Microsoft & Novell Compromise on Linux

Software makers Novell and Microsoft have finally signed a deal which says that Novell will allow Microsoft to use its open-source Linux software to work with Windows. In return, Microsoft will make two separate up front payments totaling $348 million to the Novell. In a filing with the US Securities and Exchange Commission on November 7, Novell announced that Microsoft would pay Novell $240 million up front in subscription fees to allow the world’s largest software maker to use its Linux software. Microsoft will also pay an additional $108 million up front for use of patents.

Earlier, Novell and Microsoft took an entry into a broad set of business and technological agreements to make their products work together better to serve corporate customers who use both Linux and Windows computer servers. Linux is the most admired variant of open-source software. Unlike proprietary software, open-source software lets developers to share code and add functions. A user has to only pay for custom features, maintenance, and technical support.

The deal says that Microsoft will not sign a similar agreement with any other Linux distributor for at least three years. According to some analysts, Microsoft’s pact with Novell has dealt a blow to other Linux distributors such as market leader Red Hat. The pact will run until at least 2012. Under the pact, Novell will pay Microsoft at least $40 million over five years for use of Microsoft’s patents based on a percentage of its revenue from open-source products.

Novell said that Microsoft has also agreed to spend $12 million a year to market scenarios where users can virtually run Linux on Windows machines and vice versa. Over the life of the agreement, Microsoft will also spend $34 million to put in place a sales force devoted to the combined offering, Novell said.