Cool Solutions

Fortune Magazine article


May 14, 2007 2:10 pm





There’s an article out in Fortune Magazine talking about Microsoft, intellectual property and open source. Because of our interoperability agreement with Microsoft, which includes a patent element, Novell is featured in the story. We’ve received a number of inquiries about the story, in which Microsoft lays out the specific number of patents it claims are violated in Linux and other open source projects. While providing numbers is new, the claims that violations exists are not new. In response to similar Microsoft claims back in November, we put out an open letter from our CEO, Ron Hovsepian, that states our position on this issue. That position hasn’t changed.

From that open letter…”We disagree with the recent statements made by Microsoft on the topic of Linux and patents. 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.”

As we’ve said from the beginning of this agreement, our focus has been on interoperability and making it easier for customers who have Linux and Windows to make those platforms work together. The patent agreement simply takes the patent issue off the table for those customers who are concerned about it.

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Categories: Expert Views, General, PR Blog


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  1. By:john ewing

    Bruce –

    I notice that your terminology focuses on “interoperability”, as in interoperability agreement.

    Is it Novell’s preference that the joint sales agreement is not an important part of this deal ? I believe it included a distribution agreement of 350,000 licenses and remuneration from Microsoft.

    While there may be no mis-statements of fact in your spin, I do think its disingenuous to spin this as “simple” or just about “interoperability”.

    One would presume that jointly working on interoperability would not require a sales distribution agreement.

    My personal belief is that Novell has entered into this arrangement with Microsoft as the latest desperate shift in business plans following poor market results. Financially, I do see the benefits here……however, unless accompanied by further cash flows from Microsoft or a sale of Novell, the badwill created with the Linux community may make this a strategic failure in the end.

    Granted, Novell does not control Microsoft, but surely Novell anticipated Microsoft’s actions and the Linux Community backlash.

    And surely this is not a simple deal about interoperability.


  2. By:Marc Garcia

    Novell is unfortunately going to suffer the consequences for compromising with Microsoft in such an ambiguous deal that could potentially set a bad precedent for the open source community. This deal, no doubt, will antagonize open source users, who may see Novell as unloyal, untrusworthy distributor of the open source software.
    Open source defenders are ready to start a legal battle, and Microsoft better get ready to examine their technology to ensure they are not violating themselves a GPL license agreements.

  3. By:James M. Susanka

    “As we’ve said from the beginning of this agreement, our focus has been on interoperability and making it easier for customers who have Linux and Windows to make those platforms work together. The patent agreement simply takes the patent issue off the table for those customers who are concerned about it.”

    please have Ron H. share how he thinks microsoft will “interoperate” with linux. Is there anything from their past that shows Ron H. that they want to interoperate.

    I also don’t understand the interoperate part because open source has the code out there and anybody can interoperate with it as they please as long as they abide by out license.

    Here is a link that I think you guys should watch over and over and over. I hope it makes you realize what this deal has done.

    There was no need for this deal.

  4. By:hudson

    Its a shame how people are so willing to believe the worst, even when it comes from people with an agenda of attacking linux.

    Microsoft claims that linux infringes, and yet refuses to get into any specifics. Absent any proof, I have to believe that Microsoft is lying … again. (Remember the Microsoft “Get the Facts” campaigns?)

    The community has acted shamefully in taking the unsupported word of Microsoft, who have stated about linux that they want to “knife the baby”, over that of Novell, who continue to defend our interests in court against SCO.

    I wrote this 3 months ago:

    Nothing has changed since to make me modify those views. People need to get a grip and realize that everyone involved has an agenda … and that includes the FSF trying to use this as the “wedge issue” to push an unneeded GPLv3.

    If Microsoft wants us to believe that linux infringes, show us the patents. If Microsoft wants us to believe that the Novell-Microsoft deal is not about interoperability, show us the deal.

    In the meantime, execs at Novell must be shaking their heads over the reaction of the linux community – “with friends like these …”

    And yes, in the interest of full disclosure, i use opensuse both at home (only OS) and at work (along with FreeBSD) and I like what 10.3 is shaping up to be very nice. Thank you, Novell.

