Novell filed an 8K form with the SEC yesterday. It gives the details of the Microsoft/Novell deal and is an interesting read (as SEC filings go :-).
What's perhaps most interesting (though not surprising to the conspiracy minded among us) is how much of the money goes Novell's way. If Microsoft were truly concerned wtih getting a fair return on its IP, wouldn't the vast majority of the money be flowing its way? After all, Microsoft is the one with the Mount Everest-like stack of patents, not Novell. So, clearly, this money is intended as more than a fair exchange for patent cooperation.
(And, again, it still strikes me as completely goofy that Microsoft will be distributing SUSE Linux. I suspect Oracle won't be distributing MySQL any time soon, and I equally suspect that customers are just fine with this. "Interoperability" doesn't mean, and doesn't require, a company distributing the products of its competitors. It means not putting up artificial barriers to real competition, which is what Microsoft (and many others) does. So, I'm not buying this "We're doing it for the customers" line. Anyway....)
The highlights:
- The maximum net payment Novell can receive would be $308M. (In total, Microsoft will pay Novell $348M and Novell will pay Microsoft at least $40M.)
- The deal consists of two parts: business collaboration and patents. As Jason Maynard of CSFB notes, "The business collaboration consists of a $240M upfront payment from Microsoft to Novell for SUSE Linux Enterprise Server subscription certificates. In addition, Microsoft will spend a total of $60M over the five-year contract period for marketing Linux and Windows virtualized solutions, as well as $34M over the five-year period for a dedicated Microsoft sales force focused on marketing the joint solution."
- On the patent cooperation side, Microsoft will pay Novell $108M upfront, and Novell will pay Microsoft at least $40M over the next five years. That $40M could grow if sales of Novell's Open Platform Solutions and Open Enterprise Server products do particularly well. In other words, $40M is the floor - no ceiling.
Of particular interest in all this is Microsoft's covenant not to sue Novell's customers. This puts Novell versions of Mono, OpenOffice, Linux, etc. in safe territory from a patent perspective. But I'm with Red Hat on this one: no one should be held hostage over IP rights. If Microsoft has such rights against Linux/etc., let them exercise them. Sue the open source world. Let's get it out.
Microsoft wouldn't do this, of course, because IP weapons are almost always more effective when they're merely threats. The actuality is almost always an anticlimax. IP claims are generally not as strong as believed.
In some ways, I'd welcome a big IP fight. Let IBM, Microsoft, Oracle, etc. start suing open source (and each other) with abandon. It would last for about a week until their customers commanded them to grow up, and then the IP portfolios would be put back in storage, where they belong.
Again, customers are open source's only true friends. Given enough customers using open source, no patent portfolio on the planet is going to stop it. The customers won't let it. Customers, not over-eager litigant vendors, decide.
Anyway, after talking with Jason tonight and exchanging emails with Bill, I appreciate (a little) the difficulty Microsoft was under on this deal. I don't agree with the patent-hugging and such, but I can at least see why Microsoft used a proxy to interact with the community. It chose the wrong proxy, but it's true that extending an olive branch to the Linux kernel community, OpenOffice community, etc., might not have gone very far....
Still, if those are the communities that allegedly have IP problems, shouldn't they be the ones Microsoft works with, no matter how difficult it is?
Posted by Matt Asay on November 8, 2006 08:39 PM
