In an interview with Computerworld, Ron Hovsepian gives some background on the genesis and workings of the Microsoft-Novell deal. Hovsepian states that the deal began in search of virtualization, and that initially Microsoft's position was that Linux could be virtualized within Windows, but not Windows within Linux.

Also, a little more on the motivation behind the deal, besides interoperability I suppose:

All I cared about was, I lost a deal with a large retailer to Microsoft for the first time about 12 or 18 months ago. It was going to be an all-Linux deal, and I lost it because they were unduly influenced, in my opinion, to be fearful of these [IP and indemnity issues]. From my point of view that was really too bad, because Linux lost. Then I watched it happen three more times.

Apparently it is a good thing that Ron hit the delete button on his Open Letter to the Community, since he refuses to accuse Microsoft of spreading Fear Uncertainty and Doubt (words he apparently initially intended to use), actually saying that Microsoft has been "operating genuinely" at the executive level in regards to their IP statements.

Do you think Microsoft is spreading a lot of fear, uncertainty and doubt about the risk of IP violations if companies adopt Linux?

They were sharing their position in the marketplace as they saw it through their lens.

Funny how it isn't FUD when you are in the unique position to benefit from Microsoft's fearmongering about potential "IP" violations in Linux. Hovsepian also said that he was "disappointed" by Ballmer's "Undisclosed Balance Sheet" statement, but did not want to overreact since he knows how things can be taken out of context.

One topic Hovsepian had little to comment on was the upcoming GPL3, and the possibility that it will isolate Novell from the very community from which they derive their product. But, Richard Stallman did have some more to say regarding Novell and GPL3:

Stallman said the FSF would have no hesitation in using GPLv3 to nobble the deal. "Definitely! This deal is a threat to the freedom of the free software community, because its effect is to make GPL-covered software non-free in practical terms," he said.