THE MORE we investigate and the deeper we look into AttachMSFT, the more evidence we have that AttachMSFT will be bad news to everyone except Microsoft. Matt Rosoff, a Microsoft booster from a Microsoft-based firm [1, 2, 3, 4], chose a rather daunting title for this whole new affair. He does deliver a bit of FUD (along with his new employer) by stating in the headline that "Today's Novell Deal Helps Microsoft Continue Linux Fight" and Rob Enderle, a longtime foe of GNU/Linux (also paid ally of Microsoft), draws a similar card.
Microsoft managed to buy 882 patents this week from Novell. Maybe amongst this treasure trove is the elusive Holy Grail of Patents—the Linux killer.
Linux is the real thorn in Microsoft's side, and it's not because Linux is making a serious move against the Windows and Office cash cows, but because it just cannot be dethroned as the server OS of choice. The Linux-Apache stranglehold on servers is costing Microsoft money.
But wait, there's more. The entire Google search engine mechanism consists of millions of small computers linked together in an elaborate Linux network creating one giant search machine that, for this purpose, out performs anything ever invented. Microsoft would love to find a way to de-rail the entire Google operation if it could.
Microsoft was sort of the money behind the agonizing SCO attack on Linux and open source, and there is no reason to believe that Microsoft has mellowed in regards to the destruction of Linux and everything related to Linux. It may be too late, of course, but I can assure you these patents have something Microsoft wants to help it continue the battle.
It often takes years to dissect a patent portfolio to figure out what the patents mean and who is violating one or more of them. Of course, Microsoft may have done all that in advance and could have been laying in wait to get hold of this portfolio, so it could pounce sooner than later.
This isn't going to sit well with the open source community and the fur will start flying. Within six months, I expect the battle to commence.
[I]t is troublesome that Microsoft, which leads the CPTN investment group, has so far declined to specify just what IP was part of the $450 million side deal. But not too troublesome--after all, that kind of uncertainty only works in Microsoft's favor for now.
That fact is, that while many in the Linux community are wondering if UNIX is now owned by Microsoft, we don't know if that's what has happened, and even if it was, it doesn't necessarily mean The End of All Things Penguin.
I have two points, somewhat unrelated, as to why I am not highly concerned yet. First, it's not evident to me that Attachmate/Novell would sell off UNIX IP rights for $450 million to anyone. I would think that UNIX would be worth a lot more, particularly with Oracle's investment in Solaris, and HP in HP-UX, IBM in AIX, and so on...
With no offense meant for the SUSE or NetWare sides of the business, but I think it's a reasonable assertion that UNIX is long-term the most valuable piece of Novell's property. That Attachmate would up and sell it first chance they get seems rather short-sighted. It's possible Attachmate needed the sale to raise the extra cash to complete the acquistion of Novell, but without UNIX, they are left with yet-another-Linux company that has yet to go successfully head-to-head with its closest rival, Red Hat.
Microsoft is likely walking away with valuable technologies and FUD fuel, but it still won't have control over open sources
Novell has sold itself to Attachmate Corporation. There is a side deal selling "certain intellectual property assets" to CPTN Holdings LLC, "a consortium of technology companies organized by Microsoft". SUSE goes to Attachmate, I gather, and will be a separate unit, so what goes to Microsoft's consortium?
No doubt we'll find out in time. It is being reported that what it will get is 882 patents. Blech. How many does Novell own? Is that all of them? If so, will we get to watch Son of SCO, but with patents this time? But keep in mind that the WordPerfect litigation could be in this picture, and I wonder if this could be a kind of deal to tactfully settle it out, with Microsoft paying to end it this way? $450 million isn't a lot, though, so how could it be all of the patents? Nevertheless, selling any patents to Microsoft is like selling your baby to a pedophile in the limited sense that you can reasonably predict what it will do with the acquisition.
Novell's CEO is telling "valued customers" in an email that it's a merger agreement, that Novell believes "the transaction is great news for our customers," that all contracts will be honored, and that the IP sale to Linux's sworn enemy "will not impact customers", whatever that means. Not a word about Linux and what it means for SUSE. Not a word to reassure the community.
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Well, I told you in 2006 that Novell had sold out, did I not? The Microsoft patent deal was a big hint. The sale to the Microsoft consortium could be about that too, actually.
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But I note that Miguel de Icaza tweets that Mono goes to Attachmate. Watch out, y'all. We warned you and warned you about Mono, did we not? Did you listen? I hope you will now.
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I have a question, actually, although I'm not a shareholder. What exactly did Attachmate pay? TechFlash, above in the media section, wrote: "Novell says in its news release that the $450 million cash payment from the Microsoft group is "reflected in the merger consideration" paid by Attachmate..." so how does that figure in, and what is the connection between the two deals or the two entities for that matter?
