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11.29.10

Novell’s Last Week – Part I: Novell Was Bought by Microsoft, Argue Pundits

Posted in Microsoft, Novell, Patents at 7:20 am by Dr. Roy Schestowitz

Steven J. Vaughan-NicholsSummary: Opinions and takes on the Novell-AttachMSFT agreement, which puts ammunition in Microsoft’s hands

Boycotting Novell was the original purpose of this Web site, so we stay dedicated to Novell as a topic and today we will provide detailed coverage based on the past week’s news. We have gone through hundreds of articles and collected some of the best of them.

When it comes to Novell’s sale, Techrights offered a lot of coverage one week ago (around a dozen posts and a dedicated episode of TechBytes), which was the last week Novell made the headlines in its transitory state. Novell will no longer report results as a public company and it is already being turned into a fur ball of code and marketing, which will be sold to Microsoft-bound entities 4 years and 20 days after selling out to Microsoft.

“We have gone through hundreds of articles and collected some of the best of them.”As usual, IDG has its hands on a lot of the coverage. Centralisation of reporting power is never a healthy thing, but getting a perspective from many sources (even biased ones) is the way to understand the different sides and then strike balance. First of all, Network World staff (IDG) wrote some Novell history and Paul McNamara who was among the group writing it concentrated on Eric Schmidt when he published “Why any great career move should be known as ‘a Schmidt’”. For those who do now know, Schmidt was once Novell’s CEO. As McNamara put it: “The thought arose as I compiled a Novell corporate timeline to accompany our coverage of its acquisition by Attachmate. Schmidt was CEO at Novell in 2001 when he was asked to and did indeed take the top spot at Google. The rest is not only history but has prompted me over the years to wonder: Has anyone in any field ever made a better career move?”

Also see the article “Pull a ‘Schmidt’ and Jump at Opportunity” and this memory of WordPerfect.

Remember WordPerfect back in the 90′s? That went bust thanks to a crumbling relationship between Novell and the WordPerfect executive team. Poor relationships can bring down entire products, and even business empires.

Novell has an extensive legacy as a Microsoft rival, so it cannot be easily picked up by Microsoft. However, Novell seems to have found an antitrust loophole and Steven J. Vaughan-Nichols (SJVN) involuntarily shows that Techrights‘ “Boycott Novell” was right on target all along. Writing for IDG, SJVN published the article “Dark horse Attachmate buys Novell, Microsoft helps”. He says that “VMware wanted to buy Novell, but the virtualization company didn’t want to buy everything that Novell’s board wanted to sell. At the same time, Microsoft had made it clear that it hated the idea of VMware, a Microsoft rival, ending up as Novell’s owner. The result was that Attachmate bought Novell for $2.2 billion while Microsoft paid $450 million for as yet unnamed Novell intellectual property.”

But here comes another post from SJVN. This IDG blog coverage from a longtime supporter of Novell bears the headline “Who really bought Novell? Microsoft.”

Who really bought Novell? Of course, I know that Attachmate is the company that’s on record as purchasing Novell for $2.2-billion, while Microsoft shelled out $450 million for some Novell intellectual property. But tell me, where did Attachmate get $2.2-billion? Could it have been Microsoft? I think so.

I’ve covered Attachmate over the years, so I knew who they were when the news broke that Attachmate had purchased Novell. What I couldn’t see was where the heck they had gotten the money for the deal. Attachmate’s main business over the years has been software terminal emulation. That’s a business line that’s been dying ever since the Web came along in the early 90s.

[...]

Instead Microsoft used Attachmate as a proxy to take Novell off the operating system chess board as an independent Linux company. At the same time, it retains enough direct and in-direct control of Novell and its intellectual property to put them into play if needed to put trouble into Red Hat, Android, or Ubuntu’s paths.

I don’t have a bit of proof for this mind you. Both Attachmate and Microsoft are being remarkably close-mouthed about what exactly they’ve bought and what they plan for their pieces of Novell. What I do have is decades of watching Microsoft bully its opposition. From that viewpoint, this seems like a logical Microsoft move.

“Novell is dead and Microsoft has eaten its heart” says another opinion piece from IDG and the official IDG news coverage is a lot more toned down and objective (“Microsoft purchasing 882 Novell patents”). Here is an update and discussion at LWN, which has some very insightful contributors.

Update: Novell’s 8K filing is available with a bit more information. The “certain intellectual property” is 882 patents. There is also an escape clause for Novell should somebody come along with an offer for the company that includes buying the patents.

Reuters has an interesting blog post titled “Deals wrap: Novell deal a Microsoft maneuver?”

Sam Varghese, a longtime Novell critic, says that “Microsoft buys insurance from Novell” (there are more posts that go along those lines, especially in blogs).

There’s no escaping the fact that Microsoft got those software patents from Novell. “Red Hat had “no comment” about the Microsoft purchase of the Novell patents,” wrote the person who reported for IDG on the patent sale. There’s an ongoing debate as to what Microsoft targets with those patents. Some say it’s Linux and others say it’s some of Novell’s proprietary software competitors. Simon Phipps writes: “That’s reading further than the data permits. Best guess I have seen so far is WordPerfect and PlateSpin are the targets.”

Matt Asay, Canonical’s COO (and formerly of Novell) argues that Microsoft and Attachmate were not Novell’s destiny. It’s a decent article (except the Mono boosting) and it suggests that Microsoft did not get all of Novell’s patents, just many of them

Under Hovsepian’s watch, Novell cozied up to Microsoft, gaining short-term revenue but losing long-term leadership points as Novell distanced itself from the open-source community that has supported Red Hat’s rise to a $750m Linux and middleware juggernaut. More recently, Hovsepian managed to spend eight months shopping Novell after an Elliott bid, only to eke out six per cent more from Attachmate. Was it worth it?

No, but apparently there simply wasn’t much interest in buying Novell, as The 451 Group’s Brenon Daly points out:

[B]eyond all of the complications around matchmaking is the fundamental fact that Novell just isn’t that attractive, regardless of whatever business we look at inside the company. Each component of its revenue (license, maintenance/subscription, services) has dropped so far this year, which is part of the reason why Novell has come up short of Wall Street expectations every quarter this year. Overall, sales have dropped six per cent in 2010, and current projections call for Novell’s revenue to decline next year, too. So as we look at it, the board probably did a fair job to get Novell valued at $1.2bn (net of cash), which works out to basically 1.5 times sales.

He should not have mentioned Mono the way he did because it is bound to make people worried about Ubuntu’s direction with Mono. But that’s the subject of part II in this series.

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