By Joris Evers and Stephen Shankland
Friday, November 03 2006 08:42 AM
URL: http://www.zdnetasia.com/news/software/0,39044164,61964433,00.htm

SAN FRANCISCO--In an unusual partnership, old foes Microsoft and Novell have joined forces to work on harmonizing their products.

The companies said Thursday they will collaborate on development of specific technologies, for example to help Microsoft's Windows, a proprietary operating system, work with Novell's Suse Linux, which is based on open source code. On the business side, they will promote each other's products.

In addition, the software makers have struck a deal on patents designed to give customers peace of mind about using Novell's open source products, Microsoft CEO Steve Ballmer and Novell CEO Ronald Hovsepian said at an event here.

"This set of agreements will really help bridge the divide between open source and proprietary source software," Ballmer said.

The impetus for the arrangement was to make it easier for software buyers to run both Windows and Linux-based systems, Hovsepian said. "We came together to focus on giving you, our customers, the choice," he said.

The companies will create a joint research facility at which they will build and test new products, and work with customers and the open source community. The focus will be on three technical areas: virtualization, Web services for server management, and Microsoft Office-OpenOffice.org compatibility, the company executives said.

Novell favors the open source Xen virtualization software as a foundation to run multiple operating systems in separate virtual machines on the same computer; Microsoft is working on its own alternative, code-named Viridian. Virtualization raises the prospect of different operating systems simultaneously running on the same server.

"Microsoft is taking a significant step toward being a better open-source citizen," RedMonk analyst Stephen O'Grady said. And among Linux companies, "Novell is likely to receive a significant boost in attention and credibility, and Red Hat will have to further defend its position as the de facto Linux supplier."

Additionally, Microsoft will officially recommend Suse Linux Enterprise for people who want to run both Windows and Linux. It will distribute coupons for maintenance and support for Novell's Suse Linux Enterprise Server operating system.

The two companies also said they will provide each other's customers with patent coverage for their respective products. Moreover, Microsoft said it will not enforce its patents against individual, noncommercial Linux developers.

"Today, Novell is the only company in our industry that is able to provide the customer not only with the code to run Linux, but also with a patent covenant from Microsoft," Brad Smith, Microsoft's general counsel, said at the event.

In addition, Microsoft promised not to assert patents against developers being paid to create code for OpenSuse, Smith said.

Money is flowing both ways for the patent agreement, Smith said, including an "up-front balancing payment that runs from Microsoft to Novell, reflecting the large relevant volume of the products that we have shipped and an economic commitment from Novell to Microsoft that involves a running royalty."

However, the alliance will not oaffect Novell's antitrust suit against Microsoft, one source familiar with the plan said. The suit, filed in 2004, alleges that the software colossus used anticompetitive practices that hurt Novell's earlier WordPerfect office suite business.

Microsoft executives repeatedly said that customer demands provided the impetus for the partnership. "The customers were telling us to find a way to address patent issue directly so they wouldn't have to figure out how do deal with it themselves," Smith said.

Microsoft and Novell declined to detail the financial side of their agreements. Novell, however, will have to report details soon because they are material to the company's earnings, said John Dragoon, Novell's chief marketing officer.