Practical Technology

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Why Novell is cashing in on Linux


Novell made some, but not a lot of money from Linux in its second fiscal quarter, which ended April 30, 2008. The real news though isn’t the Linux income itself–$29-million–it’s that Novell year-over-year growth in Linux is up a healthy 31%.

Actually, that’s not healthy. That’s great.

While Linux remains overall a small part of Novell‘s net revenue, $236-million for the quarter, it’s SUSE Linux’s exceptionally strong growth that’s the real story.

Ever since Novell bought Ximian and SUSE and got into the Linux business, most people thought Novell would be a perpetual also-ran to Red Hat. This quarter points to Novell becoming a more serious contender for the enterprise’s Linux dollar.

And, what has made the difference? Linux lovers will hate this but I credit Novell’s continuing strong Linux growth not to its outstanding SUSE Linux or its excellent openSUSE. No, what really is giving Novell’s Linux its boost is… its partnership with Microsoft.

Novell CEO Ron Hovespian said in the quarterly news call that “Our partnership with Microsoft continues to expand.” And, “We also expanded our technical collaboration agreement to simplify and standardize the management infrastructure needed for efficient Windows Linux management. To date, we have invoiced $157 million, or 65 percent, of the original five-year, $240 million agreement.”

I’ve found the real story is that, like it or not, customers find the idea of Linux’s low cost and Microsoft compatibility to be very attractive. I know of at least $20-million IT contract where it’s that very factor, which won the deal.

It’s certainly not a popular idea in Linux circles that partnering with Microsoft can work, but, for now, at least Novell is finding that its Linux sells better with Windows technology support than without.


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