The business and technology partnership unveiled this week by Microsoft and Novell is a multi-dimensional union that reaches deep into the open source community, slaps at rivals of both vendors and could potentially aid Microsoft in its European Union lawsuit.

Microsoft and Novell, whose dislike for each other is nearly as old as the industry, are striving to make it easier for customers to run, integrate and manage Linux and Windows environments and help open source developers steer clear of patent and intellectual property concerns.

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But the deal also tweaks rivals, including Red Hat, which dominates the Linux market, and VMware, which develops virtualization software that competes with offerings from both Microsoft and Novell. The timing is particularly poor for Red Hat, which is already stinging from a promise by Oracle two weeks ago to undercut Red Hat's lucrative support business. Red Hat's stock is down 17% since the announcement.

Microsoft and Novell say the need for the pact was driven by customers who run mixed Windows and Linux environments and need help solving interoperability issues. The companies say they will create a joint research facility staffed with Microsoft and Novell technical experts who can build and test software and work with customers.

"This is a win-win for customers," says Laura DiDio, a research fellow in the application infrastructure and software platforms division at the Yankee Group. "First, by pledging not to assert patent rights against SUSE Linux, Microsoft silences many of its critics in the open source community. Secondly, by stating they will cooperatively build products that make SUSE Linux and Windows Server coexist, Microsoft and Novell are guaranteeing interoperability."

That promise hinges on an agreement by the vendors to focus on virtualization and to jointly develop a virtualization offering for both Linux and Windows that would allow either to be the host or guest operating system.

While few details were provided, Novell CEO Ron Hovsepian said the emphasis would be on para-virtualization technology, which ensures tight integration and better performance by requiring an operating system to be explicitly ported to run in the virtualized environment.