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Friday, November 3, 2006 - Page updated at 12:00 AM

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Microsoft, Novell aim to close software divide

Seattle Times technology reporter

Microsoft offered perhaps its biggest olive branch yet to the open-source software community through a broad set of agreements with longtime competitor Novell.

The companies, frequent rivals in the courtroom and the marketplace, said Thursday they will work together to solve a problem their customers have complained about for years.

Large businesses and organizations typically have complicated computer systems that run both open-source software, such as Linux, and closed- or proprietary-source software from Microsoft.

Now, said Microsoft Chief Executive Steve Ballmer, the agreements his company reached with Novell will "bridge the divide" between open source and Microsoft's Windows.

For some time, Microsoft has been taking steps toward détente with the open-source community, which is centered on the free operating system Linux. But this latest move to cooperate with a longtime rival on intellectual property, technology development, sales and support for open source marked a milestone many analysts viewed as improbable.

"This is almost like the lion and the lamb lying down together," said Laura DiDio, a research fellow with the Yankee Group.

The agreements, in effect for at least six years, include:

• A Microsoft pledge to promote Novell's branded Linux software, called SUSE Linux Enterprise, and distribute 70,000 coupons for maintenance and service. SUSE Linux is a competitor in a market led by a Red Hat Linux product.

• An intellectual-property agreement that protects each company's customers and some open-source software developers from patent-infringement suits. Microsoft will also make a related upfront payment to Novell.

• Joint development of software with an emphasis on virtualization, management of Web services and open-document formats.

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Ballmer was quick to point out Microsoft and Novell will still be competitors when it comes to persuading customers to choose one platform over the other.

"If you've got a new application that you want to [deploy], I'm going to tell you the right answer is Windows! Windows! Windows! And [Novell CEO] Ron [Hovsepian] is going to tell you something different," Ballmer said.

Novell's shares shot up 20 percent when the news leaked out Thursday afternoon and closed up 15.7 percent, or 92 cents, to $6.79.

Microsoft's stock lost 4 cents to close at $28.77 but gained it back in the after-hours market.

Microsoft has been straddling the fence on open source for most of the decade.

It implored its engineers to build software that works better with Linux than with other open-source products, while on the other hand running a campaign that claimed Linux cost more — if you figure in maintenance and support, in addition to installation.

Since September, the company has announced agreements with open-source companies SugarCRM and JBoss.

"If you've been paying close attention to Microsoft, I don't think this is really that shocking," said Barry Crist, CEO of Centeris, a Bellevue company that helps businesses integrate and manage Linux and Windows servers.

Roughly 80 percent of business customers will run a combination of the two platforms in the next five years. They do so to avoid being locked in to a single vendor, to use the platform that's better suited to specific applications or a variety of other reasons, he said.

"What the customer wants is their major vendors working well together and playing nice in the playground," Crist said.

While Novell and Microsoft emphasized the move was aimed at solving their customers' interoperability problems, observers saw another place where their mutual interests coincide.

"One of the things that has scared everyone, from open-source aficionados down to other software vendors like Oracle and Microsoft, and IBM and Novell, is the fear ... that Red Hat was going to be so dominant that, in effect it was going to become the Microsoft of the Linux space," Yankee Group analyst DiDio said.

Linux software represents 25 to 30 percent of the server market, she estimated. Of that chunk, Raleigh, N.C.-based Red Hat claims to own about 75 percent and "had basically played Pac-Man with [Sun Microsystems'] market share," DiDio said. Sun is another major player in the market.

Red Hat came under attack from a different direction last week, when Oracle announced it would offer service and support for Red Hat Enterprise Linux, potentially cutting away at Red Hat's principal revenue source.

Microsoft General Counsel Brad Smith said in an interview the company would entertain similar intellectual-property agreements with other open-source companies, but that its open-source development and marketing efforts would be unique to Novell.

Various groups in the open-source community will greet Microsoft's news differently, said Brian Bershad, a computer-science professor at the University of Washington.

The guys writing software in the basement after work probably will not respond well to these moves, he said.

"Part of their big motivation is independence from large corporations," Bershad said. " 'Software should be free' is sort of a sub-message in the open-source community."

DiDio said Microsoft is making a concerted effort to reach out to the more strident members of that community with its pledge not to assert patent rights against individual, noncommercial software developers or those making software for Novell's SUSE Linux.

"For so long, the fanatical element in the open-source community insisted on painting Microsoft as the Evil Empire, the Dark Side," DiDio said. With this agreement "Microsoft gets to wear the white hat and look benevolent, which is not the way they're usually cast in the tableau."

Underscoring the complexity of Thursday's announcement — and its target audience of corporate IT professionals and software developers — Ballmer told a San Francisco radio reporter who asked for a sound bite that his listeners should focus on another Microsoft effort.

"The average KGO consumer listener should be more interested, in my opinion, in the launch of our Zune product," Ballmer said, referring to his company's forthcoming digital media player.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Copyright © 2006 The Seattle Times Company

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