| What's what in Dell's Linux deals |
May 11, 2007
The Linux world rejoiced when Dell announced that it was going to pre-install Ubuntu Linux on some of its consumer desktops. But then the Linux world was befuddled when Dell announced that it would be buying certificates for Novell SUSE Linux from Microsoft.
Some Linux users have reacted with rage to what they see as a change in Dell's direction. One Dell customer responded to Dell's announcement of the deal with the following: "By making a deal with Novell, you've destroyed the market that you opened by offering Ubuntu. Many will now view your company as collaborating with MS to shaft Linux with looming and vague threats about IP [intellectual property] even though MS probably copies more ideas and innovations developed on Linux than the other way around."
While this is an extreme position, it does bring up questions that are on the lips of many Linux users. These include: Is there a relationship between Dell offering Ubuntu and then announcing a new Microsoft deal? Does the deal between Microsoft, Novell and Dell support Microsoft's claims that Linux infringes on Microsoft patents? Another question is why is Dell buying SLES (SUSE Linux Enterprise Server) certificates from Microsoft, instead of Novell?
First, as Danijel Orsolic, founder of Libervis.com, a technology and society discussion site, noted in a recent story, Microsoft is not the boss, we are. "It is being said Microsoft *allowed* Dell to start selling Ubuntu under the condition that it also sells Novell SuSE GNU/Linux."
Based on what my sources at Dell and Novell are telling me, the Novell, Microsoft and Dell deal had nothing to do with the Ubuntu arrangement. David Lord, a Dell spokesperson, flatly denied that there was any connection between the deals. "Our customers told us loud and clear on IdeaStorm that they wanted desktop Linux and we're delivering what they want."
Sources indicate that the Microsoft, Novell, and Dell deal was pushed first by Microsoft. The boys from Redmond began pushing the deal in December, not long after it signed its Novell partnership agreement. This was months before Dell users told the company loud and clear on its IdeaStorm Web site that they wanted desktop Linux.
However, it should be noted that Dell knew about the Novell/Microsoft pact before it was publicly announced. At the time, Kevin Kettler, Dell's chief technology officer, said, "We are pleased to see that Novell and Microsoft have come together to address customer needs with heterogeneous operating environments. As an industry leader in the IT market, we are excited to see the technology investments being made around virtualization and interoperability by both companies with this agreement."
Dell wasn't ready to sign on then, but the company was aware of the deal and its possible advantages in Windows/Linux interoperability and virtualization. In February, Microsoft and Novell expanded upon what these generalities meant in terms of specific features.
As it happened, the decisions to make the Novell, Microsoft and Dell deal and the Ubuntu pre-load came to fruition at about the same time. Dell delayed the notice of the Microsoft/Novell deal for a week to give the Ubuntu news its turn in the spotlight.
In the Novell/Microsoft deal, Dell agreed to do three things: (1) Buy SLES certificates from Microsoft, (2) Invest in sales resources -- training their staff, running interoperability classes and proof-of-concept classes for Dell customers, and (3) Commit to joint marketing efforts with Microsoft and Novell, specifically around SLES.
Dell, it should be noted, is buying the certificates upfront rather than on a demand basis. This, in turn, effects Dell's sales commitment, and is another reason it seems that Dell will be pushing SLES more than RHEL (Red Hat Enterprise Linux).
Lord, however, says that is not the case. "It's part of our overall Linux strategy. We're driving choice for customers. If they want Linux and Windows Server interoperability, then Microsoft and Novell are offering a compelling choice. But, some customers want Red Hat and Red Hat offers great support and we've offered Red Hat for years."
But, why is Dell buying the SLES certificates from Microsoft? Kevan Barney, Novell's senior PR manager, explained. "There are several reasons Dell is buying the coupons from Microsoft. First, like all the certificates, these certificates are going to be used in mixed Windows-Linux environments and as incentives to get customers to buy more Windows by offering Linux as part of the package."
