November 3, 2006 10:04 AM PST

Microsoft, Novell paint target on Red Hat

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Red Hat appears philosophically opposed to a patent truce with Microsoft. In answer to the question, "Did Red Hat consider a similar patent deal with Microsoft?" the company answered: "An innovation tax is unthinkable."

In a response to a question about Red Hat at Thursday's press conference, Ballmer indicated that Microsoft has sought to establish similar legal and technical arrangements with other companies. But Novell's business model of mixed open-source and proprietary software made it a natural choice for collaboration.

"We had discussions with lots of folks in the industry. You can probably guess a list of names, as you hypothesized one," he said, referring to Red Hat. "But, it was really when Ron (Hovsepian) called and initiated a contact, since he's thinking about where he wanted to take Novell, that we were able to put together something that addressed the business issues, the patent issues, and the technology issues all at once."

Red Hat has had a tough couple of weeks.

Last week, Oracle announced that it intends to offer support for Red Hat Enterprise Linux. Although the deal is explicitly aimed at siphoning off Red Hat's revenue from Linux support, Oracle's plan also recognizes the popularity of Red Hat Enterprise Linux among corporate customers, analysts said.

By contrast, long-time Linux backer IBM has sought to ensure market adoption of both the leading Linux distributions--Red Hat Enterprise Linux and Suse Linux Enterprise Server. When Novell bought Suse Linux in 2003, IBM made a $50 million investment in Novell and has certified its products for Suse Linux Enterprise Server.

Both events--Oracle's Linux support plans and the announced Novell-Microsoft pact--are squarely targeted at Red Hat and could succeed in lowering the company's clout, said Stephen O'Grady, an analyst at RedMonk.

Red Hat has been "taken down a peg--possibly several pegs. Their relationship with their customers and (independent software vendors) cannot help but be impacted--negatively for Red Hat--by the Oracle and now Microsoft/Novell announcements," he wrote.

O'Grady noted, however, that independent software vendors who write and certify applications for the most commercially interesting distributions of Linux have more influence in the long term than Microsoft, Novell and Oracle in establishing market share.

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