Microsoft markets Linux and makes Novell rich
To the tune of $356 million in 2007.
By John Dunn | Techworld | Published: 12:02, 03 January 2008
Having successfully reinvented itself as a Linux company, Novell is now making a substantial portion of its turnover from a single and surprising source - Microsoft.
The company's public 10-k filing for 2007, which covers the period until 31 October, showed that Novell was paid a whopping $355.6 million by Microsoft in return for software licensing during the year.
According to the filing, the sums, paid in November 2006, will be recognised over future accounting periods to avoid distorting the company's turnover, which totalled $932 million for the same period.
The sums explain why Novell was so keen to seal what was seen in some quarters as a highly controversial deal when it was announced in November 2006. The alliance saw Novell support SuSE Linux with the Windows environment, with Microsoft purchasing 70,000 licences for Novell's SuSE Linux enterprise server, which accounts for much of what Microsoft was paying for. Microsoft, in turn, then sells these on to its customers.
"This is to bridge the divide between open source and proprietary source software," said Microsoft CEO Steve Ballmer at the time, in what amounted to an abrupt about-face on his part given his previous criticism of Linux. "It gives customers greater flexibility in ways they have certainly been demanding."
In an end-of-year blog posting on the subject, Novell's CTO, Jeff Jaffe, described the partnership as a key one for the company.
"The partnership with Microsoft became the lever to build a broader Linux ecosystem. We used this credibility and our great technology to land desktop agreements with Lenovo, Dell, and Lotus," he said.
Of course, it is not clear how much of this impressive money pile is coming out of Redmond's bank account because it is merely passing on sales revenues from Novell licences, having sold them on as part of its interoperability agreement. Novell is, therefore, gaining benefit from Microsoft's success at cornering a segment of the Linux-Microsoft interoperability market for itself.