The certificates, as described in Novell's Nov. 7 Form 8-K submission to the SEC (Security and Exchanges Commission) Entry into a Material Definitive Agreement, have always been for a packaged SLES/Windows offering. In detail, the combined offering consists of SLES, a SLES support subscription with Microsoft Windows Server, Microsoft Virtual Server and Microsoft Viridian.
This package, which includes the SLES certificates, is being offered to customers desiring to deploy Linux and Windows in a virtualized setting. For these certificates, Novell has already made its revenue. According to the agreement, Microsoft made an upfront payment to Novell of $240 million for SLES subscription "certificates," which Microsoft may use, resell or otherwise distribute over the term of the agreement, allowing the certificate holder to redeem single or multi-year subscriptions for SLES support from Novell.
In short, Novell doesn't lose anything by the certificates coming from Microsoft, because Microsoft has already paid for them. At the same time, as Microsoft places them, the deal enables Novell to place SLES in Windows shops.
As part of the Novell/Microsoft deal, Microsoft also agreed to spend $12 million annually for marketing Linux and Windows virtualization scenarios. Microsoft will also spend $34 million over the term of the agreement for a Microsoft sales force devoted primarily to marketing the combined offering.
Barney continued, "Microsoft and Novell both felt it was important to get validation of this agreement by an independent systems vendor, and the best way for Dell to show support was to actually purchase certificates. The certificates are a unique offering that Novell created specifically for the Microsoft agreement, and thus it was important for Dell to consume the certificates as a symbol of their support for our agreement."
Dell isn't the only company that's recently signed up for the SLES certificates. Novell and Microsoft announced on May 9 that 12 new customers have signed up to take advantage of the companies' collaboration. These customers, from around the world, are 1blu, Arsys, Fujitsu Services Oy, Gordon Food Service, Gulfstream Aerospace, hi5 Networks, HostEurope, Nationwide, PRISACOM SA, Reed Elsevier, Save Mart Supermarkets, and state of California Department of Fish and Game.
Novell's channel partners may also be getting into the Microsoft/Novell SLES certificate business as well. Sources indicate that two or three Novell global partners may start "reselling" the certificates. Officially, Barney said, "We haven't announced anything along those lines, and don't have anything to share today. But stay tuned."
There is still some friction in the Novell/Microsoft deal and these new partnerships show them. For example, in the announcement of the 12 new Novell/Microsoft SLES customers, Susan Heystee, vice president and general manager of global strategic alliances for Novell emphasized that "Customers are looking for their vendors to solve their interoperability challenges." In the next paragraph of the press release, Susan Hauser, general manager of strategic partnerships and licensing at Microsoft, said, "Customers have asked us for greater interoperability and for IP assurance that enables vendors to build technical bridges."
This is a continuation of an agreement to disagree. Microsoft CEO Steve Ballmer hasn't backed off from his claim that Linux "uses our intellectual property." But, Microsoft has never shown any evidence what-so-ever to back up these vague claims.
Novell CEO Ron Hovsepian countered, "Our agreement with Microsoft is in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property. To claim otherwise is to further sow fear, uncertainty and doubt, and does not offer a fair basis for competition."
The one thing both companies agree on, and Dell does as well, is that customers are getting more and more interested in Linux and Windows server interoperability. It is this business opportunity, I think, which drove both the Novell/Microsoft pact and the tripartite agreement between Dell, Novell and Microsoft.
If Microsoft can get some mileage out of IP FUD, it will. Other vendors are willing to put up with it for the sake of Linux/Windows business opportunities. While this will continue to annoy free software purists, Novell, Dell, et. al. are businesses with an eye on the bottom line, not the amorphous mess of the United States patent system which enables Ballmer to make his fuzzy IP claims.
Unless the day comes when Microsoft actually tries a legal attack with its patent claims, I foresee more deals like these happening. In a way, despite all of Microsoft's anti-Linux squawking, it is paying Linux a backhanded complement. Microsoft's partnerships are explicitly acknowledging that in today's business IT environment, Windows must work with Linux. Who would have seen that coming even three years ago?
-- Steven J. Vaughan-Nichols
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