01.23.08
Brent Williams on the Microsoft/Novell deal
Don Marti has posted a roundup of recent events in LinuxWorld. Among the interesting bits which he has scooped up there’s this:
Lots of good stuffhere: “Red Hat knows that they have a premium brand, so ignoring people competing on price is the right strategy.” Also covers “blowback” of the Novell/MSFT deal: “Customers aren’t worried about being sued for patent infringement.” Plus why software isn’t a commodity, when not to copy Red Hat, and more.
Don points at the following presentation from Brent Williams [PDF]. It is a very large presentation, but here is the content from just 4 slides that cover the Microsoft/Novell deal.
Microsoft “Endorses” Novell Linux
In November, Microsoft and Novell announced a “patent
cooperation” agreement that exempted Novell’s Linux customers
from patent lawsuits from Microsoft against Linux
Deal was carefully worded to avoid collision with GPL2
Microsoft is paying Novell more for patent protection
than Novell is paying Microsoft
Microsoft will pay Novell $240 million for discount coupons it can
give to its customers to get them to switch to SuSE instead of
“other” Linux distributions
© 2007 by Brent C. Williams; made available under the EPL v1.0
Results of the Novell-Microsoft Deal
Last week, Novell reported $91 million of invoicing for Linux
subscriptions, up 650% from prior year
$73 million of this was multi-year deals from existing
customers still under subscription
$18 million in multi-year revenue less than the dollar
growth in Red Hat deferred revenue quarter-to-quarter.
So are they gaining share?
Stock dropped 10% last week on earnings release,
despite Linux results.
Novell management on the defensive
Ballmer keeps accusing Linux of IP Infringement, not
talking about benefits of Novell deal
Novell management has to keep trying to “sell” deal
as a good thing
© 2007 by Brent C. Williams; made available under the EPL v1.0
Solving the Wrong Problem, Again
Novell thinks the problem is catching Red Hat
Novell needs to formulate a brand identity for SuSE
other than “We’re not Red Hat.”
Customers aren’t worried about being sued for patent infringement
Especially after the SCO lawsuit
Solving the wrong problem at the wrong time
Competitive alternatives to Microsoft exist in most of its
key markets
Sometimes they require a little work, other times, they
are “drop in” replacements.
Open source is the technology gaining share in all
those markets.
Open source community can get very good at defending
against patent litigation very quickly.
Prior art claims, third-party reviews, using Internet to
help “patent busters” coordinate efforts.
Real possibility that 100% of Microsoft patents will
be attacked in initial counterstrike.
© 2007 by Brent C. Williams; made available under the EPL v1.0
Blowback. It’s a “beast”
Reaction from open source community
Jeremy Allison, Samba Project lead, quits Novell and
goes to Google
Novell cancels other open source projects
GPL3 strengthened significantly to block similar
follies in future
Likely increase in shunning of Novell as project
contributor because of
possible patent “contamination.”
Geopolitical fallout grows
Likely to influence course of patent legislation in
Europe and other non-US geographies.
Likely to result in further tacit or explicit
government advocacy of open source.
Tacitly shows that even Novell believes it can’t stop Red Hat
itself.
Customers recognize the implicit admission of market
leadership.
Brent Williams will hopefully not mind the use of just 4 of his slides. These insights are all noteworthy. The only part worth correcting is about Novell’s finance. Novell has admitted 'massaging' the numbers.█
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