  5. By:shane

    Ah, yes, Ron’s Open Letter. How much more appropriate would the unedited version have been even now?

    “We disagree with the recent statements made by Microsoft on the topic of Linux and patents. Importantly, our agreement with Microsoft is in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property. To claim otherwise is to further sow fear, uncertainty, and doubt, and does not offer a fair basis for competition. 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. We strongly object to the usage of our agreement to suggest that members of the Linux community owe Microsoft any remunerations.“

  6. By:hypatia

    the best part about this deal is that M$ is now a distributor of the GPL. it distibuted linux to at least one user (DELL).

    looks like we will have SCO all over again.

    cu 😉

  7. By:Jude Suszko

    Microsoft is emitting a strong stench very like that of SCO. It is hard to ignore the role Novell played in helping Microsoft set this up. Novell looks like at least an enabler, or perhaps even a co-conspirator.

    Novell has a serious P.R. mess on their hands, and perhaps even a serious legal problem. The Microsoft patent deal is starting to look like the most serious blunder Novell has ever made.

  8. What would you expect. Getting into bed with a convicted monopolist is NOT a good deal at all.

    I am in the process of replacing all 20+ SUSE servers at companies I maintain to Ubuntu because I cannot trust what will happen with SUSE in the future.

    You need to take the money from m$ because you are losing customers like me.

    Please just sever the relationship.

    Peter Morgan
    It Consultant & Software Developer

  9. By:Steve Atty

    I have to say that given Microsoft’s stance on Linux infringing their patents that I find it hard to believe you didn’t see this coming.

    Was anything like this mentioned during negotiations or did Microsoft basically lie to you then about their intentions?

    Your deal with them followed by their immediate arrogant press releases really didn’t do you any favours.

    If they did reveal any information about infringing patents during negotiations then why not share them with us. NCD or not – Microsoft have shown their true nature in this deal and deserve everything they get

  10. By:Anonymous

    > […] The patent agreement simply takes the patent issue off the table for those customers who are concerned about it. […]

    The problem is that by entering this deal, *you* put the issue *on* the table for those customers and to the rest of the Linux community.

  11. By:Dev

    You guys are sissies with piddly excuses like interoperability.

    Can Novell still walk out of the deal? I personally have lost all faith in SuSe as being open anymore. I think there will be many more like me. The only bold way to reinforce our faith is to walk out and say no to Microsoft.

    Just say NO and the whole open source community will stand with you.

    (or make a deal with the devil and loose your soul … you fools)

  12. By:Matt C

    I notice that Gutierrez and Smith are both fond of the “bridge” metaphor for describing the agreement that Novell and MS reached. Too bad Gutierrez blows it here
    “We hope that we can resolve this issue through licensing…”

    Sorry, if “licensing” is what’s going on, then whoever purchases a license from MS cannot redistribute the software in question without passing the license on to the recipient.

  13. By:Bruce Lowry

    I know this is a passionate subject for many people, and I suspect that anything we do – short of renouncing the deal – will fall short for those folks. But Novell did not invent the patent issue – Microsoft has been making these claims for some time. We haven’t agreed to any of those claims, as we’ve said multiple times. We’ve been clear from the start that interoperability was the customer driver that we saw – not IP issues. We felt that the benefits for customers of the technical interop work was worth including the patent agreement. Thanks.

  14. By:Roger


    From a PR point of view, has this got the stage where Novell and the community would benefit from one of those one page adverts that company’s place in the WallStreet press stating your position for everyone to see.

    Novell would need to state its position (as above) and that it will support the community with its patent portfolio. I think many people forget that that Novell can still go after MS if they are misusing Novell’s patents, it just can’t sue MS’s clients.

  15. By:Nate

    “We felt that the benefits for customers of the technical interop work was worth including the patent agreement. ”

    But… I’m sorry. That’s not any kind of an answer. You had to know that the patent agreement was both 1) legally worthless (since if any GPL software you ship is found to be infringing any actual MS patents then you lose the rights to ship it), and 2) a huge PR fiasco.

