Why Microsoft Can't Afford To Let Novell Die 215
Posted
by
kdawson
from the dark-knight dept.
from the dark-knight dept.
geek4 sends in an analysis indicating that Microsoft may have the most to lose if hedge-fund operator Elliot buys Novell. (The eWeekEurope piece is based on a longer and geekier writeup by Andy Updegrove on how the mechanics of unsolicited tender offers can play out in the tech world.) To avoid meltdown or asset-stripping, Novell can try and find a preferred bidder — a company with some interest in running Novell as a business, and preferrably a tech company. Or another company may make a move independently. But who might that be? A couple of analysts have suggested IBM, Oracle, or SAP. These all have problems... Microsoft is in a similar category, with one added problem. ... Microsoft has staked any open source credibility that it has on Novell's SUSE distribution. If Novell falls to bits, then Microsoft's efforts to gain open source cred pretty much disappear with it. It's something that would have been impossible to imagine a few years back, but if we're looking for someone to prop Novell up, Microsoft would now be a prime candidate."
Re:Microsoft the tar-baby (Score:3, Informative)
Being signatory to a dodgy, borderline-illegal, patent protection racket which offended anyone who understood the GPL certainly was one way to differentiate their Linux product from all the rest, yes.
Re:Microsoft the tar-baby (Score:4, Informative)
Yes there is such a thing as bordering the illegal.
When something is per se illegal, but a team of lawyers with questionable ethics find a way to phrase it that somehow circumvents the law, that situation is certainly in the border of the illegal.
When something goes against the spirit of the law, but steps carefully over regulations, and is "technically" legal, that is bordering the illegal too.
Don't know how appealing it is.. (Score:2, Informative)
IBM is in an interesting situation. They've avoided distributing Linux like the plague, yet they invest a lot of development into it. They base a lot of firmware and utilities around Novell-sourced linux, but simultaneously make every effort to not make that obvious. Novell I don't think is that appealing in and of itself, but IBM would be left having to rework their linux sourcing strategy, which is not a technical difficulty (switch to RH or just live without SuSE maintaining the codebase), but their lawyers may make it highly difficult to continue without significant impact. Owning Novell would also put them in an awkward position relative to frequent partners RH and MS.
SAP, I can't comment on. I could see it in theory, but practically speaking the partnership I've seen with SuSE is probably not worth the price of the company compared to the price of just jumping to RH.
Oracle I seriously doubt. They have Solaris and a RHEL derivative already in terms of platform. Maybe they can get some credibility in broader enterprise directory or systems management, but it seems to be stretching it and I just don't see it.
MS I don't see as giving a rat's ass. In terms of the legal circumstance MS wanted to project in the world about linux, that pretty much was over with the moment RH called their bluff and didn't get sued. I think they tried to grandstand a little around the MS-Novell partnership to make the best out of the situation, but it comes off as a salvage operation of a move that didn't pan out rather than a strategic investment to preserve.
If Novell/SuSE is on the verge of dying out, I don't see any companies investing any money in salvaging. The companies that want to be a distributor of linux already do. The ones that don't would be better off with a rebuild of RHEL or Ubuntu. A company thinking they could make a better run of making something of SuSE's assets than Novell is deluding themselves.
Come again? (Score:2, Informative)
Microsoft has staked any open source credibility that it has on Novell's SUSE distribution.
I hate to break it to the author of TFA, but Microsoft does not have, never had, and never will have "any open source credibility". I'm sure there are people dumb enough to think that the Microsoft-Novell deal had any beneficial effects whatsoever for FOSS, but none of those people matter because they already bankrupted themselves in a series of repeat sales of the Brooklyn fucking Bridge.
Have we really reached the point where someone can wave around a huge wad of cash and say that night is day and everyone just nods and smiles? Even people who aren't getting any of the cash? Really?
Re:Microsoft the tar-baby (Score:4, Informative)
They did. But then Microsoft owns them at least partially.
I'm too lazy to google it up, but I'm pretty sure they unwound that a couple of years ago.
Re:IBM should buy them. (Score:5, Informative)
Re:Microsoft the tar-baby (Score:5, Informative)
Not particularly accurate. It's not unusual for such companies to take some time to break even, and the same was true of Red Hat. The $50 million injection was purely as part of the Novell deal and no they weren't in the red to that figure. There wasn't a second payment that I'm aware of. Novell have also only just about, with some creative accounting, managed to make their Suse Linux business break-even. Would Suse have done better by themselves? It's a matter of some debate.
You're going to have to qualify that statement and set of assumptions with some facts I'm afraid. Trying not to make money from something to get money is a contradiction in itself. Many open source companies around Linux have tried it and they've burned their VC money and went to the wall. It's a stretch to assume that because Suse didn't open YaST it was in trouble, but it would have probably had to have happened eventually. They didn't open it purely because they had some competitive advantage at the time. It was hardly a reason for people not giving Suse money for the distro, which is ultimately what counts.
Additionally, Novell has done the very thing you accuse Suse of doing - and it has cost them. They haven't opened Groupwise or any of their other archaic pieces of software and as such no one was using them. That was the real problem at the time Novell bought Suse. That's sometimes even worse than people not paying for your software! They've also retro-fitted Novell on to effectively a proprietary Suse Linux in OES which has not only alienated Linux users but has also completely alienated and failed to attract existing Netware users - who've usually gone to Windows Server. They've handled that so badly it's unreal.
I'm not entirely sure what that means, but that sounds like a problem with Novell's management and leadership.
They freed some Suse and Novell software they didn't care about, and much of the Novell software they did free like Hula fell by the wayside very quickly. The important software that they should have open sourced and found a business model around like Red Hat's to get people really using it again they didn't, and it's all been left to rot and stagnate. Novell's revenue has steadily declined since just as it did before the Suse takeover.
What money have they made off that? Their much touted 'Enterprise Linux Desktop' is absolutely nowhere to be seen. Suse Studio is possibly the most different thing they've done, but again, they need to turn that into revenue. They just haven't made the money from Suse that they should have done.
Re:Microsoft the tar-baby (Score:3, Informative)
I was actually surprised to see that Novell's "Open Platform Solutions" account for about 21% of their positive operating income ("Identity and Security Management" and "Workgroup" are the other units that made money last year) for 2009 (2008 was about 10%, 2007 was about 6%). Novell still posted a $206M operating loss for the year (SuSE profit was $87.355M). The only time Novell has ever made a yearly profit in the last five years were in 2005 and 2006, thanks only to agreements with Microsoft and lawsuit settlements from Microsoft.