Novell CEO: We made Microsoft open up

To many outsiders and to numerous sections of the open source community, Novell's decision to make a deal with Microsoft in 2006 to avoid litigation around Linux was motivated by desperation.

Novell had been struggling financially and failing to make much ground against open-source rival Red Hat. The deal that the company signed with Microsoft, which cost Novell some US$40 million (AU$44 million), to avoid Suse customers being sued, meant that the two companies would promote each others products. Since then, Novell has realised a significant amount of revenue from being Microsoft's Linux provider of choice and saw its sales in this area rise by 65 percent in the last quarter.

Novell chief Ron Hovespian

Unsurprisingly, Novell's chief executive, Ron Hovsepian, does not see his company as desperate or a traitor to the open source community, which it bought into with its 2003 acquisition of Suse Linux. Rather, Hovsepian believes Novell is a brave innovator, walking the line between old-world proprietary companies and disruptive open source players. He claims Novell is all about building bridges and that, in reality, businesses are not interested in the binary thinking that afflicts many open-source enthusiasts — it is not about Microsoft being good and open source being bad, but "making IT work as one".

Speaking to the Novell boss at his company's annual BrainShare user conference in Salt Lake City, Utah, ZDNet.com.au's sister site ZDNet.co.uk asked whether the Microsoft deal could actually be damaging in the long run and what effect a financial downturn could have on Novell's recent recovery.

Q: Novell is keen to position itself as an ally of Microsoft, despite the flak this attracts from some elements of the open source world. Why, in that case, are you continuing with your antitrust lawsuit against the company for alleged anti-competitive practices around WordPerfect [which Novell used to own before selling it to Corel in 1996]?
A: We have tried to resolve this through normal business conversation, but we just viewed it from two different vantage points and we both decided to continue on the path we were on, which has unfortunately ended in litigation. But that is OK, that is what that mechanism is there for, at the end of the day.

But doesn't that send out mixed messages, given your apparent close relationship with Microsoft following the 2006 agreement?
It is very easy to compartmentalise that. I appreciate that customers might not always see it that way but, aside from our two legal departments, it has a very little impact on the rest of the company.

Your relationship with Microsoft has had some short-term financial benefits but do you think it will be damaging in the long-term, especially around your relationship with the open source community?
I think long term will be the final arbiter. I think initially there was some reaction until we explained the details. [In the] longer term, I hope that we will be seen as the company that helped to bridge the relationship between the community and the Windows world. At the end of the day, we have to tackle that interoperability issue for customers, as that is where the real value lies.

Can you provide any numbers on how many of your customers really adhere to that mixed-source message?
I am very confident about all the calls I have made and I have yet to meet a customer who doesn't understand or believe that mixed-source story. You would be challenged to find an all-Linux shop or an all-Windows shop. I accept that there is going to be five percent of the continuum that operate there, but the broad majority adhere to mixed source. I met with a large financial services company that said: "We love Linux; we love open source," and I asked them what percentage of their servers are running Linux and open source and they said: "Oh, about 50 percent of our servers run on Windows." We can talk about these things but, when you actually go into the datacentre, it's a mixed world out there.

Your attempts to tread this middle road between open source and proprietary make pragmatic business sense but you also need to attract open source development talent, for instance, and these guys are passionate about open source as a philosophy.
We have had unbelievable success in recruitment, including open source developers. I think that what is more important, from my perspective, is that, as we have focused on interoperability between open source and proprietary, that has attracted people from the community who realise that is the reality of what is going on in most businesses.

Under former chief executive Jack Messman, Novell unveiled a commitment to moving the majority of its own internal IT systems to open source. Is this something that you are continuing with or has it been abandoned in light of the mixed-source message you are now putting out?
I don't know that he ever committed to moving 100 percent of systems to open source. What I am very clear on is that we use our IT function as a showcase and I know for a fact we are a showcase for Linux on the server. Additionally, what we spoke about more publicly is our desktop migration and we have continued to do that desktop migration. I am using it and I am not the most technical guy on the team, but I didn't go through any pain and didn't really need any special training.

Has that enabled you to extend the life of the desktops?
Absolutely, we definitely get more life out of the desktops from running Linux on them.

How could a possible recession in the US and slowdown in other markets affect Novell in the immediate future?
I will share two pieces of information with you around this. The first is that around 40 percent of our revenues come from the public sector, and — not that they don't feel the pressure; they do feel the pressure — but it gives a level of insulation to the company compared to if we had 80 percent financial services customers. That being said, the other important piece of information is the market for servers and the value proposition that Linux offers. We really see a pressure in the market to cut down complexity and costs which will drive Windows-to-Linux migrations, so we do see that as continuing and being a help. I don't say we are completely insulated but I think we are in a good position in relative terms.

Is the new Fossa strategy that you laid out this week an attempt to add some momentum to the company, given that you are not pushing the open-source mantra as much as before?
No, I don't think so. I think you are looking for deeper meaning that is not there. It is really about how and where the corporate enterprise world is going. That will be our lifeblood and, if we don't get [the Fossa strategy], then, over time, we won't have the cash to put back into the community to do the things that need doing. Part of what we did, for better or worse, is to help bridge that conversation and we are going to keep that focus on IT continuing to work as one, while being vigorously committed to open source. I think someone is going to write about it one day — this concept of bridging the gap between proprietary and open source rather than dealing with it in purely binary terms, where it is one or the other. For me that is the reality of the market and it is going to resonate more with businesses.

But do the market and investors respond to easy messages as well? The acquisition of Suse did give a certain boost to Novell's fortunes.
And then what did it do after that? It came right back down. We have got to push on with this message that IT must work as one because that is the reality of what businesses are experiencing right now.

What did you make of Microsoft's open specification promise?
We think it is great, absolutely in line with their desire to try to be more open, and you have to respect that. As a company that is going through many different metamorphoses, I give them a lot of credit for their desire to be more open. Is it the way we would have done it or the way we would want it? No. But is it making the right steps in the right direction.

And they have only agreed not to sue non-commercial Linux offerings, right?
Well, you know, crawl, walk, run... If we weren't in this relationship, then do you think they would be where they are now?

So you are saying that your 2006 agreement with Microsoft laid the ground for their alleged commitment to be more open early this year?
Absolutely, they have been much more open since that point.