    I mean, it’s like making a deal with a Mafia don for pizza delivery and unspecified other services and then saying “nothing illegal is taking place, trust us, we were just really hungry for pizza. And its great pizza! Want some? Even though we sell our own brand which is in competition with them, and they’ve tried to rub us out of the market multiple times… we’re best buddies now. Oh, and we also wanted to reassure our customers that nothing… bad… would happen to them — not that it could, but you know, just in case… we wanted insurance… against unspecified future dangers… and Mafia Inc can guarantee that. They’re paying us money, too! We all win! We’re friends! But absolutely nothing dodgy is going on, no sir.”

    Yeah, um. Right.

    IANAL, but I can see no no plausible legal, legitimate reason why Novell needs any kind of patent “protection” from Microsoft with regards to Linux technology. The obligations clause of GPLv2 prevents that. So: the only *conceivably legal* reason I can see why Novell might want to buy/share patents with MS is if Novell wants to use patented MS technology in its non-Linux, non-GPL software – like Netware/OES or the eDirectory/IDM/exteNd stack – or if MS likewise wants to use Novell proprietary patented tech in Windows. Any GPL components have to be right out – right?

    So – if Microsoft’s patents don’t apply to Linux, and Linux patents don’t apply to Microsoft (because of the GPL) – why even bring SUSE/Linux into an agreement *at all*?

    Sorry, but I’m not sure there’s anything Novell can say or do right now to clear this stench from them except to lay right out in the open *exactly what the reasons were* for even considering such an agreement.

    And fast. Tick, tock. Your credibility is evaporating FAST.

    (Disclaimer: I use Novell products at work and for the most part defend them. But… if it smells like a rat. You know.)

  16. By:Nate

    To be specific: what how can you possibly square these two statements?

    Bruce Lowry:
    “The patent agreement simply takes the patent issue off the table for those customers who are concerned about it.”

    “Finally, any free program is threatened constantly by software patents. We wish to avoid the danger that redistributors of a free program will individually obtain patent licenses, in effect making the program proprietary. To prevent this, we have made it clear that any patent must be licensed for everyone’s free use or not licensed at all.”

    “7. If, as a consequence of a court judgment or allegation of patent infringement or for any other reason (not limited to patent issues), conditions are imposed on you (whether by court order, agreement or otherwise) that contradict the conditions of this License, they do not excuse you from the conditions of this License. If you cannot distribute so as to satisfy simultaneously your obligations under this License and any other pertinent obligations, then as a consequence you may not distribute the Program at all. For example, if a patent license would not permit royalty-free redistribution of the Program by all those who receive copies directly or indirectly through you, then the only way you could satisfy both it and this License would be to refrain entirely from distribution of the Program.”

    Please, tell us how any patent agreement that “takes the issue off the table” only for Novell customers can be in any way shape or form compatible with the expressed spirit and letter of the GPLv2.

    This doesn’t seem like rocket science to me. Either Linux has patent issues or it doesn’t. If it does, Novell can’t distribute it. If it doesn’t, Novell doesn’t need any patent agreement.

    End of story.

  17. By:Fred


    Don’t worry about the fools complaining here, Linux is their religion and they’re not the ones making business decisions.

    These are the nerds who use Linux at home, not in a business environment…

  18. By:Sum Yung Gai

    Bruce Lowry Says:
    May 15th, 2007 at 12:39 pm
    “I know this is a passionate subject for many people, and I suspect that anything we do – short of renouncing the deal – will fall short for those folks.”

    Bruce, you’re almost right. Allow me to tweak it so that it’s correct. Anything that you do short of renouncing–and severing–the *patent provision* of the deal will fall short for us. By all means, keep the technical collaboration with Microsoft. But renounce–and SEVER–the patent provision.

    I, too, quit using SuSE Linux for this reason; I can’t trust it anymore. Unfortunately for your company, I happen to have influence at a large organization. The CIO was looking hard at SLES. At my urging, we went with Red Hat Enterprise Linux instead.

  19. By:Eric G

    Wow you guys (Novell) are killing me. You have the package!

