Microsoft-organized consortium pays $450 million for Novell IP

Microsoft isn't talking - could deal extend Linux/Windows agreement?

There's a curious side note involving Microsoft regarding today's $2.2 billion Attachmate purchase of Novell.

Once a formidable rival to Microsoft in the operating system market, Novell is now playing second fiddle to Red Hat in the Linux world and, if the Attachmate acquisition is completed, will soon no longer be an independent company. 

Why Novell is worth $2.2 billion to Attachmate

Along with the Attachmate purchase, Novell said it "has entered into a definitive agreement for the concurrent sale of certain intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft Corporation, for $450 million in cash." 

"$450 million of Novell IP is likely to make its way through CPTN to Microsoft," Gartner analyst Earl Perkins writes in his blog, adding that he expects more details to be "revealed in the days ahead." 

Which intellectual property assets will be transferred to the Microsoft-organized CPTN? Which other companies are involved in this consortium? For now, Microsoft isn't saying. 

A statement released by Microsoft deputy general counsel Horacio Gutierrez says only "We are pleased to be a part of the acquisition of certain intellectual property assets of Novell. Microsoft looks forward to continuing our collaboration with Novell into the future, to bring mixed source IT solutions to customers." 

Microsoft said it would offer no further comment. There are several areas where Novell and Microsoft cross paths, however. 

Believe it or not, there is still an ongoing lawsuit involving a Novell antitrust claim against Microsoft related to WordPerfect. IDC analyst Matt Eastwood also suggests that Microsoft is interested in Novell's PlateSpin technology for virtualization and workload management. 

However, Microsoft's statement about "continuing our collaboration with Novell into the future" may more likely refer to a collaboration agreement between Novell and Microsoft struck in November 2006 to improve interoperability between Linux and Windows. The deal was to last for five years, so it would expire about 12 months from now.

Perhaps not coincidentally, an IDG News Service report from four years ago says "Microsoft will spend more than $440 million on the deal it struck ... with Novell," and that "the money will be spent on licensing fees, and sales and marketing costs."  

The Linux/Windows deal, which involved cooperation on patents, "was extremely controversial at the time," says Pund-IT analyst Charles King. 

While we don't know for sure what the $450 million Microsoft payment is all about, it is clear that Novell and Microsoft have had quite an impact on each other over the years.

The Novell acquisition is "the end of an era," Perkins writes. "Novell represents one of the original key players in the network operating system and identity management period from the early 1990s until today," he continues. "In fact, one could make an interesting case that the company made Microsoft what it is today through the early market battle between Novell NetWare and Microsoft Windows Server. We all know how that battle ended, but in the long run Windows Server was a better product because of it." 

UPDATE: The Microsoft consortium purchased 882 patents from Novell, the IDG News Service reports. Some details are available in a filing with the U.S. Securities and Exchange Commission

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