Novell MD on getting along with Microsoft

Novell has so far managed to weather global economic uncertainty — at a cost of about 100 engineering jobs in early February. Novell UK managing director Sean McCarry, who was appointed at the beginning of February, is bullish about Novell's prospects, arguing that open source will become increasingly attractive to businesses because of its potential for cost savings.

The company signed a deal with Microsoft in 2006 to collaborate over sales and to license patents Microsoft claims to hold over Linux. ZDNet UK caught up with McCarry to discuss the relationship with Microsoft and Novell's strategy for working with the technology company.

Q: How is the relationship between Microsoft and Novell?
A: It's going really well and customers are reaping the benefits. That relationship really kicked off in 2006 and goes through to 2012. Microsoft has injected a large investment.

People are absolutely delighted with the Microsoft relationship. We've got HMRC, the Ministry of Justice, ITV, and a long list of customers who we are working with, on either Red Hat migration or proprietary migrations.

Some in the open-source community — Boycott Novell, for example — still have issues with Novell and Microsoft. Does this affect customer perceptions?
The interoperability agreement was driven by customers. They wanted Novell and Microsoft in the datacentre or for document management. Novell and Microsoft working together has benefited customers. To offer a true solution across the datacentre, Novell had to work with Microsoft — and this can only be a good thing for the open-source community.

Has the agreement affected Novell's standing in the open-source community?
Novell is one of the largest contributors to the open-source community and we do take the community very seriously. We have a Microsoft [press] statement we can send you about that, that might help.

Novell agreed to pay Microsoft licensing fees on the understanding Microsoft would not assert patents it holds that supposedly cover Linux. These patents have never been tested in court and have never been publicly specified by Microsoft. Did Novell make too big a concession to Microsoft in submitting to its patent claims?
I think the intellectual-property conversation is really complex, but I'm not the right person to talk to about this [at Novell]. One aspect of the agreement was protection for Novell customers.

How is Novell working with Microsoft on business products?
The main strategy is technological interoperability with Windows Server 2008. That's all about optimising hosting and memory of Windows Server 2008 with Suse Linux, and standards-based...

...systems management. It's also about enhancing interoperability between OOXML and ODF documents.

Is there a place for both OOXML and ODF? Microsoft has been easing off on support for OOXML.
Overall the enterprises in Novell's marketplace are seeing a large growth in Linux. But documents cover a lot of strategies, and there's going to be a mixture of proprietary and open source.

Is the recession an opportunity or a threat for open source?
I think it's a real opportunity for Novell. We've got the government marketplace and we've also got the commercial side. We're seeing more large customers coming to Novell to migrate from proprietary [Unix] software to Linux. Cost savings are significant with Linux, compared with the support costs and hardware costs of Unix providers.

At the moment Novell has large opportunities in security and identity solutions — we're seeing huge demands for those. [Specific security product demands include] audit and login solutions, especially due to compliance issues across government. However, we're not taking the economic challenges to organisations lightly. We are providing customers with opportunities where they must take hard decisions.

How is Novell doing in the current climate?
If you look at our growth rate, I think Novell is in a strong position today, and will be in a stronger position in the future.

But didn't Novell lay off about 100 staff at the beginning of February?
Novell, like any company, is always looking for operational efficiencies. Yes, there was an announcement that under 100 staff would go in engineering, but there are over 4,200 employees — you're looking at approximately two percent of the workforce. Compared with our competitors, I don't think it's a really important matter or a big number.

Surely it's an important matter to the staff who were laid off?
Yes, but again, it's a business, and I'm not close to those decisions. In the UK we have increased the headcount — we've increased the sales staff.

That's positive. By how many?
It's not a large number. We've increased the sales camp by five people in the past few months. The UK business of sales and marketing is healthy.

It's good you are employing more sales staff, but don't they need a product to sell? Could Novell ridding itself of engineering staff hobble it in the future?
I'm not the expert, but if you look at Novell's acquisitions strategy, [engineering] is a critical part of Novell, and we're an organisation with increasing revenues. In the UK we don't have an engineering facility — the majority of R&D and [software] development work is done in the US.

So what can you tell me about future acquisitions?
It's hard to comment on future acquisitions. Linux in the datacentre has taken off, as customers are looking at massive cost savings. For example, our customer Kent Police has demonstrated a 90 percent cost saving since migration.