    You have SuSE Linux, a viable distro, and a more than viable alternative to Vista.

    You have Novell OpenOffice, once again a viable alternative to MS Office

    You have eDirectory, to tie it all together (a sound, tested answer to Active Directory)

    You even have the perfect time for it all to take off, with Vista not catching on (despite Microsoft’s lies), and a newly redesigned Office 2007 (the ribbon? what the hell is a ribbon? Oh OpenOffice looks like Office 2003! Let me try that)

    Please stop holding hands with Microsoft, before its too late. All I can say is we told you so…

  20. By:Bruce Lowry

    A quick point of correction on an issue raised in several of these comments. The Novell-Microsoft patent agreement frequently gets reported in the press as a cross-license, but it isn’t. Novell did not cross-license any patents with Microsoft. Novell and Microsoft made an agreement not to sue one another’s customers over patent issues. So we don’t have the rights to use Microsoft patents in Novell technologies, nor does Microsoft have the rights to our patents. So when I say we did this deal to take the patent issue off the table for customers, that’s all it does. It doesn’t entitle Novell to any patent protection vis-a-vis Microsoft, nor Microsoft any patent protection vis-a-vis Novell. Nor does it change any of the commitments we’ve made previously on patents, including our commitment to use our patents against anyone attacking our open source products, or our involvement in the Open Invention Network, which is designed to leverage patents to promote open source innovation. Thanks.

  21. By:Eric G

    OK so…. what was the point of this agreement again? If Linux doesn’t infringe… why is this agreement needed?

    Let me just point out I’m not “religious” about FOSS, or this deal. I just think Novell will come to regret making this deal in the future. I think Novell had the makings (in its products) of being a viable, corporate alternative. This deal has called Novell’s future into question.

    The Groklaw link I posted earlier says it best:
    “[Novell] If you think there are no Microsoft patents infringed by Linux, do you see some hypocrisy in trying to benefit in the marketplace from Microsoft’s FUD? They claim that there are such infringements, and they are selling the patent peace agreement to PHBs as offering actual needed protection. Think about truth in marketing. Think about the ethics. You are losing out on the value add of FOSS, in my view, and sullying its good reputation.”

  22. By:Ryan

    I think that the Novell deal with Microsoft is being looked at currently as a mistake, since it appears Novell has paid Microsoft not to sue because SUSE Linux – and therefore all flavors of Linux – infringes on patents that Microsoft holds.

    Although Novell claims explicitly that this agreement is in no way, shape or form an admission of anything patent related, it is seen in the eyes of almost everyone as an implicit admission.

    That’s all said and done. Forget about the fact that the code is already under GPLv2 license and Novell could never be in a position to deny/admit anything – it doesn’t matter.

    This is going to ultimately wind up being a good thing, and here is why:

    1. Microsoft may not have come out with these outrageous patent claims if that agreement had not happened, which may have given them the illusion there is room to apply some pressure.
    2. Now, Microsoft will have to either put up or shut up. Either way the outcome will be a win-win for free software and and lose-lose for Microsoft. Why? Because the pendulum is swinging back to the other way in terms of liberal patent claims. My prediction is that either this goes to court and the patents are thrown out, or it never does and Microsoft loses stride to Linux at an even greater rate – the latter being more likely since it seems from statement like “We don’t really want to sue you. Just pay us and we won’t” that Microsoft would rather just hold up the FUD flag and try to cash in.

    Nobody is going to pay.

  23. By:lmf

    Bruce: Thanks for your further clarification. I think Novell’s handling of this matter is a case study for business schools in how to not handle public relations. It wouldn’t have been difficult for Novell to put up a FAQ that actually addresses the complaints against the deal. (I’ve seen everything you’ve done and it is beyond bad.)

    To add one more item, I wish Microsoft would answer the following question. If Novell was admitting IP infringement, why in the world did Novell make a deal that only protected its customers from lawsuits? Novell itself is still subject to lawsuits, and the Fortune article did not offer any explanation for why they would do so.

