Linux gains despite and because of Microsoft

Novell swears Microsoft deal panning out; others resist getting chummy with Windows maker

Novell swears Microsoft deal panning out; others resist getting chummy with Windows maker.

Like other phone handset makers, Motorola introduces new models, such as the Razr V8, which made its debut in June.

Software developers are using Linux to build Web browsers, multimedia players and other mobile applications, VandenBrink says. The Linux community can develop new phones with new features quickly for a variety of global markets

Chart of projected worldwide rise in revenues for Linux upgrades.

“Having the Linux software means we won’t be held up by a software-development schedule. We can actually hit these markets whenever we want to hit them.” Linux, he said, “is becoming ubiquitous.”

At Motorola, 60% of its phones are built on a Linux platform, but it is just one of the companies embracing Linux as a way to build handsets, run servers and desktop computers and deliver other technology.

As the Linux community gathers for its annual LinuxWorld convention Aug. 6 through 9 in San Francisco, growth trends are promising. IDC forecasts revenue from the issuing of new Linux operating-system licenses and support to reach $856.9 million in 2010, from $303.7 million in 2005, for a compound annual growth rate of 23.1%.

According to the numbers, the open source alternative to Windows is becoming more credible.

The Microsoft-Novell deal

To some Linux purists, though, the operating system has become mainstream, in part, by making a deal with the devil. Since last year’s San Francisco LinuxWorld, Novell entered into a controversial arrangement with Microsoft in November to collaborate on the interoperability of Novell’s Suse Linux distribution with Windows and to indemnify Novell customers from copyright-infringement claims by Microsoft.

Novell says the deal overcomes one of the major obstacles to deploying Linux in an IT infrastructure -- the legacy Windows-based equipment already there.

“As we were selling Linux into our data-center [market], our customers were telling us they have an existing investment in Windows,” says Justin Steinman, the director of product marketing for Linux and Open Platform Solutions at Novell. “They said, ‘If you want to be taken seriously as a major player in my data center, you need to figure out how to make your Linux work with Windows.’”

The deal makes it possible for Windows to run as a guest in a virtualized environment on top of a Suse Linux operating system, or vice versa, Steinman says. It also allows an IT manager to use either Suse or Windows management tools to run both systems and document compatibility between Windows’ Office and the competing Open Office software.

On the support side of the deal, Microsoft purchased $240 million worth of certificates for Suse Linux support subscriptions that Microsoft will sell to users of Suse Linux. The certificate agreement was for five years, but in the first two full quarters since the Microsoft-Novell deal was in effect, Novell had already invoiced $91 million worth of certificates, or 38% of the total, Steinman says.

Compatibility with Windows may increase Novell’s market share at the expense of open source rival Red Hat, he says. Novell's pitch is, “Do you want the Linux that works with Windows or the one that doesn’t?” Steinman says.

Red Hat holds 61.2% of the worldwide market for Linux operating-system license and support revenue to Novell’s 29.4%, according to a February IDC report. Market share for all other vendors is in the low single digits each.

But Novell shouldn’t pop the champagne cork just yet, says Al Gillen, the chief IDC researcher on the report. “It’s really too early to be declaring victory for Novell,” Gillen says, “or declaring it a failure either.”

Novell has to track sales over a few more quarters to correct for possible seasonal variations in Linux revenue, he says.

Although interoperability with Windows is advantageous to Novell, Gillen says, other Linux distributors are wary of entering into a deal in which they have to pay Microsoft to protect their consumers from a patent-infringement claim. Novell paid Microsoft $40 million for that assurance and is also paying it a percentage of sales of Novell open source products.

“I don’t think Microsoft is going to let any distribution vendors have that type of [interoperability] relationship without first having the [intellectual-property] discussions,” Gillen says.

Although Microsoft also has made deals with Linux vendors Xandros and Linspire, Canonical, the commercial sponsor of the Ubuntu Linux distribution, and Red Hat, provider of Red Hat Enterprise Linux, have publicly said they won’t.

Further, Microsoft’s CEO Steve Ballmer irked many in the Linux community last November, when he said Linux violates a number of Microsoft patents.

More recently, Microsoft clarified that its agreement with Novell applies only to Novell’s Suse Linux Enterprise Software written under Version 2 of the general public license (GPL), the underlying license for open source software. Microsoft said July 5 that the Novell agreement does not apply to Novell software written with code from the new GPL v3 license, which was released June 29.

Novell’s Steinman says it’s a nonissue. Even if Microsoft says the support certificates don’t apply to GPL v3, when customers take those certificates to Novell, Novell will honor them.

“From a Novell perspective, it doesn’t matter,” he says. “It’s [about] the relationship between the customer and Novell.

Legitimizing Linux

Despite all the controversy, the Microsoft-Novell deal legitimizes Linux, says Rajesh Radhakrishnan, vice president of enterprise resource planning software products at HP.

“A lot of the moves that have been happening in the Linux market have increased credibility for Linux,” says Radhakrishnan, who came to HP from the software vendor Mercury Interactive, which HP acquired in 2006.

As Linux gains more credibility, such companies as HP are called upon to advise customers about how to use Linux within their IT infrastructure, he says. The company is creating “reference architectures” that put together a number of Linux software stacks that, combined, will fit a particular IT need.

“We’ve gone in and validated various reference architectures in our Competency Centers and. . . . we’re able to come to our customers and show them, ‘Here are reference architectures that work out of the box,’” Radhakrishnan says.

Early adopters of Linux and open source in general have been government agencies and other large enterprises, but Red Hat has seen a recent increase in sales to small-to-medium-size businesses, says Matthew Szulik, CEO of Red Hat.

Despite the heightened competition over the last two quarters from Microsoft-Novell and a move by Oracle to undercut Red Hat on the cost of Red Hat Linux support service, Red Hat has reported double-digit growth in revenue and an increase in profit.

“The success of Red Hat has been able to validate the future potential for open source software,” Szulik says.

Emerging countries are also lucrative markets for Linux, says IDC’s Gillen, because there isn’t as much of the legacy Windows technology to have to displace.

Robert Mullins is a U.S. correspondent for IDG News Service in San Francisco.

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