A Microsoft coupon bonanza for Novell? Not really

Novell's Microsoft-related revenue is still significant, but comparatively speaking, it's in decline.

Ed Moltzen writes headlines an article with "Microsoft's Coupon Money Boosts Novell's Linux Numbers," which is true on its face, but not as interesting under the covers. Justin Steinman, Novell's head of Linux marketing, had told me a week ago that Novell's "non-Microsoft- related Linux business is growing."

This remains true. While Novell continues to redeem its Microsoft coupons for a healthy amount of money, the relative amount of money attributable to Microsoft is in decline.

Moltzen notes that Novell had $16 million in Microsoft coupons (quoting Novell's Ron Hovsepian, who said "To date, we have invoiced $157 million, or 65 percent of the original five-year, $240 million agreement," up from $141 million the quarter before), which is actually down year over year in Q2 2008 for Microsoft, while Novell had $22 million in non-Microsoft Linux revenue in Q2 2008, which is up year over year.

So, yes, Novell continues to make money from the Microsoft deal. But the value of that deal is decreasing over time as Novell begins to stand on its own. This is good news for Novell and for the industry, and seems to be having an effect. One small data point? My own company, Alfresco, is seeing an uptick in SUSE Linux Enterprise Server demand, and none of my customers are suggesting it has anything to do with Microsoft.

Instead, it has everything to do with open source.

Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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