  24. By:Hendra

    Can you still walk out from the deal with Microsoft? I’m sure you’ll have more to gain in the long run if you do that. By downplaying the deal by saying it’s suppose to be only for interop isn’t going to help. No one will buy that. Don’t tell me you didn’t expect Microsoft will come out with all this patent claims. Looks like some one need to be fired at Novell for making this deal. Anyway, if anyone plan to launch a “ditch Suse” campaign, please drop me a line, I’d like to share my story 😉

  25. By:Harry

    # Fred Says:
    “Don’t worry about the fools complaining here, Linux is their religion and they’re not the ones making business decisions.
    These are the nerds who use Linux at home, not in a business environment…”

    Well Fred, how would you know?
    From the arrogant style I bet YOU are exactly this astroturfer sitting at home having Windows installed and no business choices relating to Linux to make.

    to Bruce:
    Over here in Germany my company actually uses SLES big time (Oracle 10G Cluster), and we’re VERY concerned about recent events…
    My gut feeling’s telling me ANY business using Linux from Novell now consideres if they’re not better off with RedHat or anything BUT continuing Novell right now!

    That’s because people using Linux in business environment know exactly what’s going on here, yet they are no dumb trained pavlovic dogs who will react like MS-Novell believes they will when throwing certain key-words at them (and interop is exactly one of those words doing nothing here to change that).

  26. Dear Bruce Lowry

    By definition, a “license” is a “covenant not to sue”.

    If the licensee abides by the stated terms then the licensor promises not to take legal action.

    That the licensor Microsoft promises not to sue the licensee Novell’s customers instead of Novell itself does not change the obvious fact that Microsoft stated terms represent a license for Novell.

    Let put it in the context of another case.

    Microsoft licensed patented data base technology from a company called Timeline Inc and put it in Microsoft SQL Server 7, Office 2000 other Microsoft products.

    Timeline Inc license to Microsoft was a “covenant not to sue” Microsoft’s customers for *using* code developed by Microsoft that infringed on Timeline’s patents.

    Note : “covenant not to sue” customers — that what a license is. How is the Microsoft/Novell agreement not to sue Novell’s customers any different?

    However Microsoft chose a cheaper license option that granted Microsoft the right to develop infringing software but did not confer full use rights for the patented technology to downstream customers. ( The Washington Court of Appeal agreed with Timeline Inc ). Timeline then threatened several of Microsoft’s customers who were developing on top of Microsoft SQL Server and received very large payouts.

    Since those infringing customers has already agreed to Microsoft’s EULA, which included an effective agreement to recognise any patented technology that Microsoft had sub-licensed, it was a lot more difficult, if not impossible, for those Microsoft customers to challenge Timeline’s patents in court. Such agreements can limit defensive options.

    Microsoft is suppling “coupons” for Novel products. What terms do those customers have to abide by to accept the deal? What about making that license/terms public?

  27. If you dance with the devil…

    Making a deal to ignore pantents for only one case as a company like Novell makes the panten claim stronger, not “off the table”.

    You should be more carefull where you are leading Linux to.

  28. By:JohnD CNE

    Well said Bruce. I notice there haven’t been any responses to your last post. Perhaps there’s a collective “Oh” going around.
    For all those people who are dropping Novell because of the deal – I’d never have you guys do any work for me or my clients. One doesn’t just go and make an infrastructure change because of some deal – that’s the act of a petulant child. Suse 10.x is great, but it’s not where it needs to be yet. I say this because I have a client who is struggling with a change from Win98 to WinXP there is no way I could drop Linux on them. Not yet at least. Time will tell if MS will live up to it’s end of the deal.
    Novell has stepped up to the plate by protecting it’s customers from MS and from SCO. That alone is worth loyalty in my book. When’s the last time MS stood up to protect anyone but themselves?
    Free software is a nice concept, but at the end of the day we all need to get paid somehow – even Linus had to take a paying job. Get your knickers off “Auto knot” and focus on helping Linux gain market share.
    A spot of free advice to the Open Source community from a fan of OS/2 – FUD has a greater impact on corporate decisions than any rational discussion of the facts. The majority of IT managers out there won’t be selling Linux to their companies because of it’s technical merits, but via cost savings. I think more members of the Open Source community need to spend time in “corporation land” instead of your open source commune.

