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Is Novell Too Microsoft-Dependent?

Posted in Deals, Finance, Microsoft, Novell at 7:20 pm by Shane Coyle

From the Shocking Revelations Department…

Larry Dignan is alleging that Novell is too heavily reliant on their partners, Microsoft:

Most of that pop came a quarter ago. For the second quarter Linux invoicing declined 75 percent from the first quarter. Sure it’s up a bunch from a year ago, but that’s a way easy comparison. Non-Microsoft related pieces of the Linux business fell 39 percent in the second quarter compared to the first quarter.

Playing with the numbers, SUSE sales without Microsoft had an invoice total of $11 million compared to the $29 million figure reported. The remainder of that sum is Microsoft.

It appears that analysts are also quite concerned about Novell’s reliance on Microsoft as their #1 channel partner:

Credit Suisse analyst Jason Maynard said in a research note that Novell’s organic Linux growth is worrisome. Says Maynard:

“Given the lack of organic Linux invoicing growth, we think it is doubtful that Novell’s Linux business will be a source of cash flow unless Microsoft buys more licenses or emerges as a meaningful channel for Linux sales. We however remain skeptical that Microsoft will become a champion of Open Source software.”

Some folks are just too cynical.

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  1. Yuhong Bao said,

    October 25, 2007 at 6:55 pm


    That, BTW, illustrate one of the dangers of boycotting Novell. If no one buys Novell software, Novell will be entirely dependent on Microsoft for it’s money.
    So how about bribing Novell to get off the Microsoft-Novell agreement. That will solve the problem.

  2. Roy Schestowitz said,

    October 25, 2007 at 8:05 pm


    You’re missing the bigger picture, which is Novell’s role in changing the terms offered to Linux in the industry. If Novell’s influence can be reduced, then this becomes less of an issue.

  3. Yuhong Bao said,

    October 25, 2007 at 8:11 pm


    But the problem is that if Novell is entirely dependent on MS, it will be hard for Novell to end the MS-Novell agreement.

  4. Yuhong Bao said,

    October 25, 2007 at 8:14 pm


    That is where the money given to Novell for bribing it can help to reduce it’s dependency on MS, making it easier to end it. So bribing it both encourages Novell to end the MS-Novell agreement and makes sure Novell has the money to survive without it.

  5. Roy Schestowitz said,

    October 25, 2007 at 10:09 pm


    The Microsoft-Novell agreement will not be ended. Ron Hovsepian has made it clear on numerous occasions. Thus, the longer this relationship goes on, the deeper in the mud Linux will sink.

  6. Yuhong Bao said,

    October 26, 2007 at 7:43 pm


    At least end the patant licencing part of the Microsoft-Novell agreement or extend patant licensing to all Linux users, and the boycotts can stop.

  7. Roy Schestowitz said,

    October 26, 2007 at 8:11 pm


    That’s just what we have argued from the very start.

    Since then, however, other issues have emerged. For instance, Novell’s access to Microsoft source code and building of binary bridges (which needs licensing) is a discriminatory step. It helps Microsoft isolate ‘taxed’ Linux users from those that embrace open standards. There are various other issues, which were all covered before.

  8. Yuhong Bao said,

    October 26, 2007 at 9:35 pm


    As long as GPL code is not contamated with MS source code and binary bridges are licensed as it was non-free software instead of free software, that should not be an issue. I think the patent licencing part is still the major part, because that is the part that allows MS and Novell to make Linux non-free software.

  9. Roy Schestowitz said,

    October 26, 2007 at 9:56 pm


    As long as GPL code is not contamated with MS source code and binary bridges are licensed as it was non-free software instead of free software, that should not be an issue.

    But that’s not the case. Red Hat, for example, will not receive the same ‘bridges’. It is also related to the patent part, which turns from just FUD and unsubstantiated threats to actual code access and permission.

  10. Yuhong Bao said,

    October 31, 2007 at 11:05 am


    But the binary bridges don’t make Linux non-free the same way the patent part does, so there is no reason to boycott Novell just because of the binary bridges, plus that is a separate issue from the patent part.

  11. Yuhong Bao said,

    October 31, 2007 at 4:20 pm


    In other words, the MS code does not make the rest of Linux non-free, the discriminatory patent deals does.

  12. Roy Schestowitz said,

    October 31, 2007 at 4:56 pm


    But the binary bridges don’t make Linux non-free the same way the patent part does…

    They come as a pair. They are, in that sense, inseparable.

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