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Sunday, March 15, 2009

Microsoft-Novell partnership yielding little results

When Microsoft and Novell partnered some time back, many people predicted doom and gloom. Open source advocates said that the IP sharing and cross-licensing Novell had agreed to was detrimental to Linux and ultimately was just a trap to any potential customers that would sign up. Businesses tasked with running mixed-operating system environments seemed to initially welcome the deal, though, and the two actually expanded their alliance with further investments back in August.

Specifically, the software giant agreed to purchase up to $100 million of additional Suse Linux Enterprise Server certificates – paid in $25 million increments starting last November as the certificates were distributed. But things are now slowing down in the Novell-Microsoft relationship, as it turns out, the companies didn’t sign a single large customer during the most recent quarter. Novell's approach to this loss of sales has been to blame itself, claiming that their reseller channel is insufficient rather than pointing fingers at Microsoft.

Novell also said that they have to date invoiced $199 million, or 83 percent, of the original $240 million agreement. So why did Microsoft prepay $25 million for a new batch of certificates when it still had $41 million lying around? It’s clear that Novell needed the cash, the company reported disappointing first-quarter earnings and a slide in its Linux business, but Microsoft’s motivation for the move seems unclear.


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