Two days have now passed since Novell announced the high-level terms of its proposed sale, and so far the press has not been able to prize any additional details out of the parties involved. As a result, speculation is rife on several key points, and especially with respect to the 822 patents that Novell proposes to sell to a consortium of companies, only one of which has been disclosed: Microsoft.
And if, as I’ve read elsewhere, Elliott Associates is going to retain its stake in the surviving company (which I’ll call “New Novell”)Were you aware that Attachmate's press release said,As part of the transaction, Elliott Management Corporation, one of Novell’s largest shareholders, will become an equity shareholder in Attachmate Corporation.
“[A] full analysis of #OIN licensing is on my TODO list.”
--Bradley Kuhn, FSFHe also told Bradley Kuhn: "i confess I am no expert in OIN agrmnt, but your position does not seem evident from the reading of it. Will ask KeithB to comment."
Kuhn replied with: "Usually #Bergelt dodges questions re: specifics of #OIN agreement. Guess I should write up my analysis to dispel false marketing [...] basically, there's a "grace period" in #OIN crosslicense. Any member can withdraw & after N months, #swpats licenses evaporate. [...] a full analysis of #OIN licensing is on my TODO list. Frankly, I haven't done it b/c I fear it'd give them undeserved publicity"
Red Hat's Oliva wrote to Kuhn: "OIN agreements: it's trivial to withdraw & there's no estoppel. OIN is mostly useless."
We are going to write about the OIN's role later on.
The FFII, a known critics of the OIN, only writes:
#Novell acquisition sounds like a parody of 10 yro #FFII #patent #doom mongering #swpat
The deal itself is a "reverse triangular merger." That means that Novell, the "acquired company continues its corporate existence, since in a merger the parties are free to designate which company will be the 'surviving corporation.' Attachmate will therefore form an empty shell company before the closing, all of whose shares will be owned by Attachmate. On the closing date, that company will merge into Novell, rather than the other way around."
Why would they do it that way? Well, there are usually two reasons. The one that seems important here is, "It will lessen a major headache under other structures, which is getting the permission of many hundreds of third parties to assign their contracts from Novell to the acquirer. While every company seeks to limit the number of contracts that it signs that require such permissions, granting this term is sometimes unavoidable (and especially if you want the same right in return). Since Novell will be the surviving legal entity."
In January, 2009, Jeff Hawn, the president and CEO of Attachmate, was sentenced to 10 days in jail for authorizing the 2008 slaughter of 32 of his neighbor's bison that had wandered onto his Colorado ranch.[12] Hawn pled guilty in November, 2008 to criminal mischief and animal cruelty and was released on $15,000 bail.[13][14] Hawn and hired hands shot and killed 32 bison—including cows carrying calves—which had wandered onto and near his property from a neighboring ranch in Park County, Colorado. The arrest warrant said most were left to rot. In Colorado, bison are allowed to wander under open-range laws.
Novell will be bought by a North American group called Attachmate that appears to be made up of financiers buying assets as investments. As someone who has seen one acquisition of a company by financiers up-close, and an acquisition of legacy products, where they languished as cash cows, I feel partly qualified to guess what might happen to Novell post acquisition – although I am often wrong about these things, so take all this with a pinch of salt.
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So you sell on some patents & copyrights that you’re not really interested in (presumably with a free license to use said patents for a period of time), you split your business up into the cash cow moneymaker (Old Novell) and the new, growing business that can sell at a high valuiation relative to its earnings (Suse Linux), and you line up a buyer for the speculative Linux business. With $450M for patents and perhaps $800m for the Linux business, you get old, profitable business with limited growth potential, but with regular earnings (~$600M for the last financial year, as far as I can tell, in legacy revenues, with an operating net margin of >10%) and $300M cash on hand (after subtracting liabilities & deferred revenues from cash on hand).
Remember just four years ago, when Novell entered into the now-infamous joint patent agreement with Microsoft? Remember the hue and cry that went up to boycott Novell? So that Novell would be driven out of business, and thus punished for entering into that "evil" agreement with the enemy?
Well, guess what.
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Frankly I hope Microsoft does have Linux by the short hairs over this. If Katherine Noyes of PCWorld is finally right for once, and Microsoft is indeed looking for a new, more potent way to make Linux vendors "an offer they can't refuse", then all I can say is suck it up; you asked for it.
Sleep well tonight, all you self-righteous open source software heroes. Sleep well in the bed you've made for yourself.
Acquisitions almost always lead to some product line consolidation or outright discontinuation, often coupled with changes in pricing and terms of support. It can take months or more before the impact of a merger is felt. Statements by top officials of the acquiring company are supposed to sound reassuring, while they typically lack meaningful details. Such was the case today.
With that background, we can follow the next step. Elliott Associates, L.P. (through The Liverpool Limited Partnership) bought a lot of stock beginning in January. And Elliott International, the Cayman Islands entity, bought the rest, to a combined total of approximately 7.1% of Novell stock...