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-------------------------------------------------------------- This story was printed from ZDNet Australia. --------------------------------------------------------------
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Microsoft paying Novell US$308m for Linux pact By Stephen Shankland, CNET News.com November 08, 2006 URL: http://www.zdnet.com.au/news/software/soa/Microsoft-paying-Novell-US-308m-for-Linux-pact/0,130061733,339272090,00.htm
In one of the more complex examples of "co-opetition" in the computer industry, Microsoft will pay Novell a net amount of US$308 million to market and distribute its competitor's product. The five-year Microsoft-Novell partnership, unveiled last week, involves a mix of patent, technology and business issues. Novell disclosed details of the partnership in a Securities and Exchange Commission filing Tuesday in the US. Microsoft will pay Novell US$240 million for 350,000 coupons -- 70,000 per year -- entitling customers to support and maintenance for Novell's Suse Linux Enterprise Server, Novell chief executive Ron Hovsepian said yesterday. In addition, Microsoft will spend US$94 million over the five-year deal on its own sales and marketing work for Suse products. Microsoft hopes the partnership will help the fortunes of its management software for virtualisation, technology that lets different operating systems run simultaneously on the same server, said general counsel Brad Smith. "The principal purpose of this is to enable us to take our virtualisation solution to market," he said. The deal also involves patent-related payments. Microsoft will pay Novell a net amount of US$108 million in an agreement under which both companies release each other from patent claims from past actions, Hovsepian. However, that will be offset by Novell payments of at least US$40 million over the course of the deal to ensure Microsoft won't sue Suse customers for patent infringement. The Novell payments are based on how much revenue Novell garners from sales of its Linux and Open Enterprise Server products. "There are two things in the patent deal. We had to address proprietary code and we had to address open-source software," said Microsoft general counsel Brad Smith. "We addressed the proprietary issues through the net up-front payment. The open-source (part) we addressed through the percentage of revenue." Novell said its agreement with Microsoft doesn't violate the General Public License (GPL), the licence that governs the Linux kernel.
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