This concept of money for nothing does enrage people, by threatening people which fail to pay up cannot last long. Failure on the part of Microsoft to list which patents are violated does prevent people from, choosing to either pay royalities or redesign the software. The behavior on the part of Microsoft is proof they engage in, unfair business practices.

One side of me would like to see Novell get less press coverage, so they hopefully would just die out quicker. Sort of like Sun has been for awhile, where they would mention Linux or Red Hat, just to get press coverage.

On the other hand I am more glad people are making the monkey business between Novell and MS visible. MS hopes that the world just accepts these types of deals, and absorbs them into the "fabric of the industry". That is the aspect that people have to keep calling baloney on. They want to just keep turning the knobs, like a frog boiling in hot water slowly, until one day the computing world wakes up and says "yeah, I guess we all (every small and mid-size sw firm, proprietary or open source) should be paying MS, IBM, Patent trolls and others, a good % of every thing we do; yeah seems like that is the way it works...". The good news is that world is onto this thought process, and the jig is up, and will continue to be up !!

Burn the boats!

Don't miss this one from Larry:

http://software.seekingalpha.com/article/37009

"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."

"There's a way out of this for Novell. Several, actually. First, dump Microsoft. Second, dump all the ancillary products that continue to bring in stale maintenance revenues but mire Novell in its past. Third, and related to #2, focus its value closer to the one product in its arsenal that customers care about (Linux)."

So your plan is:
- dump Microsoft, where a lot of their Linux sales are coming from
- dump products other than Linux eventhough Suse Linux is only 8.8% of their total revenues
- focus everything on Linux, supposedly all that their customers care about eventhough 91.2% of their revenues come from products other than Linux?

This looks like converting Novell into RedHat but how could Novell ever be a better RedHat than RedHat? Novell is probably better served by being the best Novell it can be rather than trying to be RedHat. RedHat is an all Linux company, Novell is not. RedHat's sales in one quarter are more than what Novell sells all year from Linux eventhough Novell's total revenues are more than double that of RedHat.

Let me guess where that would lead. Dumping Microsoft would end the technical collaboration Novell is benefiting from, not heal the wounds of alienated community members, and would reduce Linux sales. Financially that would likely lead to one very profitable quarter due to asset sales followed by many quarters with the lowest revenues in 10 years (a company with $950 million in sales per year becomes a company with $75 million in sales per year). Cross selling opportunities would cease to exist. Brainshare would be dead with most of Novell's partners being tied in to the 91.2% of Novell's sales, not the 8.8% that is Linux. Improvements to Linux would be significant with the large influx of cash redirected to R&D from asset sales but all inventions would be quickly copied into other distributions like the community favourite Ubuntu netting Novell little return on its investment that would be able to make up for the 91.2% of the revenues it sold.

I don't see where this magic formula is going to turn into growing revenues above $950 million per year when RedHat follows that exact formula and has less revenues. As far as profit is concerned that is a function of reducing cost of revenue (Linux has the second highest after IDM), increasing efficiency to reduce general operating expenses, and increasing sales. I don't see this magic formula doing anything other than promoting a Linux only agenda which ignores the fact that many if not most Novell customers aren't Linux customers. Apple ditching everything to focus on iPods makes more fiscal sense looking at overall revenues than Novell ditching everything to focus on Linux. Novell should definitely keep it's Linux business and work on growing that business but until Linux is it's number one revenue generator it is far too early to consider dumping everything else in my opinion.

"But it needs to focus the company's value on the one product that the world still cares about when it thinks of Novell: SUSE Linux."

I don't think that is right, Matt. The problem is that no one is coming to them saying 'ooh, we really like suse.' Or virtually no one. The only people coming to them are saying 'we like Linux, and would like Linux with systems management, identity management, and groupware. We'd use RH, but they only offer Linux. What can you offer us?' If they scale back to just SUSE, the answer to that question is 'well, we offer an inferior linux that no one really likes, and by the way, we just got rid of our systems, identity, and groupware products. Sorry about that.' They aren't going to build a markedly better operating system than Red Hat- SUSE might someday reach parity, but it won't pull meaningfully ahead- RH is too big and too good at what they do. To be successful they must build a better *ecosystem* than Red Hat- and Red Hat has, so far, left the door pretty wide open for Novell to at least attempt that. But they will only get there building on Zen and Groupware, not tossing them away.

Matt - it's easy for you to stand on the outside and play arm chair quarterback... but if you remember that ultimately, corporations (ALL corporations) were created to make money. Novell makes $950M or so in a year. Red Hat finally got to about $400M. If you just consider those numbers, who's winning? I don't know of any for-profit companies who are interested in just doing pro-bono open source work, do you?

Clearly, Novell has much room for improvement in terms of what percentage of their revenue mix is from Linux... but you're assuming several things which are simply incorrect.

For starters, doesn't Red Hat include technical support with every sale of their subscription? Novell does not. If you add in some $$ from their technical support revenue, I wonder how even a comparison it would be? Unfortunately outsiders and the investing community don't have that kind of insight.

Secondly, you also forget that Red Hat basically has ONE revenue stream -- RHEL subscriptions. They are heavily dependent on that single stream. Novell has multiple streams of revenue they are trying to balance... some less successfully than others. The point of this is: maybe Novell hasn't priced SUSE Linux as their primary source of revenue - because IT IS NOT. Maybe they're adopting a model similar to Microsoft where they charge full fare for some products (eg, Windows and Office), but are willing to take a loss on others just to win customers (eg, SMS, SharePoint, etc.).

It's something to think about before thinking your line of thinking is the only and correct one...

"Maybe Novell should acquire MySQL. Maybe Zend."

If you're either of those companies, do you sell to Novell? Not a chance!

Novell is not a technology company.

It is a business company.

The software is secondary to the relationship of trust it has with its (very loyal) customers.

Linux is there to help these customers...Novell is not there to force feed Linux.

Whether it's Linux or something else, Novell serves its business partners.

And that's what it's about -- not some kernel hack or Vista UI thingy.