Microsoft

The overall market for enterprise spending may be weak, but Novell and Microsoft insist they are signing plenty of joint customers.

Novell CEO Ron Hovsepian (left) shakes hands with Microsoft CEO Steve Ballmer after signing a 2006 accord.

(Credit: Microsoft)

In a statement, the software makers say they have signed more than 100 joint customers in the past six months. That's twice the rate at which they had been signing folks as part of an 2006 accord, the two companies said. In total, the two companies say they have sold $200 million worth of Novell support and maintenance certificates to more than 300 customers.

Microsoft says the economy is helping this piece of its business. "In today's economic environment, when customers are looking to derive the greatest value from their IT investments, we are seeing an increased rate of demand for the interoperability solutions and IP peace of mind benefits provided by our collaboration," Microsoft general manager of strategic partnerships Ted MacLean said in a statement.

Among the better known North American names signed since November are Honeywell Aerospace, Procter & Gamble, SC Johnson and Sony Pictures Entertainment. The companies also named several other U.S. firms as well as a number of companies in Asia and Europe.

The Microsoft-Novell deal is often held up by Microsoft as an example of how open source and proprietary software makers can work together. Striking that deal, though, was not easy, as noted in a book earlier this year co-authored by Microsoft's Marshall Phelps.

The arrangement has also led to technical cooperation between the two, including a plug-in for Microsoft's System Center Operations Manager software which lets IT workers monitor their Linux and Windows system environments all within Microsoft's management software. That module is due out later this month, the companies said.

In a statement, 451 Group analyst Jay Lyman said that "the partnership has substantially benefited Microsoft's Linux integration story and has driven Linux revenue for Novell.

"The development and work by the two companies to improve Linux and Windows interoperability addresses the reality of mixed enterprise environments for customers, who were largely the impetus for this collaboration and are now benefiting from the resulting technology and support," Lyman said.

Just two days before Microsoft and Novell signed a controversial deal in 2006, the two sides still hadn't figured out a way to make peace over Linux without violating the licensing terms that govern the open-source operating system.

The terms of the GNU General Public License made it tough for Microsoft to get paid a royalty for each copy of Linux that Novell sold and also made it tough for Microsoft to offer patent protection to Novell without giving it to all users of Linux. But, just hours before it hoped to announce a deal, Microsoft workers thought up an end-run around the provision. Instead of protecting Novell, Microsoft hit on the idea of offering legal protection to Novell's customers.

Even after they did reach an accord, Microsoft still had trouble signing off. With the press waiting for a news conference that was already behind schedule, Microsoft general counsel Brad Smith found that the pen he had been given to sign the deal was out of ink. Smith looked around, spotted a whiteboard and grabbed a marker, which he used to finish signing the contract.

(Credit: Amazon.com)

That story is just one of many interesting tales in "Burning the Ships," a new book that traces Microsoft's moves from intellectual property novice to patent powerhouse. And the author of the book should know. It's co-written by Marshall Phelps, the former IBM lawyer who Microsoft recruited to lead its intellectual property licensing efforts. (Phelps still works at Microsoft, although he notes in the book that the company did not finance the book.)

The timing of the book is interesting, of course, given Microsoft's recent suit against TomTom, which alleges, among other things, patent infringement for TomTom's use of the Linux kernel in its mapping products.

The book itself is an interesting read. "Burning the Ships" traces the history of Microsoft's licensing efforts from the time before Phelps arrived. Former Microsoft Chief Technology Officer Nathan Myhrvold reflects on those early days when Microsoft found itself trying to defend against a slew of patent claims.

"And when our lawyers looked around and asked what sort of patents we could assert back against these companies...the answer was 'we don't have crap,'" Myhrvold is quoted as saying. "So every time one of these companies came by to assert their patents against us, it would cost us money. Sometimes 50 or 100 million dollars. And that's a lot of zeroes to give away just because someone else has patents and you don't."

Ultimately, Microsoft decided it needed to change things. It brought in Phelps and launched moves to both open its IP up for licensing as well as greatly speed up its rate of patent applications.

"My job was to reform and invigorate Microsoft's IP department," Phelps said, "which in my view had been functioning like a football team composed only of defensive linemen, with no one knowing how to throw a forward pass."

With Phelps' arrival--as well as that of general counsel Brad Smith--Microsoft's playbook definitely changed.

The company set upon a new course with regard to intellectual property, making peace with longtime enemies, creating a business around its underused technology, and seeking to strike broad cross-licensing deals with nearly everyone in the industry.

Myhrvold, too, would come to see even more value in patents. After he left Microsoft, he set up Intellectual Ventures, an entity that specializes in acquiring and licensing patents.

The Novell deal, though, is the most interesting tale and the one to which Phelps and co-author David Kline go into the most detail. It began as "Project Summer"--an effort to get at least one major Linux vendor to sign a pact with Microsoft by the summer of 2004. It began with a well-regarded salesperson, Susan Hauser, being tapped to confidentially meet with customers and see how much support there was for some sort of Microsoft-Linux partnership.

