Novell vows to keep fighting Microsoft 'juggernaut'

Despite an alliance with Microsoft, Novell's chief says he's "excited by the muted reaction to Vista".
Written by Chris Duckett, Contributor and  Scott Mckenzie, Contributor

SYDNEY, Australia--Novell will continue its march against Microsoft and the Vista operating system despite a recent alliance with the software giant.

"We're excited by the muted reaction to Vista," Ron Hovsepian, Novell's chief executive, told the media at a meeting here Thursday. "We're going to attack (Microsoft) vigorously and go after their footprint as much as we can."

Microsoft's Vista was five years in the making, so the code behind it is very complex, Hovsepian said, whereas open source is more nimble and flexible. "And we have got to take advantage of that."

Despite Novell's commitment to attack the market on its own terms, Hovsepian acknowledges that there are benefits to its alliance with the software giant. The two companies signed the pact in November and fleshed out details of it this week.

The reality is you can't escape the "Microsoft juggernaut" in the marketplace, so you have to work with them to get your foot in the door, Hovsepian said. When you talk to customers, he said, most will say "I hate Microsoft." Yet those same customers say 60 percent of their servers run on Windows--not Linux, which Novell backs.

"The closer you get to the customer…you increase the chance of migrating footprints to Linux," Hovsepian said. "We want to compete with Microsoft…and then we'll work together once a customer decides which platform (to run)…It ensures longevity for Novell in the marketplace."

Linux is a US$500 million market, he noted, and growing at the expense of Unix consolidation. "We have not taken enough from Microsoft," he said.

One significant customer that Novell has taken from Microsoft, however, is French automaker PSA Peugeot Citroen. Novell is replacing Peugeot's Windows systems with 20,000 Suse Linux desktops and 2,500 servers.

The Peugeot win was considerable. Yet market share issues still played a role in Novell's decision to join hands with longtime bitter enemy Microsoft, despite Novell's claims that it was purely customer driven.

"It was not a deal that Novell had to make," Hovsepian said. However, it was definitely made to create more market momentum; and it was a deal that seemed to resonate with the customers, he added.

"We did not sign a patent cross-license agreement with Microsoft. That has been one of the confusion points out there. What we agreed to was you will not sue our customers and we will not sue your customers for any of our products," Hovsepian said.

"That is what we agreed to--a covenant not to sue our customers. That is where some of the confusion and rhetoric has been generated in the marketplace. So are we really clear? Microsoft can sue us, and we can sue Microsoft tomorrow."

The threat of legal action, real or otherwise, had hindered Linux deals in the marketplace, according to Hovsepian.

He said that Novell had lost Linux deals with four Fortune 500 customers to Microsoft over concerns about intellectual property. Looking at the losses beforehand, he said, the deal with Microsoft "makes sense".

The pact with Microsoft has certainly helped in the three months following the signing, Hovsepian said. The software maker has honored its contractual commitments by hiring sales staff and dedicating money to marketing. The companies are also working together on an interoperability lab.

More importantly for Novell, "big wins" have started to roll in, further justifying Novell's decision to enter into an agreement on "coopetition", or a blend of cooperation and competition, with its foe. Novell claims that about 35,000 Suse Linux support certificates have been sold since the deal was signed.

Yet Hovsepian remains wary. He marks the progress every day. "I have to, because it's a big deal for Novell," he said.

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