Microsoft and Novell Announce Broad Collaboration on Windows and Linux Interoperability and Support

1 January 1970

Microsoft Corp. (Nasdaq: MSFT) and Novell Inc. today announced a set of broad business and technical collaboration agreements to build, market and support a series of new solutions to make Novell and Microsoft(R) 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(R) and Linux.

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"They said it couldn't be done. This is a new model and a true evolution of our relationship that we think customers will immediately find compelling because it delivers practical value by bringing two of their most important platform investments closer together," said Steve Ballmer, CEO of Microsoft. "We're excited to work with Novell, whose strengths include its heritage as a mixed-source company. Resolving our patent issues enables a combined focus on virtualization and Web services management to create new opportunities for our companies and our customers."

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.

"Too often technology companies ask their customers to adapt to them. Today we are adapting to our customers," said Ron Hovsepian, president and CEO of Novell. "Microsoft and Novell are enabling customers to take advantage of each other's products where it makes sense in their enterprise infrastructure. We jointly believe that our business and patent agreements make it possible to offer the highest level of interoperability with the assurance that both our companies stand behind these solutions."

Agreement Has Broad Scope

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(R) 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.

"As a result of this collaboration, customers will now be able to run virtualized Linux on Windows or virtualized Windows on Linux," said Jeff Jaffe, executive vice president and chief technology officer at Novell. "Customers continually ask us how they can consolidate servers with multiple operating systems through virtualization. By working together, Novell and Microsoft enable customers to choose the operating system that best fits their application and business needs."

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.

"Both companies had to think creatively about how to create an intellectual property bridge between the two worlds of open source and proprietary software," said Brad Smith, senior vice president and general counsel of Microsoft. "This bridge is built on respect for the innovations of each company and the open source community, and a passion for what we can deliver for our customers together."

Customer and Partner Reaction

Microsoft and Novell announced the new alliance at an event attended by several customers and partners.

"We applaud Novell and Microsoft in their efforts to provide greater Windows and Linux interoperability," said Paul Otellini, president and chief executive officer of Intel Corporation. "Customers want solutions that meet their individual needs, and higher levels of software interoperability give them the ability to more easily make the best choices."

"Windows and Linux are extremely important to our enterprise customers and the industry, and AMD strongly supports both," said Hector Ruiz, chairman and chief executive officer of Advanced Micro Devices. "This agreement by Novell and Microsoft helps customers bridge the gap between these platforms, giving them greater flexibility in doing what works best for them. This is a great example of vendors working together to resolve complexity so their customers don't have to."

"This technology and business collaboration provides a model that allows Microsoft and Novell to develop new solutions to enable open source and proprietary software to work better together in a mixed-source environment," said Shane Robison, executive vice president and chief strategy and technology officer at HP. "We applaud these two companies for doing the hard work to build a bridge between Windows and Linux."

"IBM encourages more industry endorsement of mixed-source solutions that promote open standards," said Steve Mills, senior vice president and group executive at IBM Software. "Microsoft support for interoperability with the industry-standard OpenDocument Format is most welcome. Open documents give customers choice and help unlock broad industry creativity, allowing access to a new generation of innovative applications. Our view continues to be that interoperability and choice are key values that customers demand and deserve."

"We are pleased to see that Novell and Microsoft have come together to address customer needs with heterogeneous operating environments," said Kevin Kettler, CTO at Dell Inc. "As an industry leader in the IT market, we are excited to see the technology investments being made around virtualization and interoperability by both companies with this agreement."

"SAP has been the first enterprise application vendor to run our apps on Linux, while we have more Windows-based deployments than any other platform," said Shai Agassi, president of Product and Technology at SAP. "Today's announcement means that customers can now choose their preferred operating system for each part of their SAP implementation with the confidence that the systems will have strong interoperability and be supported by SAP, Novell and Microsoft -- both companies being strong SAP partners."

"One of the key challenges in government is IT interoperability," said Thomas Jarrett, secretary of the Department of Technology and CIO of the state of Delaware. "We commend Microsoft and Novell for their collaboration and their efforts to build bridges in the interoperability area, which will help government to better serve our customers, our business community and our citizens."

Good for the Open Source Community

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 today's 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.

"Today's announcement by Microsoft and Novell marks a significant milestone in the adoption of Linux," said Stuart Cohen, CEO of Open Source Development Labs. "By choosing a course of co-opetition, Microsoft acknowledges the critical role that open source plays today in an enterprise IT infrastructure. We appreciate the role Novell is playing to help bridge the gap between Microsoft and the open source community. We are glad to see these two companies collaborating to further diminish the legal threat posed to developers and customers by patent assertions. This is good for customer confidence in Linux, the open source community and the broader IT ecosystem."