The customers were game, Phelps and Kline write, but unwilling to become a party in the negotiations themselves. As the effort took longer than Microsoft wanted it became "project next summer," the authors quip. The company met with Red Hat, starting in the fall of 2004, as part of "Project Bridge Builder," though talks broke down after a year and a half. Just as those talks were collapsing, in June 2006, Microsoft Chief Operating Officer Kevin Turner got a call from Novell's then-president, Ron Hovsepian. A few days after that, Brad Smith called Hovsepian back and a new effort, "Project Blue," was born.

The sides first met face to face two weeks later at a Hyatt near the Chicago airport. That meeting took place amid a convention of female bodybuilders. Another meeting took place in September, this time at Microsoft's outside counsel's office--in the same conference room where several months earlier Microsoft had hammered out an agreement with Sun Microsystems.

"Given the challenges of coming together with Novell," Smith says in the book, "I thought it made sense to meet in the same conference room... Plus, since the room had been lucky for us once before, I figured that couldn't hurt either."

Talks progressed, but had not reached a conclusion. Smith suggested the two sides set an October 31 deadline for reaching a deal. Novell agreed that the deal would be "done or dead by Halloween." After the last-minute end-run around the GPL, the two sides got the deal done and announced it to the world on November 2, 2006.

Microsoft and Novell said Tuesday that they are nearly ready with a beta version of Moonlight--a Firefox add-on that allows Silverlight content to play on Linux PCs.

The software is being announced as the companies tout the second anniversary of their peace deal.

Work on Moonlight began in May 2007 and an alpha version was shown a month later. Novell's Miguel De Icaza, who is heading the Moonlight effort, said on his blog last week that the beta version should be out within days.

The move helps Microsoft in its effort to position Silverlight as a rival to Adobe's Flash. Flash already runs on Linux and is installed on an overwhelming percentage of PCs. Both Flash and Silverlight also run on Macs.

Silverlight's biggest early win was Microsoft's deal with NBC that saw the technology used to power the video on NBCOlympics.com. Silverlight suffered a blow earlier this week when Major League Baseball said it was switching to a Flash-only player for the 2009 season.

In addition to the Moonlight announcement, Novell is releasing a management pack that plugs in to Microsoft's System Center product that will allow IT managers to more easily oversee mixed deployments of Suse Linux and Windows.

As for the broader work between the two companies, they now have more than 200 joint customers, said Susan Heystee, Novell's general manager global strategic alliances. That's up from fewer than 70 customers at the end of the first year.

"That really goes to the value proposition and the focus we've really had around interoperability," Heystee said. "Many of these companies are deploying Linux and windows in their data centers."

See also:
• MLB.com drops Silverlight for Adobe Flash
• Adobe bringing full-fledged Flash to phones

One of the nice advantages of server virtualization is the ability to run Linux and Windows on the same server. One of the headaches, though, is getting help when something goes wrong.

Microsoft and Novell on Thursday said they are going to try to make things a little easier. The pair announced that they will jointly support a virtualization scenario in which Suse Linux is running as a guest operating system under Microsoft's Hyper-V virtualization.

The companies said partners such as Dell will test the setup at the joint lab the two companies have in Cambridge, Mass. It's the latest fruit of a nearly 2-year-old alliance between the two companies.

"The collaboration between Microsoft and Novell has been built by our desire to meet our customers' and partners' IT needs, and to deliver solutions that support customers' mixed-source environments," Microsoft Vice President Bob Kelly said in a statement. "For customers standardizing on Microsoft's hypervisor who also have a mixed-source IT environment, this virtualization solution gives that choice. For channel partners who need a cross-platform hypervisor offering, our work with Novell gives them an easy starting point."

Microsoft on Wednesday extended its existing partnership with Novell with a pledge to pump up to an additional $100 million into the deal.

The companies, which announced an interoperability deal two years ago, said that Microsoft will purchase up to $100 million in certificates that its customers can redeem for Novell's Suse Linux service and support.

Microsoft CEO Steve Ballmer

(Credit: CNET)

The new Microsoft investment will begin in November, the companies said.

The deal is centered on interoperability between Windows Server and Suse Linux Enterprise Server. The original deal, a five-year interoperability partnership inked in November 2006, called for Microsoft to buy $240 million worth of such certificates. Novell said that it has already invoiced more than $157 million in certificate revenue in 18 months.

The companies said that between now and November, they "will solicit customer input and identify aspects of the support programs that will be most useful to organizations running mixed-source environments."

The initial deal between the companies was roundly criticized by open-source advocates as conflicting with licensing provisions. Corporate customers, faced with the realities of making mixed-operating system environments work, have welcomed the deal. Microsoft and Novell said that customers taking advantage of the partnership include BMW, HSBC Holdings, Southwest Airlines, and Wal-Mart.