12.02.06
Anyone Believe Microsoft is this Stupid?
So, are we all to believe that Novell approached Microsoft and walked away with a deal which, on its face, is so one-sided in Novell’s favor that Microsoft’s shareholders should be calling for Steve Ballmer’s resignation:
- Microsoft pays $240M for 70,000 SLES subscriptions* - a cost of $3429 per certificate - that MS customers can redeem for “single or multi-year” SLES support, it does not specify what level of support in the SEC filing. (3 year 24×7 priority support for SLES is $3748)
- Microsoft pays a combined $46M for a sales force and marketing the combined offerings.
- Microsoft pays Novell $108M for the “Patent Cooperation” agreement, Novell pays just $40M and agrees to pay a royalty going forward on their “open source software shipped under the agreement“.
Grand totals: MS gets at least $40M, Novell gets $348M themselves plus the benefits of having Microsoft selling and marketing SUSE ($46M). And remember, Novell approached Microsoft, perhaps they just have experience in dealing with Microsoft:
As for allegations that Novell has intentionally or naively entered a deal with the devil, Hovsepian was candid in his remarks: “We’ve been competing with Microsoft for 20 years. We didn’t just get stupid overnight.
Now, does anyone really believe that Microsoft got stupid overnight? Of course not. The money is insignificant to them, we are talking about a company that is facing a daily $1.5M fine in the EU and never even blinked. Perhaps this money even came from their anti-linux slush fund.
So, what is Microsoft getting from the deal, it clearly isn’t economic?
Well, there is the EC Antitrust ruling, in which Microsoft is required to do two things: 1) provide the interoperability interface information necessary to communicate with Windows, and 2) submit proposed license terms for the interoperability interface information. Now that Novell has accepted their interoperability license terms, it will be hard for the EC to argue that they are not Reasonable and Non-Discriminatory.
Then, there is the possibility of using Novell to undermine the Open Document Format, all while deriving revenue from their competition and instituting the “Microsoft Tax” on virtually all software. As a bonus, Microsoft got a bunch of FUD-munition (I wrote that the other day, I kinda liked the sound of it) to use against Free Software and GNU/Linux. The community is fragmented, and “Open Source” is Dead:
This was the week ‘Open Source’ ceased to be a useful phrase because it denoted everything up to and including Microsoft’s attempts to destroy free.
* UPDATE: Apparently, it is 70,000 certificates per year for 5 years, so divide the per certificate cost by 5 = $646, and they are 1 year certificates: “Each certificate entitles the recipient to a one-year subscription for software updates and technical support for SUSE Linux Enterprise Server.”
** UPDATE: Since this article, subsequent announcements regarding coupon distribution have indicated that they are actually the 3 year certificates - more confusion about the nature of the agreement by the parties involved.
Highlight: Novell was the first to acknowledge that Microsoft FUD tactics had substance. Novell then used anti-Linux FUD to market itself. 
Highlight: Xandros let Microsoft make patent claims and brag about (paid-for) OOXML support. 
Highlight: Linspire's CEO not only fell into Microsoft arms, but he also assisted the company's attack on GNU/Linux. 
Highlight: Microsoft craves pseudo (proprietary) standards and gets its way using proxies and influence which it buys. 
Highlight: The invasion into the open source world is intended to leave Linux companies neglected, due to financial incentives from Microsoft. 
Analysis: Xen, an open source hypervisor, possibly fell victim to Microsoft's aggressive (and stealthy) acquisition-by-proxy strategy.