  29. By:gary


    I believe that Novell’s main interest in the agreement is interoperability and the fact that some deals had not gone through in the past due to customer’s fear of MS patent threats.

    After all, interoperability has been Novell’s mantra for years and years.

    I’m just curious from reading all of these and other community responses if there will come a point that Novell feels that all of the bad PR and loss of community support is not worth the interoperability.

    Or is Novell hoping that GPL/V3 will allow Novell an out to go back to MS to amend the agreement?

    Or is the opensuse community hanging in fairly strong, and what i’m seeing on the boards and in the press is a small very very vocal minority ?

    Or is it at this time, severing the agreement would do more harm than good business-wise and the whole patent threat by MS has to play out, just as the SCO lawsuit is?

    One last thing: Won’t the community benefit from the interoperability that Novell builds and gives back to the community ? If so, shouldn’t this be pointed out more by Novell ?

  30. By:shane

    So we don’t have the rights to use Microsoft patents in Novell technologies…

    Justin Steinman recently indicated otherwise, care to explain?

    This foundation falls into two primary categories: 1) the “covenant not to sue,” which provides customers with peace of mind when they deploy SUSE Linux Enterprise; and 2) the IP access necessary for the technical collaboration to deliver interoperability between Windows and Linux.

  31. By:Stephen

    Seems to me that a simplified clarification is needed. Perhaps it could be fronted on for a week? Microsoft certainly have no problem taking PR into their own hands when it suits them. It sure would be nice to be the David in the Goliath story!

  32. By:James M. Susanka


    Don’t worry about the fools complaining here, Linux is their religion and they’re not the ones making business decisions.

    These are the nerds who use Linux at home, not in a business environment… ”

    intelligent comment – I have input on what companies buy and it will be redhat/ubuntu.

    this is about the nerds at home who use linux –
    it is about software freedom and for those nerds at home to be able to create in a enviroment free of lawyers and frivolous expensive lawsuits. it is much bigger than a linux vs microosft issue.

    if you folks can’t realize that then anything I write here isn’t going to make you see the light.

  33. By:Vik

    It is obviously clear that Microsoft are not dumb and they _do not want to sue businesses_ (Novell’s clients or not) for using something else rather than MS products.
    And Microsoft also acknowledges that publicly. No sane corporation will fight their own or potential cliens and create negative image.

    What Novell did is shielding their clients from nonexisting threat, thereby indirectly confirming its validity.

    So whats the point of the deal? (except the $ that Novell collected).

    And no matter what you say now, and what explanations you give, we have what we have in press – and they are going to hear Balmer, not Novell.

    This will only contribute to the fear from using open source, and in long term will work agains all OS community and also against Novell in partuicular.

    I won’t say that Microsoft outsmarted you as one does not need to be smart to see this.
    They just played the card – and let Novell bite the bait lined with $.. and now MS are monetizing their job well done in the public space.

    Yeah, thank you Novell.

  34. By:Anonymous

    “But Novell did not invent the patent issue – Microsoft has been making these claims for some time.”
    OK, we see that Microsoft is the one who raised the claim of supposed IP contamination in Linux. But the point and problem is that Novell decided to create an agreement that restricted the alleged protection to exclusively Novell’s Linux. If you do this as a tactical maneuver against other Linux distributors, then that was your tactical mistake.

    You see, regardless of what you say, Microsoft is making of this supposed IP contamination.

    “We felt that the benefits for customers of the technical interop work was worth including the patent agreement.”
    OK, that was probably a fair and worth desire, but the point and problem is that this *portrays* there are IP issues in Linux (even if you really think there are none) that need to be addressed in the agreement.

    Again, regardless of what you say, Microsoft is making of this supposed IP contamination.

    “So we don’t have the rights to use Microsoft patents in Novell technologies, nor does Microsoft have the rights to our patents.”
    How can you possibly assure this when you are integrating with their .NET environment. If it is possible, then your actions have not assured us that you think it is possible. Heck, even Microsoft is being sued by Vertical Computer Systems over .NET. This patent agreement between you and them is of little value.

