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Microsoft Loves Linux: What's With That?

In November, Microsoft and Novell announced a five-year patent and technology agreement around Microsoft software and Novell's SUSE Linux software. The parties to the deal called it a "patent covenant." Others called it a sellout, a FUD attack, or a declaration of war on Linux specifically and open-source software generally. So what is this Microsoft-Novell deal really about?

In trying to understand any legal agreement, it's usually helpful to look at the money flow. In this case, it's a little complicated—with some of the money flowing now and some later, and with Microsoft buying Linux support coupons from Novell, committing money to market Novell products to Microsoft customers, and granting patent indemnification to Novell customers while receiving patent indemnification for Microsoft customers from Novell.

It nets out, though, to hundreds of millions of dollars flowing from Microsoft to Novell. So you'd think that the question would be, "What did Novell give Microsoft for the money it got from Microsoft?" But instead, the reaction to the announcement was all about something that Microsoft was giving to Novell, or rather to Novell customers, under the agreement: A promise not to sue them for intellectual property infringement.

Which is something that Novell's SUSE Linux users didn't realize they needed until Microsoft pointed it out to them. Something that, some would say, they still don't need. It's not good journalism to attribute opinions to unspecified parties as I just did with the word "some," so I'll change it: Something that, Novell would say, they still don't need. If it sounds odd to you that one of the partners to the deal is denying that one of the key elements of the deal has any value, you're right. It is odd.

Technologically, the deal is less puzzling. According to Microsoft and Novell, the agreement is about three things:

  • Virtualization.
  • Web services for server management.
  • Compatibility between Microsoft Office and

It gets simpler, though. According to Microsoft General Counsel Brad Smith (I don't know why a lawyer is weighing in on this, but I think he's right), the truly important element is virtualization. The kind of virtualization at issue is the kind used by IT departments to consolidate development, production, and app-serving tasks onto a single machine with some kind of virtualizing platform running multiple virtualized operating systems. Such virtualization is a growing market in which the exact roles of the potential players—including that of the operating-system vendor—are not yet defined. That's a situation fraught with opportunity and risk. Microsoft wants more than just to play in this market—it wants to control it, and that requires astute technological and legal strategy.

Because any action by a large company has public-relations implications, you have to think that the PR aspects of the deal were analyzed carefully. Whether they were analyzed successfully is another matter. I'd say clearly not in Novell's case. One unanalyzable and unpredictable element of public relations for Microsoft is the company's, um, enthusiastic CEO.

In presenting a deal like this to the public, most technology CEOs would probably concentrate on the technological aspects and throw around a lot of eight-syllable words like "interoperability" and try to generate a warm fuzzy feeling that they'd done something generally good for their customers and for the industry at large. Microsoft doesn't have that kind of CEO. Steve Ballmer can throw around eight-syllable words with the best of them, and he did some of that, but mostly he was intent on emphasizing the IP aspect of the deal. This is about IP compliance, he emphasized. Microsoft's customers and Novell's are worried about Sarbanes-Oxley, they want a legal guarantee that they won't be sued. The deal, he said, gave such assurances. But his assurances sounded more like threats. "[T]here's nothing in this covenant not to sue," Ballmer said, "that is exclusively offered to Novell." Implying that if other Linux providers don't want their customers sued, they should maybe talk to Microsoft. And nobody'll get hoit.

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