Additional Announcement Details

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.

For more information on SUSE Linux Enterprise from Novell, see http://www.novell.com/linux .

For more information on Microsoft Windows, see http://www.microsoft.com/presspass.

About Novell

Novell, Inc. (Nasdaq: NOVL) delivers Software for the Open Enterprise(TM). With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. With more than 20 years of experience, 4,700 employees, 5,000 partners and support centers around the world, Novell helps customers gain control over their IT operating environments while reducing costs. More information about Novell can be found at http://www.novell.com .

About Microsoft

Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

NOTE: Microsoft, Windows and Active Directory are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Novell and SUSE are registered trademarks and Software for the Open Enterprise is a trademark of Novell, Inc. in the United States and other countries. *Linux is a registered trademark of Linus Torvalds.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Customers and Partners Respond to Microsoft and Novell Collaboration

November 2006

"The City of Seattle's IT staff supports a number of different operating environments, including Microsoft Windows(R), Novell NetWare and several varieties of UNIX/Linux. All these environments require separate physical servers, and our data center is running out of space. This new Microsoft and Novell collaboration agreement could allow significant virtualization of servers, reducing the number of physical platforms we'd have to maintain. That, in turn, reduces costs for maintenance, electricity, cooling and space, saving taxpayer dollars, and helping improve stewardship of the environment. This helps to meet key goals set by Mayor Greg Nickels in his Climate Action Plan."

-- Bill Schrier

Chief Technology Officer

City of Seattle

"One of the results of the rapid growth of open source software is a world of 'mixed code,' IT environments composed of both commercial and open source software. At Palamida, we are dedicated to assisting our customers with the new intellectual property (IP) compliance, licensing and software asset management issues that result. From our perspective, today's announcement from Microsoft and Novell is an important advance in interoperability in this mixed code world - interoperability not only with respect to technical issues, but also to IP issues. This is a major win for customers who will now receive a whole new level of support and assurance in their deployment of mixed-code IT environments."

-- Mark Tolliver

CEO

Palamida Inc.

"In everything we do, we put our customers first. It is heartening to see longtime competitors like Microsoft and Novell do the same for the long-term benefit of the IT industry customers. Meaningful collaboration between leading software vendors that builds bridges between proprietary and open source software is necessary for the IT industry. We welcome these initiatives and hope to see others join in."

-- Eric Wilson

Senior Vice President and CIO

Raley's Family of Fine Stores

"This announcement validates both open source and proprietary software and is a tremendous development for the IT industry. By addressing open source IP issues and focusing on enabling greater interoperability between their open source and proprietary products, Novell and Microsoft have sent a strong signal to the industry - it's about customers, collaboration and innovation. Let's hope others follow their example."

-- Catherine A. Allen

CEO

BITS Financial Services Roundtable

"This agreement is a positive example of how companies with different business models and approaches to intellectual property can work together. Hopefully this is a model that others in the industry will repeat. Intellectual property is a currency of exchange in the software marketplace, and today's announcement is an important step in the continued progress of the IT industry as a whole."

-- Eugene Roman

Group President, Systems and Technologies

Bell Canada

"This collaboration of open source and proprietary software is a win-win for the IT industry and our customers because it provides greater choice when developing comprehensive solutions. This alliance allows resellers to better address the specific needs of their end-user customers -- even highly customized application needs. Congratulations to Microsoft and Novell for listening to customers, putting them first, and taking such a forward-looking approach."

-- Jodi Honore

Vice President, Vendor Management

Ingram Micro North America

"Microsoft and Novell should be commended for putting customers and innovation before licensing ideology. This is the kind of achievement that can only be reached when parties respect one another's innovations and intellectual property and put their customers first.

"This announcement is a victory for customers and the industry, including small software developers developing solutions for both Windows and Linux platforms. It's further proof that free market forces are working and enable a vibrant software ecosystem that provides customer choice, innovation and competitive products.

"The reality is that customers are not interested in the best proprietary product or best open source product; they want the best product, period. With their pioneering approach, Microsoft and Novell are giving customers the choice they have demanded, leaving behind the philosophical licensing debates around open source and proprietary software."

-- Jonathan Zuck

President

Association for Competitive Technologies

Source: prnewswire

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