Microsoft and Novell to Improve Windows and Linux Interoperability

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Microsoft and Novell pronounce a set of broad business and technical collaboration agreements to build, market and support a series of new solutions to make Novell and Microsoft products work better together. The two companies also announced an agreement to provide each other's customers with patent coverage for their respective products. These agreements will be in place until at least 2012. Under this new model, customers will realize unprecedented choice and flexibility through improved interoperability and manageability between Windows and Linux.

Under the agreement, Novell is establishing clear leadership among Linux platform and open source software providers on interoperability for mixed-source environments. As a result, Microsoft will officially recommend SUSE Linux Enterprise for customers who want Windows and Linux solutions. Additionally, Microsoft will distribute coupons for SUSE Linux Enterprise Server maintenance and support, so that customers can benefit from the use of an interoperable version of Linux with patent coverage as well as the collaborative work between the two companies.

The two companies will create a joint research facility at which Microsoft and Novell technical experts will architect and test new software solutions and work with customers and the community to build and support these technologies. The agreement between Microsoft and Novell focuses on three technical areas that provide important value and choice to the market:

Virtualization. Virtualization is one of the most important trends in the industry. Customers tell Microsoft that virtualization is one way they can consolidate and more easily manage rapidly growing server workloads and their large set of server applications. Microsoft and Novell will jointly develop a compelling virtualization offering for Linux and Windows.

Web services for managing physical and virtual servers.Web services and service-oriented architectures continue to be one of the defining ways software companies can deliver greater value to customers. Microsoft and Novell will undertake work to make it easier for customers to manage mixed Windows and SUSE Linux Enterprise environments and to make it easier for customers to federate Microsoft Active Directory with Novell eDirectory.

Document format compatibility. Microsoft and Novell have been focusing on ways to improve interoperability between office productivity applications. The two companies will now work together on ways for OpenOffice and Microsoft Office system users to best share documents, and both will take steps to make translators available to improve interoperability between Open XML and OpenDocument formats.

The patent cooperation agreement enables Microsoft and Novell to give customers assurance of protection against patent infringement claims. It gives customers confidence that the technologies they use and deploy in their environments are compliant with the two companies' patents. As part of this agreement, Microsoft will provide a covenant not to assert its patent rights against customers who have purchased SUSE Linux Enterprise Server or other covered products from Novell, and Novell will provide an identical covenant to customers who have a licensed version of Windows or other covered products from Microsoft.

Novell officials noted that one of their priorities in working toward the agreement with Microsoft was making sure the agreement made sense for the open source community. As part of the agreement, Novell and Microsoft are announcing three important commitments. First, Microsoft will work with Novell and actively contribute to several open source software projects, including projects focused on Office file formats and Web services management. Second, Microsoft will not assert its patents against individual noncommercial open source developers. And third, Microsoft is promising not to assert its patents against individual contributors to OpenSUSE.org whose code is included in the SUSE Linux Enterprise platform, including SUSE Linux Enterprise Server and SUSE Linux Enterprise Desktop.

Like many commercial transactions, the financial terms of the agreement are not being disclosed at this time. Under the technical collaboration agreement, the companies will create a joint research facility and pursue new software solutions for virtualization, management and document format compatibility. These are potentially huge markets - IDC projects the overall market for virtual machine software revenue to be more than $1.8 billion by 2009, and the overall market for distributed system management software to be $10.2 billion by 2010 - and the companies believe their investment in interoperability will make their respective products more attractive to customers.

Under the patent cooperation agreement, both companies will make upfront payments in exchange for a release from any potential liability for use of each other's patented intellectual property, with a net balancing payment from Microsoft to Novell reflecting the larger applicable volume of Microsoft's product shipments. Novell will also make running royalty payments based on a percentage of its revenues from open source products.

Under the business collaboration agreement, the companies will pursue a variety of joint marketing activities to promote the adoption of the technologies they are collaborating on. In addition, Microsoft will purchase a quantity of coupons from Novell that entitle the recipient to a one-year subscription for maintenance and updates to SUSE Linux Enterprise Server. Microsoft will annually make available approximately 70.000 of these coupons to customers, with a mix of priority and standard support services. By providing its customers with these coupons, Microsoft is enabling companies to benefit from the use of the new software solutions developed through the collaborative research effort, as well as a version of Linux that is covered with respect to Microsoft's intellectual property rights. The parties are assessing the accounting treatment for the agreements and will provide information as required in the course of their filings with the SEC.

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