[ossig] What's what in Dell's Linux deals

[Maulvi Bakar]

What's what in Dell's Linux deals
http://www.linux-watch.com/news/NS9215991890.html
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