    You see (regardless of what you say) what Microsoft is making of the projects you are “working with them” on.
    According to
    You are working with them on the kernel, and now they target the kernel (virtualization) saying 42 violations are there.
    You are working with them on OpenOffice, and now they target OOo saying 45 violations are there.
    Do the other projects are you working with them on involve (samba for example) the supposed additional 83 violations?

    Microsoft is (by their words) creating a schism and really making *you* look bad when your attempt was to help us. If your attempt really is to help us, then help us by removing this patent issue. It is not helping us nor is it helping you.

  35. If this was just a deal to work together on interoperability, as you claim, why was there a big money transfer from Microsoft to Novell ?

    What is Microsoft paying Novell for ? Don’t tell me it’s for the SuSE coupons, that’s just an excuse. Why would Microsoft buy coupons from Novell ? What’s the other side of the bargain ?

    (I posted this before, but it never appeared. Trying a second time.)

    Was Novell in financial problems ? Did Microsoft need another ally for anti-trust purposes ?

    If anything I would expect Novell to pay Microsoft to get access to closed standards and implementations to allow for interoperability. But that than proves that Microsoft is not really interested in interoperability, but only money.

    Tell us again, why does Microsoft pay Novell to ork on interoperability ? If 2 people _want_ to work together, why shift money around ? Why a deal ? Just do it.

  36. By:Thim

    I have no longer trusted Novell since they signed that piece of crap called agreement with Microsoft. I replaced SuSE for another Linux. And this recent story is EXACTLY what I had expected. On the other hand, I feel much sorry and regret for Novell, because they even do not realize that they are going to become a victim of a big fraud that is going to happen – a big code piracy of Ballmer’s legal gang. This entire event reminds me how the gang stole VMS/VAX code from Cutler and brought it to NT kernel. This same gang – and I’m sure about it – is about to seize the “patent” of the one of the most stable OS – Netware that is capable of being up for years without a single restart.

  37. Here is a very good talk by Eben Moglen about the problems with the Microsoft/Novell deal:

    It allows microsoft to spread FUD, it allows Novell to capitalize on the FUD and it attacks directly all Open Source developers and divides the Open Source community.

    After hearing this talk, I know understand why Microsoft was willing to pay Novell for doing this. As there is a clear advantage for Microsoft to cause Fear, Uncertainty and Doubt in the Open Source community and in the marketplace.

    And Novell hopes to use that to have an advantage over Red Hat even if that means Open Source is being impaled. Money is a bad motivator.
    And Microsoft has lots to spend.

  38. By:Dennis

    “Well Fred, how would you know?”

    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.

  39. Dennis,

    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 ?

  40. Novell has made managing Microsoft OS desktops for more than two decades. And Novell designed in security. I never lost data nor had any major down times (that includes Email – GroupWise of course). Never any virus infections.

    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.

  41. By:JohnD CNE

    While I too am suspicious of anything MS, this is starting to sound a bit “Grassy knoll”ish to me.
    Personally I think the MS goal was to fragment the community – which is has done nicely. I’m sure it didn’t take much research to figure out how angry the community would be about such a deal. And all the zealots out there have played right into their hands. At the end of the day the Linux community is doing far more damage than MS. How many distributions are out there? I thought they were nuts for offering 7 flavors of Vista, there are at least 2 times that number of popular Linux distros. The community needs to unite and establish some type of base distribution with base functionality that way anyone who decides to use linux won’t have to deal with Red Hat vs Suse vs Ubuntu vs etc…
    Stop focusing on what this deal MAY mean and spend time on what it DOES mean – more press and growing market for the OS you love.

  42. By:Vik

    “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.”

    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….

  43. By:Dennis

    Re: Dag Says

    “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.

  44. By:john ewing

    Actually, Novell can survive for a nearly infinite period in its current form as long as it hovers around cash flow breakeven as it has done for years (with a bias toward cash flow negative).

    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.



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