard decisions – and make money."

So what is so strategic in the "move" Novell did? Imho apart of the immediate cash.

"Will this ultimately have been a good move for Novell? None of us can say, not even Novell – it will play out over time; it’s a bet."

Hah.. We already see the results.
Maybe for Novell in short term it is good who knows:) – but at the expense of hurting the whole open source market in global.

"Bottom line, cut Novell some slack."

Its not a matter of cutting a slack….

Of course I had to "know" windows. But I didn't have to use MS networking techniques – only their tcp/ip stack.

I find Novell programming to be top notch. Marketing has always been weak -but then I don't care about marketing- it is the results that mattered to me. And I find the previous posting right on – thanks Dennis.

Thank you Novell, keep up the great programming.

And thank you to all the SUSE people – got my SANBA update just fine.

You say:

"Will this ultimately have been a good move for Novell? None of us can say, not even Novell – it will play out over time; it’s a bet."

The rest of the Open Source community just wished Novell wouldn't be betting at the community's expense.

I'm not sure why you are defending Novell, but since you argue that it's fine wat Novell does because Novell needs to make money. I can only assume that you write this in defense because you can make money from it too.

Ethics don't enter into it ?

While I can't speak for Fred, I can speak from 20 years experience working for the largest *nix hardware company, doing deals with other very large hardware & software companies. (And btw, I'm a long-time Linux user and fervent Open Source proponent – but not necessarily because the SW is "free".)

We once decided to discontinue a major software product in favor of new marketing & channel relationships with competitors. This was a long-term strategic decision based upon product lifecycles, market position, new technologies, etc. It would (did) take several years to pay off.

My job was to communicate the change to our largest customers. We put a number of programs in place to protect our customers' investment, provide continued support, and eventually transition them to a superior alternative (but only when they chose to do so).

Didn't matter. The reaction was much like most of those above. That the decision made good business sense, that it made us a stronger supplier, that our customers would ultimately benefit, was not understood by those in the "community" – most of whom were end-users, technicians, and a few middle-managers. It did not fit with how they wanted things to be, it was perceived as a threat, and no amount of PR would change that view.

However, these kinds of strategic moves *are* understood by executives that run large companies and have to make hard decisions – and make money. While the noise was deafening, in the end we lost only a few accounts while strengthening our position with the others – and gained many more thru our new relationships.

I could cite similar examples. Actually, we really disliked a number of our new "partners". But swimming with the sharks and co-opetition in hi-tech is a fact of life. We take these kinds of calculated risks all the time. Near-religious notions, or thinking that "money is a bad motivator", obviously won't deliver a dime to shareholders.

An educated guess: Novell desperately needs to penetrate the large enterprise market, where Red Hat has a commanding position. They have downward cash flow, and that's not going to be reversed anytime soon in the desktop market. They have to do something different – and make money at it, too. They looked for an opening with target enterprise CIO's and found it with lowering cost (interoperability, more customer choice) while lowering risk (indemnity). They didn't make this up, it's what their customers told them.

Will this ultimately have been a good move for Novell? None of us can say, not even Novell – it will play out over time; it's a bet. Should Novell have put "community" interests first and foremost? Not unless they want to be sued by shareholders. Will Novell be hurt by all the negative blow-back? Probably some, but the Linux enterprise market is still quite young, so again no way to know for sure; one thing is sure, most of those making the noise control very few of the market's dollars. Did Novell get back-stabbed by an unscrupulous competitor? Definitely, and here Novell should be shouting MS down in the press. Should Novell breach the contract? On what grounds? – that's an invitation to a lawsuit that Novell can't afford.

Bottom line, cut Novell some slack. Treating Novell like a heretic deserving excommunication only helps Microsoft. If the patent threat is a ruse, then Novell's deal is a non-issue for the market (keep in mind that HP & IBM are already imdemnifying their Linux customers). If it's valid, it's also a non-issue – the focus in court will be the patents; marketing deals are irrelevant.

Oh, and btw, Red Hat's holier-than-thou reaction, so often quoted, should be taken with a grain of salt. RH is not stupid; they saw an opportunity here to do damage to a competitor – Novell. I would have done exactly the same thing.

Bruce, hang in there. I remember it took me a while to pull all the arrows out of my back.